Benzinga | Sep 30, 2021 04:06PM EDT

MSP Recovery Enters Into $3B Agreement To Sell Select Healthcare Claims Recoveries To Virage Capital Management, An Anticipated New Source Of Revenue For MSP

MSP Recovery, LLC, ("MSP Recovery" or "MSP"), a Medicare, Medicaid, commercial, and secondary payer reimbursement recovery leader, that in July announced a planned business combination with Lionheart Acquisition Corporation II (NASDAQ:LCAPU, LCAP, LCAPW, &ldquo, Lionheart&rdquo, or &ldquo, LCAP&rdquo, ))), today announced an agreement to monetize up to $3 billion of select healthcare claims recovery interests to its investment partner, Virage Capital Management LP ("Virage"). This initial agreement provides the platform to create a new source of revenue for MSP Recovery.

The agreement gives Virage the right to buy recoveries otherwise due to MSP's assignors ("Clients") -- up to an aggregate total of $3 billion. MSP's 50% share of the recovery amount remains untouched by the agreement, which now provides an additional avenue to monetize the Clients' 50% of the total recovery amount.

MSP Recovery is an industry pioneer in obtaining reimbursements for Medicare, Medicaid, commercial insurance, and other healthcare entities from parties which should have paid the claims in the first place. MSP acquires the assignments of these recoveries from health insurance payors, healthcare providers and self-funded entities, and uses its proprietary multi-level data analytics system to secure recoveries from responsible parties. MSP historically pays the Clients 50% of such recoveries and retains the rest.

"In the five years we have been working with Virage, they have been instrumental in helping build the scope and magnitude of our business model, having raised hundreds of millions of dollars from top notch investors," said John H. Ruiz, CEO of MSP Recovery. "We are thrilled to enter into this ground-breaking $3 billion-dollar deal with Virage. This agreement represents MSP's initial step toward realization of an additional revenue opportunity that will further support our market leadership in the healthcare recovery space. MSP is working hard to continue developing revolutionary systems that will provide never-before-seen solutions for patients, providers and payers."

"Virage Capital Management LP is excited to continue and extend the successful relationship forged with MSP Recovery, LLC. Over the last five years, Virage has worked closely with the MSP management team and witnessed its ability to identify opportunities and execute on them in both the courtroom and the boardroom. Virage has been impressed by the MSP management team's ability to adapt its business plan to the growing market opportunity. This $3 billion Assignor Interest Investment Capacity Agreement represents Virage's confidence in MSP's ability to continue to grow their Medicare claims inventory with assignors of claims and the continued investment interest from existing and future Virage investors," stated Edward Ondarza, Founder and Managing Director of Virage.

"As Lionheart narrowed its search for an acquisition target, we saw MSP's revolutionary data analytics platform as the type of explosive growth opportunity we sought for our shareholders," stated Ophir Sternberg, Chairman and CEO of Lionheart. "The agreement announced today expands on that opportunity and gives MSP access to a new revenue stream that is incremental to the original business combination forecast. Moreover, this new agreement with Virage validates the model and provides additional upside to LCAP shareholders."

Today's announcement follows MSP's filing in August of a whistleblower ("qui tam") lawsuit against 315 auto insurers to recover billions of dollars for claims that auto insurers should have paid, but didn't. MSP continues to find new revenue sources that were not originally part of the $32.6 billion valuation.