One of the Top
Three Largest SPAC Transactions Announced to Date Upon Closing
Combined Company to Be Listed on Nasdaq
- MSP’s data-driven solutions discover improperly paid
claims out of the $3.6 trillion paid by healthcare payers yearly,
and pursues them against primary payers and responsible
parties.
- Combination with Lionheart Acquisition Corp. II will provide
gross proceeds of approximately $230 million to MSP,
assuming no redemptions by Lionheart’s public stockholders, to
support current operations and expand existing and new market
growth opportunities.
- MSP Recovery Founder and CEO, John H. Ruiz, to lead the
combined company.
- Pro forma enterprise value of the combined company is
approximately $32.6 billion.
- Upon completion of the business combination and subject to
compliance with the law, Lionheart stockholders who do not redeem
their shares are expected to collectively receive approximately
1.029 billion additional warrants ("Additional Warrants”), with
each such stockholder receiving at least 35 Additional Warrants,
each with a 5-year tenor and being exercisable for one share of
MSP common stock at an $11.50 strike price.
- No dilution expected to result from the Additional Warrants, as
the MSP founders have agreed to sell an equivalent number of
securities back to MSP in connection with the exercise of
Additional Warrants, for the same value as the exercise price of
the Additional Warrants.
- Upon closing, the combined company is expected to list on
Nasdaq under the ticker symbol “MSPR”.
MSP Recovery, LLC (“MSP”), specializing in Medicare
Secondary Payer recovery rights and the recovery of improperly paid
Medicaid, and commercial payments was founded in 2014. Lionheart
Acquisition Corp. II (Nasdaq: LCAP, “Lionheart”), a special purpose
acquisition company, today announced a definitive agreement for a
business combination that would result in MSP Recovery
becoming a publicly listed company.
Upon the closing of the transaction, the combined company will
be named MSP Recovery, and its common stock, existing warrants and
the Additional Warrants are expected to trade on Nasdaq under the
new ticker symbols “MSPR”, “LCAP W”, and “MSPR W”, respectively.
The pro forma enterprise value of the combined company is
approximately $32.6 billion. Upon closing, at that valuation, the
transaction would be one of the top 3 largest SPAC transactions
ever.
MSP is currently pursuing the more than $50 billion it
owns in billed amounts against insurance companies that have
primary payment responsibility as well as medical and
pharmaceutical manufacturers that either caused the expenditure of
medical treatment or inflated their prices against the law.
MSP’s $50 billion in billed amounts is projected to grow to
$263 billion.
MSP has received historical financial backing from
investment partners, including Virage Capital Management LP
(“Virage”) and its managed private investment vehicle, Virage
Recovery Master LP (“VRM”) which launched in 2018, raising nearly
$440 million from U.S. and European institutional investors to
invest in certain claims recovery rights with MSP. VRM
investors have agreed to convert a significant portion of VRM’s
expected return from its investment with MSP into shares of
the public company once the transaction has closed.
MSP will continue to be managed by its existing senior
executive team, led by Chief Executive Officer, John H. Ruiz, a
Martindale-Hubbell “AV Rated” attorney, and architect of its
proprietary healthcare reimbursement data analytics platform.
MSP 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.
Considering the Centers for Medicare & Medicaid Services
reviews less than two tenths of a percent of the more than one
billion claims Medicare receives a year—there is a high frequency
of improper payments.
MSP provides a data-driven solution to secure recoveries
against responsible parties and provides the healthcare industry
with comprehensive compliance solutions. Today there is no
nationally integrated system to identify improper healthcare
payments. As a consequence, primary payers, such as property and
casualty insurers, do not always properly report and reimburse
healthcare entities. Data legacy challenges, billing delays, and
reconciliation issues make it difficult to efficiently identify
these improper payments and the proper payers. MSP addresses
this problem.
"MSP identified fragmented data infrastructure both in
the insurance and healthcare industries and developed a
revolutionary solution: a pioneering data analytics platform that
efficiently identifies and uncovers historical waste, helps to
support the long-term sustainability of Medicare and Medicaid
programs, and recovers monies owed to hospitals, health insurance
companies and medical providers,” said Ophir Sternberg, Chairman
and CEO of Lionheart. “Unlocking this explosive growth asset class,
which has historically only been available to institutional
investors, is exactly the type of opportunity that Lionheart has
set out to bring to its shareholders.”
