The following excerpts are from Marpai’s SEC Q10 Report ending September 2024
“Based on our current financial condition, our Board of Directors, supported by our management team, is considering exploring strategic alternatives focused on maximizing shareholder value.”
“Strategic alternatives may include, among others, a strategic investment financing which would allow the company to pursue its current business plan to commercialize its products, a business combination such as a merger with another party, or a sale of the company.”
“During the nine months ended September 30, 2024 and 2023, our total revenue was $21.6 million and $28.4 million, respectively, representing a decrease in revenue of $6.9 million. The decline is primarily due to customer turnover.”
“We incurred $1.4 million of sales and marketing expenses for the nine months ended September 30, 2024 compared to $5.5 million for the nine months ended September 30, 2023, a decrease of $4.1 million”
“We incurred $1.9 million of interest expense for the nine months ended September 30, 2024 compared to $1.1 million for the nine months ended September 30, 2023, an increase of $788 thousand. Interest expense increased primarily due to the debt to and JGB which was partially offset by the decrease in interest due to AXA for the acquisition of Maestro being partially paid down in 2023.”
“Management continues to evaluate additional funding alternatives and is seeking to raise additional funds through the issuance of equity or debt securities.”
“As a result of the above, in connection with our assessment of going concern considerations in accordance with Financial Accounting Standard Accounting Standards Update (“ASU”) 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” management has determined that our liquidity condition raises substantial doubt about our ability to continue as a going concern through twelve months from the date these condensed consolidated financial statements are available to be issued. The condensed consolidated financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should we be unable to continue as a going concern.”
“Currently, our revenues are concentrated with one major customer and our revenues may decrease significantly if we were to lose our major customer.“
“Due to our limited operating history, we have a limited customer base and have depended on a major customer for a significant portion of our revenue. For the three month periods ended September 30, 2024 and 2023, we had one customer that accounted for 14.6% and 11.3% of total revenue, respectively. For the nine month periods ended September 30, 2024 and 2023, we had one customer that had 15.4% and 10.9% of total revenue, respectively. At September 30, 2024, two customers accounted for 51.4%, and 11.3% of accounts receivable. At December 31, 2023, two customers accounted for 16.6% and 14.0% of accounts receivable.”
“If our major customers were to terminate their agreement with us, or if we fail to adequately perform under our agreement, and if we are unable to diversify our customer base, our revenue could decline, and our results of operations could be adversely affected.”
“We are reviewing strategic alternatives and there can be no assurance that we will be successful in identifying or completing any strategic transaction, that any such strategic transaction will result in additional value for our stockholders or that the process will not have an adverse impact on our business.“
“The process of reviewing strategic alternatives may be costly, time consuming and disruptive to our business operations and, if we are unable to effectively manage the process, our business, financial condition and results of operations could be adversely affected. We may incur significant costs associated with identifying, evaluating and negotiating potential strategic alternatives, such as legal, financial advisor and accounting fees and expenses and other related charges. We may also incur additional unanticipated expenses in connection with this process. A considerable portion of these costs will be incurred regardless of whether any such course of action is implemented or transaction is completed, decreasing cash available for use in our business.”
See Marpai SEC 10k Report HERE
The TPA market will be completely different in the next two years: (1) More TPA consolidation and (2) New high tech startup niche TPA’s will enter the market like Yuzu.
Ancillary vendors like Asserta Health and DPC organizations and others needed for a holistic approach to administering self-funded health plans will grow in number. The steady move away from managed care networks will accelerate. Lawyers are going to have more fun than the law allows because health care delivery has become a regulatory nightmare for plan sponsors. Any misstep can bring punishing government sanctions and plan member legal retribution. Lawyers will bet on Red and Black at the same time prospering in one of two ways while never losing; (1) working with plan sponsors or (2) working against plan sponsors.
Lastly, ICHRA plans will grow in popularity as a means for employers to “get out of the health insurance business” and away from lawyers (#2 above) and pissed off plan members with a lawyer in their back pocket. More carriers will enter the individual market making it more competitive. Legacy TPA’s blind to market demand will be left in the dust. Others will transition their business model to ICHRA administrative services and will thrive. Voluntary benefits added to ICHRA plans will generate the bulk of revenue both to the ICHRA administrator and independent agents important to market distribution.
