Approximately Doubling Its Size
NEW
YORK, Aug. 4, 2022 /PRNewswire/ -- Marpai, Inc.
("Marpai" or the "Company") (Nasdaq: MRAI), an AI-technology
company transforming the $22 billion
Third-Party Administrator (TPA) market supporting self-funded
employer health plans, today announced it has signed a
definitive agreement to acquire Maestro Health ("Maestro"), a
leading TPA servicing over 80 self-insured employers, based in
Chicago, Illinois.
Highlights of the transaction include:
- At the closing the combined company will serve over 40,000
employee lives with expected combined proforma annual revenues of
approximately $40 million in
2022.
- Significant cash of over $20
million on the combined balance sheet expected at closing,
which is expected to finance the integration of the two
companies.
- While up to date Maestro has posted substantial operating
losses as it invested in growth, the joint company expects to
target positive EBITDA within 18 months.
- Maestro's Clinical Management and Cost Containment in-house
capabilities will enhance Marpai's ability to deliver better value
to its clients and better health outcomes to its members.
- Purchase Price of $22.1
million is due in April 2024,
but, subject to the Company meeting its obligations under the
agreement, may be financed over four years by the seller.
Together, the companies will continue to provide innovative
health plan administration for self-insured clients driven by
technology.
"Maestro shares our vision on how to improve healthcare for
employees and family members covered by self-insured plans," said
Edmundo Gonzalez, CEO of Marpai.
"There are tremendous revenue synergies. Maestro has in-house care
management that helps members live healthier lives, and we intend
to roll this out to the Marpai member base. The Maestro cost
containment solutions will also be rolled out to our client base.
Marpai's proactive match making of members to the best care will
also be introduced to the Maestro client base."
The acquisition is expected to more than double Marpai's
revenues (exclusive of third parties' share of revenues), number of
customers and number of members it serves.
"We are committed to continue delivering the high level of
customer service that both Maestro's and Marpai's customers are
used to. We believe that this combination will create long-term
benefits for our members, clients as well as our stockholders,"
said Gonzalez.
"Combining our TPA experience with Marpai is incredibly
exciting. Over the last couple of years, we have made significant
investments in cost containment and clinical solutions that are
delivering outstanding results for our customers. Marpai brings
deep TPA domain expertise, expanded discount network options and
incredibly sophisticated approaches to data analytics," said
Brandon Wood, CEO of Maestro Health.
"The combined organization will help employers proactively provide
benefits that are expected to lead to healthier and more satisfied
member populations. This will be unmatched in the market."
Transaction Summary
The transaction is expected to close within 60 days, subject to
completing certain regulatory notices and filings as well as
satisfying certain other customary closing conditions.
Under the terms of the agreement, the purchase price of
$22.1 million will be payable in cash
on April 1, 2024. However, subject to
the Company meeting its obligations under the agreement, this
payment may be financed over four years by the seller with minimum
annual cash payments, reflecting a 10% per annum cost of capital,
of $5 million, $6 million, $8
million and $9 million which
will be payable on December 31, 2024,
2025, 2026 and 2027, respectively. In addition, Marpai has agreed
that a minimum of 35% of the net proceeds of any equity offering
will be used to pre-pay its minimum payment obligations. Such
payments will offset the minimum payments described above.
In addition, the parties have also agreed that Maestro's free
cash position at closing will be $15.79
million and have also agreed that Maestro will have certain
minimum working capital amounts at closing. The cash on the
combined company's balance sheet, as well as synergies from the
transaction, are expected to drive the joint company's plan of
integration, which is expected to include a target of reaching
positive EBITDA within 18 months.
Marpai management will discuss the transaction on the previously
announced second quarter operating results conference call which is
scheduled for Thursday, August 11 at
8:30 a.m. ET
The call can be accessed as follows:
Live Call: US: 1-866-652-5200 / CAN: 1-855-669-9657 / INT TOLL: 1-412-317-6060
Webcast: https://app.webinar.net/0EJlBnd6mVz
About Marpai, Inc.
Marpai, Inc. (Nasdaq: MRAI) is a technology company bringing
AI-powered health plan services to employers that directly pay for
employee health benefits. Primarily competing in the $22B TPA (Third Party Administrator) sector
serving self-funded employer health plans representing over $1T in
annual claims, Marpai maximizes the value of the health plan as
measured in health outcomes. Marpai takes a member-centric approach
that uses AI and big data to connect members to health solutions
predicted to have a high probability of positive outcomes and aims
to bring value-based care to the self-insured market. With
effective early intervention, disease management, claims processing
and proactive member outreach, Marpai works to deliver the
healthiest member population for the health plan budget. Operating
nationwide, Marpai offers access to provider networks including
Aetna and Cigna and all TPA services. For more information, visit
www.marpaihealth.com.
About Maestro Health
Maestro is a Third-Party Administrator (TPA) for employee health
and benefits servicing approximately 25,000 employee lives. Maestro
offers end-to-end health plan solutions, integrating in-house care
management and cost containment services. Maestro has over 80
customers in over 40 states with a 93% client retention rate,
indicating high level of customer satisfaction. For more
information, visit www.maestrohealth.com (link to Maestro's website
does not constitute a part of this press release).
Forward-Looking Statement
Disclaimer
This press release contains forward-looking statements, as that
term is defined in the Private Litigation Reform Act of 1995, that
involve significant risks and uncertainties, including statements
regarding revenues, employee lives and cash. Forward-looking
statements can be identified through the use of words such as
"anticipates," "expects," "intends," "plans," "believes," "seeks,"
"estimates," "guidance," "may," "can," "could", "will",
"potential", "should," "goal" and variations of these words or
similar expressions. For example, the Company is using forward
looking statements when it discusses the expected timing of the
closing of the transaction, the expected benefits to be derived
from the combined businesses, the Company's belief that the
combined company expects to target positive EBITDA within 18
months, the expected combined revenues of the companies, that the
acquisition is expected to more than double its revenues, number of
customers and number of members it serves, that the cash on the
combined balance sheet expected at closing is expected to finance
the integration of the two companies and that the combined
organization will help employers proactively provide benefits that
lead to healthier and more satisfied member populations. Readers
are cautioned not to place undue reliance on these forward-looking
statements, which reflect Marpai's current expectations and speak
only as of the date of this release. Actual results may differ
materially from Marpai's current expectations depending upon a
number of factors. These factors include, among others, adverse
changes in general economic and market conditions, competitive
factors including but not limited to pricing pressures and new
product introductions, uncertainty of customer acceptance of new
product offerings and market changes, risks associated with
managing the growth of the business. Except as required by law,
Marpai does not undertake any responsibility to revise or update
any forward-looking statements whether as a result of new
information, future events or otherwise. More detailed information
about Marpai and the risk factors that may affect the realization
of forward-looking statements is set forth in Marpai's filings with
the Securities and Exchange Commission. Investors and security
holders are urged to read these documents free of charge on the
SEC's web site at http://www.sec.gov.
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SOURCE Marpai