“Medicare and Medicaid pay billions of dollars of healthcare
claims they should not pay. This harms taxpayers, the
underprivileged, and America’s senior citizens. MSP
developed a proprietary data analytics system to discover and
recover improper payments through a multi-faceted legal strategy
and big data platform,” says Mr. Ruiz. “Our tools help fix this
broken system. Many of the nation's largest healthcare
organizations rely on MSP to maximize their recovery
potential, increase revenue and reduce expenses, while complying
with Medicare and Medicaid laws.”
“Over the nearly five years that we’ve invested in the
MSP management team, we’ve been consistently impressed by
its vision, work ethic and execution,” says Edward Ondarza, Founder
and Managing Director of Virage. “John Ruiz and his team have been
excellent partners in collaborating with us to develop strategies
that have generated favorable rulings from state and federal courts
to recover amounts due under federal law from primary payers or
other responsible payers legally required to pay for the
claims.”
MSP’s proprietary data analytics system of waste
discovery, recovery and prevention was designed by leading experts
in data, Medicare, Medicaid, commercial, and secondary payer laws,
to efficiently identify proper payers and recover reimbursements
across the healthcare industry.
MSP’s proprietary multi-level data-analytics platform
currently deploys more than 1,400 algorithms and other leading
technology to aggregate and analyze data from more than 600 data
funnels to identify and pursue recoverable claims. The funnels are
applied to data from more than 100 leading healthcare providers and
insurance company clients, legal filings from across the country,
including private lien agreements, and numerous third-party
databases help enrich this data.
The Lionheart transaction will help enable MSP to
accelerate acquisitions of claims portfolios while further scaling
and enhancing its data-analytics capabilities within its existing
infrastructure. This includes planning and developing next
generation technology for new machine learning, artificial
intelligence and real-time decision support.
Rulings secured in the last several years have established
MSP’s rights to own healthcare reimbursement claims, sue and
ultimately recover against responsible parties. The U.S. Department
of Justice, when asked by the 11th U.S Circuit Court of Appeals
filed an amicus brief. The Department of Justice agreed with the
legal methodology MSP utilized to pursue the responsible
parties. In that landmark decision, the court went as far as to
state, “We agree with Plaintiffs (MSP) on all issues”.
Thereafter, all but one of the losing insurers appealed to the U.S
Supreme Court. The appeal was denied on June 14, 2021.
Transaction Overview
The business combination values MSP at a $32.6 billion
pro forma enterprise value, excluding cash on the balance sheet.
The transaction is anticipated to generate gross proceeds of up to
approximately $230 million of cash, assuming no redemptions by
Lionheart’s public stockholders. These funds will be used to fund
operations and growth.
Upon completion of the business combination and subject to
compliance with applicable law, approximately 1.029 billion
Additional Warrants will be issued to former Lionheart stockholders
who have not elected to redeem their shares of Lionheart common
stock in connection with the business combination. Each Additional
Warrant will represent the right to purchase one share of the
combined company’s common stock at $11.50 per share with a 5-year
tenor.
No dilution is expected to result from the issuance of the
Additional Warrants because the MSP founders have agreed to
sell to the combined company for the same value as the exercise
price of a share issued pursuant to an Additional Warrant, one
share of the combined company’s common stock (or an equivalent
security, under certain circumstances) upon the exercise of the
Additional Warrants. As a result, on a net basis, following the
repurchase of the applicable securities from the MSP
Founders, there is anticipated to be no increase in the number of
outstanding shares as a result of the exercise of the Additional
Warrants.
The board of directors of Lionheart has unanimously approved the
proposed transaction, which is expected to be completed in the
fourth quarter of 2021, subject to, among other things, the
approval by Lionheart’s stockholders and satisfaction or waiver of
other customary conditions.
Additional information about the proposed transaction, including
a copy of the membership interest purchase agreement, will be
provided in a Current Report on Form 8-K to be filed by Lionheart
with the Securities and Exchange Commission and available at
www.sec.gov as well as online at: www.LCAP2.com.
