MSP Recovery Going Public Via SPAC With Portfolio Of $50B In Unpaid Claims: What Investors Should Know

One of the largest SPAC deals of all time was announced Monday morning with MSP Recovery announcing a merger.

The SPAC Deal: MSP Recovery announced a SPAC merger with Lionheart Acquisition Corp II LCAP valuing the company at a pro forma enterprise value of $32.6 billion.

There was not a PIPE on the SPAC merger for MSP Recovery, joining a limited number of recent SPAC deals that don’t include this financing method.

Public LCAP shareholders will own 0.7% of the company after the merger. Shareholders who do not redeem their shares at the merger vote will receive at least 35 additional warrants with a five-year tenor and $11.50 strike price.

Shares are expected to list on the Nasdaq with ticker MSPR after the merger.

About MSP Recovery: MSP Recovery is a leader in data-driven solutions for the Medicare and Medicaid sector. The company targets improper payments made in the $3.6 trillion healthcare sector.

MSP Recovery owns more than $50 billion in billed amounts against insurance companies. The company expects this figure to grow to $263 billion through data analytics of existing Medicare and Medicaid deals.

The Centers for Medicare and Medicaid Services reviews less than 0.2% of one billion annual Medicare claims a year, according to the company. This creates an opportunity for MSP to use its platform to review cases for improper payments.

With MSP, mass data and powerful analytics equals actionable intelligence, according to the company’s presentation.

Related Link: 5 SPACs To Watch In The Second Half Of 2021

Growth Ahead: MSP uses a data analytics platform of more than 1,400 algorithms to look for recoverable claims. MSP is paid out on claims it finds.

The company is targeting a total addressable market size of $1.6 trillion annually and serviceable addressable market size of $102 billion in 2021.

The SPAC merger is expected to help accelerate MSP’s claims portfolio and scale its data-analytics platform.

Growth plans include introducing new products, additional compliance sectors, acquisitions and expansion into commercial recoveries.

Financials: MSP does not currently have revenue. The company estimates revenue of $992 million in fiscal 2022 and $3.11 billion in fiscal 2023. Projections out to fiscal 2026 see revenue hitting $23.77 billion.

The company said that several factors are not in its financial projections that could provide upside including faster recovery time and heightened recovery multiples.

LCAP Price Action: LCAP shares are up 0.61% to $9.95 on Monday at publication.

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