Advisors
Keefe, Bruyette & Woods, a Stifel Company, is serving as
financial advisor to MSP Recovery. Nomura Securities
International, Inc. is serving as financial and capital markets
advisor to Lionheart Acquisition Corp II. Weil, Gotshal &
Manges LLP is serving as legal counsel to MSP Recovery. DLA
Piper LLP is serving as legal counsel to Lionheart Acquisition Corp
II.
Investor Webcast Information
Listeners may access an investor webcast hosted by MSP and
Lionheart management at 10:00am on July 12, 2021. The webcast is
accessible on the Lionheart website here: www.LCAP2.com.
About MSP Recovery
Founded in 2014, MSP Recovery has become a Medicare,
Medicaid, commercial, and secondary payer reimbursement recovery
leader, disrupting the antiquated healthcare reimbursement system
with data-driven solutions to secure recoveries against responsible
parties, while providing the industry with comprehensive compliance
solutions. For more information, visit: www.msprecovery.com
About Lionheart Acquisition Corp. II
Lionheart Acquisition Corporation II is a blank check company
formed for the purpose of effecting a merger, capital stock
exchange, asset acquisition, stock purchase, reorganization or
similar business combination with one or more businesses. For more
information, visit: www.LCAP2.com.
About Virage Capital Management LP
Established in 2013, and with total current assets under
management of approximately $1.25 billion, Virage provides
litigation finance solutions to established law firms and lawyers
for a wide range of business purposes. For more information, visit:
www.viragecm.com.
Important Information and Where to Find It
In connection with the potential business combination (the
“proposed business combination”), a registration statement on Form
S-4 (the “Form S-4”) is expected to be filed by Lionheart
Acquisition Corporation II (“Lionheart”) with the U.S. Securities
and Exchange Commission (the “SEC”). The Form S-4 will include a
preliminary proxy statement / prospectus to be distributed to
holders of Lionheart’s common stock in connection with Lionheart’s
solicitation of proxies for the vote of its stockholders in
connection with the proposed business combination and other matters
as described in the Form S-4, as well as a prospectus relating to
the offer and sale of securities to be issued in connection with
the completion of the business combination. This document does not
contain all the information that should be considered concerning
the proposed business combination and is not intended to form the
basis of any investment decision or any other decision in respect
of the proposed business combination. Lionheart and MSP
Recovery, LLC (and related entities, “MSP”) urge
investors, stockholders and other interested persons to read, when
available, the Form S-4, including the proxy statement/prospectus
included therein and the amendments thereto as well as any other
documents filed with the SEC in connection with the proposed
business combination as these materials will contain important
information about MSP, Lionheart and the proposed business
combination. After the Form S-4 has been filed and declared
effective, the definitive proxy statement/prospectus will be mailed
to Lionheart’s stockholders as of the record date established for
voting on the proposed business combination. Lionheart’s
stockholders will also be able to obtain copies of such documents,
without charge, once available, at the SEC’s website at
www.sec.gov, or by directing a request to: Lionheart Acquisition
Corporation II, 4218 NE 2nd Avenue, Miami, Florida 3313.
INVESTMENT IN ANY SECURITIES DESCRIBED HEREIN HAS NOT BEEN
APPROVED OR DISAPPROVED BY THE SEC OR ANY OTHER REGULATORY
AUTHORITY NOR HAS ANY AUTHORITY PASSED UPON OR ENDORSED THE MERITS
OF THE ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED
THEREIN.
Participants in the Solicitation of Proxies
This communication is not a solicitation of a proxy from any
investor or securityholder. Lionheart, MSP, and their
respective directors, executive officers and other members of their
management and employees, including John Ruiz and Frank Quesada,
may, under SEC rules, be deemed to be participants in the
solicitation of proxies of Lionheart’s stockholders in connection
with the proposed business combination. Investors and
securityholders may obtain more detailed information regarding the
names, affiliations and interests of Lionheart’s directors and
executive officers in Lionheart’s Annual Report on Form 10-K filed
with the SEC on March 31, 2021, as amended, and other reports filed
with the SEC. Additional information regarding the participants
will also be included in the Form S-4 that includes the proxy
statement/prospectus, when it becomes available. When available,
these documents can be obtained free of charge from the sources
indicated above.
No Offer or Solicitation
No offer or offering of equity interests or securities of any
kind is being made, conducted or extended at this time. This
communication is for informational purposes only and does not
constitute or include an offer to sell, or a solicitation of an
offer to purchase or subscribe for, equity interests or securities
of any kind or a solicitation of any vote of approval, nor shall
there be any sale, issuance or transfer of any such securities in
any state or jurisdiction in which such offer, solicitation or sale
would be unlawful prior to registration or qualification under the
securities laws of such jurisdiction. Any such offer or
solicitation will be made only in connection with the delivery of a
prospectus meeting the requirements of the Securities Act of 1933,
as amended (“Securities Act”), or exemptions therefrom.
Cautionary Note Regarding Forward Looking Statements
This communication includes forward looking statements within
the meaning of the safe harbor from civil liability provided for
such statements by the Private Securities Litigation Reform Act of
1995 (set forth in Section 21E of the Securities Exchange Act of
1934, as amended (“Exchange Act”) and Section 27A of the Securities
Act, which include information relating to future events, future
financial performance, strategies, expectations, competitive
environment, regulation and availability of resources and involve
known and unknown risks, uncertainties and other factors which may
cause our actual results, performance or achievements to be
materially different from any future results, performances or
achievements expressed or implied by the forward-looking
statements. These statements are often accompanied with or by words
such as “expects”, “plans”, “ projects”,” forecasts”,” estimates”,”
intends”, “expects”, “anticipates”, “seeks”, “ targets”,
“continues”, “ believes”, “opinion”, “will”, “could”, “future”,
“growth”, or “may” (or the negatives thereof) or other similar
expressions that predict or indicate future events or trends or
that are not statements of historical matters. These forward
looking statements include, but are not limited to, statements
regarding MSP’s plans, goals and objectives, forecasts,
budgets or projections and any related assumptions, statements and
projections regarding projected MSP claims by paid amounts,
projected recovery percentages, forecasts relating to key revenue
drivers, earnings growth, gross and cumulative recoveries and the
implied enterprise value and Lionheart’s and MSP’s
expectations with respect to future performance and anticipated
financial impacts of the proposed business combination, the
satisfaction or waiver of the closing conditions to the proposed
business combination, and the timing of the completion of the
proposed business combination. There is no guarantee that prospects
or results or the timing of events included or referred to in this
communication will be achieved or that MSP will be able to
implement successfully its investment strategy or achieve its
investment objectives or return targets. Accordingly, we caution
you against relying on forward-looking statements. Forward looking
statements also are subject to a number of significant risks and
uncertainties that could cause the actual results to differ
materially, and potentially adversely, from those express or
implied in the forward-looking statements. These statements are
based on various assumptions, whether or not identified in this
communication, and on the current expectations of management and
are not predictions of actual performance. Actual events and
circumstances are difficult or impossible to predict and may differ
from assumptions, and such differences may be material. Many actual
events and circumstances are inherently subject to significant
business, economic and competitive uncertainties and contingencies,
and are beyond the control of MSP and Lionheart and are
difficult to predict. These forward-looking statements are provided
for illustrative purposes only and are not intended to serve as,
and must not be relied on by any investor as, a guarantee, an
assurance, a prediction or a definitive statement of fact or
probability. Factors that may cause such differences include, but
are not limited to, the occurrence of any event, change, or other
circumstances that could give rise to the termination of the
Membership Interest Purchase Agreement (the “Agreement”); the
outcome of any legal proceedings that may be instituted against
Lionheart or MSP or affiliated companies following the
announcement of the proposed business combination; the inability to
complete the proposed business combination on the expected time
frame or at all, including due to failure to obtain approval of
Lionheart’s stockholders, certain regulatory approvals, or the
satisfaction of other conditions to closing in the Agreement; the
occurrence of any event, change, or other circumstance that could
give rise to the termination of the Agreement or could otherwise
cause the proposed business combination to fail to close; the
inability to obtain or maintain the common stock listing on the
Nasdaq Stock Market following the proposed business combination; a
delay or failure to realize the expected benefits of the proposed
business combination; the risk that the proposed business
combination disrupts current plans and operations as a result of
the announcement and consummation of the proposed business
combination; the ability to recognize the anticipated benefits of
the proposed business combination, which may be affected by, among
other things: future economic, financial, lending, competitive and
market conditions, including healthcare spending fluctuations;
future costs of and returns on capital; leverage and lending costs
and terms; operating costs and future business, investment, holding
and sale decisions and costs; the risks associated with
MSP’s business, including, among others, MSP’s
ability to capitalize on its assignment agreements and recover
monies that were paid by the assignors; litigation results; the
validity of the assignments of claims to MSP; a
determination that MSP’s claims are not reasonable, related
or necessary; the failure of MSP’s clients to renew their
agreements with MSP (or terminate those agreements early);
MSP’s claims being within applicable statutes of
limitations; the inability to successfully expand the scope of
MSP’s claims or obtain new data and claims from MSP’s
existing assignor base or otherwise; the limited number of
MSP’s assignors and the associated concentration of
MSP’s current and future potential revenue; internal
improvements to claims and retail billing processes by MSP’s
clients that reduce the need for and revenue generated by
MSP’s products and services; healthcare spending
fluctuations; programmatic changes to the scope of benefits and
limitations to payment integrity initiatives that reduce the need
for MSP’s services; delays in implementing MSP’s
services to its claims; system interruptions or failures;
cyber-security breaches and other disruptions that could compromise
MSP’s data; MSP’s failure to maintain or upgrade its
operational platforms; MSP’s failure to innovate and develop
new solutions, or the failure of those solutions to be adopted by
MSP’s existing and potential assignors; MSP’s failure
to comply with applicable privacy, security and data laws,
regulations and standards, including with respect to third party
providers; changes in legislation related to healthcare programs
and policies; changes in the healthcare market; negative publicity
concerning healthcare data analytics and payment accuracy;
competition; successfully protecting MSP’s intellectual
property rights; the risk that third parties may allege
infringement of their intellectual property; changes in the
healthcare regulatory environment and the failure to comply with
applicable laws and regulations or the increased costs associated
with any such compliance; failure to manage MSP’s growth;
the inability to attract and retain key personnel; MSP’s
reliance on its senior management team and key employees and the
loss it could sustain if any of those employees separated from the
business; the failure of vendors and providers to deliver or
perform as expected, or the loss of such vendors or providers;
MSP’s geographic concentration; MSP’s relatively
limited operating history, which makes it difficult to evaluate its
current or future business prospects; the impact of the ongoing
COVID-19 pandemic; and the risk that MSP may not be able to
develop and maintain effective internal controls. The foregoing
list of factors is not exhaustive. If any of these risks
materialize or MSP’s assumptions prove incorrect, actual
results may differ materiality from the results implied by these
forward-looking statements. There may be additional risks that we
do not presently know or currently believe are immaterial that
could also cause actual results to differ from those contained in
the forward-looking statements. The foregoing list of factors is
not exclusive. Additional information concerning certain of these
and other risk factors is contained in Lionheart’s most recent
filings with the SEC and will be contained in the Form S-4,
including the proxy statement/prospectus, to be filed with the SEC
in connection with the proposed business combination. This
communication speaks only as of the date indicated, and the
statements, expressions, information and data included therein may
change and may become stale, out-of-date or no longer applicable.
We do not have, and do not undertake, any obligation to update,
amend or revise this communication (or to provide new, amended or
revised materials), including with respect to any forward-looking
statements, whether as a result of new information, future events,
changed plans or circumstances or any other reason, except as
required by law. The communication should not be relied upon as
representing our assessments as of any date subsequent to the date
of this communication. Accordingly, undue reliance should not be
placed upon the communication, including the forward-looking
statements.
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For Media: ICR, Inc. Tom Vogel Tom.Vogel@icrinc.com
For Investors: ICR, Inc. Marc Griffin
Marc.Griffin@icrinc.com
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