Q4 2023 Marpai Inc Earnings Call

Presentation

Operator

Good morning and welcome to the Marpai Fourth Quarter and Fiscal Year 2023 earnings conference call. All participants will be in a listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. Please note this event is being recorded.
I would now like to turn the conference over to Steve Johnson, Chief Financial Officer. Please go ahead.

Thank you and good morning and welcome to our page Fourth Quarter and Fiscal Year 2023 earnings release. Webcast. With me today is Damien Lamendola, CEO. and Director of Marpai. This morning, we will review the state of the industry and cover some of the key trends that are relevant to market. Damian will also highlight our strategic priorities, and we will walk through some specific actions that the team has completed. Then I will take you through the financial highlights our next steps, and we will wrap up with some final thoughts. As the conference operator mentioned, today's webcast will be recorded and available later today. So if you miss something you can go back in and get that.
Switching to the next slide, just briefly to see the required Safe Harbor and forward-looking statement disclosure. I'm not going to read all that.
All right. On slide 3, as I'd like to turn over the call to Damian, and he'll start us off with what the industry trends are.

Great. Thank you, Steve. Martha, is a leading national health benefit, third-party administrator, sometimes called TPA for self-funded employers. The industry is experiencing significant growth, which we expect to continue to positively impact the performance of marketing first as a continued shift, employers taking advantage of the benefit plan savings by moving to a self-funded plan. In fact, on average of companies switching to a self-funded plan, save 8% to 10% on their health plan costs. Second, the inflationary pressures in both health care costs and employee compensation employers are looking for innovative solutions to increase their base savings.
Third the TPA model allows increased flexibility and customization, which allows employers to drive towards a more value-based care model. And finally, the industry has seen significant demand from clients looking for unique solutions to mitigate high-cost chronic conditions and manage prescription costs for the employees. The TPA model that's employers focused on their core business and allows a TPA to manage and monitor the various programs on their behalf. It all begins with our customer. We focus on making the customer experience as pleasant as possible. No one likes to see their doctor is usually only when you're sick, more pay is one of the few independent third-party administrators. It has access to two leading national provider networks with both Aetna and Cigna. So our members have a terrific choice of in-network care. We're also revamping our customer service department to make sure we get our members the right answers when they need them. We performed multiple internal audits and process improvement exercises to keep our team continuously improving our President, Don powers and I personally met with several of our key clients, so some of the feedback and implement many of the great ideas they have suggested Next, the team is engaged on operational excellence. We're still digesting the Maestro Health acquisition and integrating the best practices from both organizations. We're also utilizing our strength in generative artificial intelligence to focus internally and automate several tasks to improve quality and speed while also reducing the cost of service for members. Lastly, they'll save them time money and potentially lies more pay offer specialized proven clinical programs, tackle diabetes, phosphate issues, GI problems, heart and lung conditions can move as many both. As I said, these programs help our clients save time money and also lives. I'm sure you will see Steve will address some of the actions that have been completed so far since we joined back in early November.

Thank you, Damian, have you gotten that and hard to believe it was just a short four months ago when we joined the March 18 in late November, Damian, and I held our first Investor Webcast and we outlined several actions that we believed would help right the ship. It is always nice to be able to follow up and show that you did what you said you were going to do. We were successful in completing the sale of our noncore FSA and HSA business for $1.7 million last December. We were able to negotiate a payment term extension as well as a $3 million discount with Axa stemming from our sale, our acquisition of Maestro health in late 2022.
We were able to secure nearly $2 million in non-dilutive capital from Libertas funding. And we were very fortunate to have John Powers join us as our new President, and he has been working feverishly meeting with clients, and he was successful in closing a three year contract with a new Southeastern based clients that started earlier this month. Quite simply, we outlined our objectives and then execute.
Next, we'll start with the financial highlights of the fourth quarter. Net revenues were $8.7 million, an improvement of $1.1 million or 12% over the fourth quarter of 2022. Gross profit was $3 million, an improvement of $0.2 million or 6.5% over fourth quarter of 2022. Operating expenses were $8.2 million, an improvement of $3.6 million or 30.6% lower than last year.
Operating loss was $5.2 million, an improvement of $3.8 million or 42.3% lower than the prior quarter year. And the net loss was $5 million, an improvement of $3.5 million or 41.1% lower than the fourth quarter of 2022. Earnings per share was a loss of $0.65, an improvement of $1 over the fourth quarter of 2022. While we didn't have much time, we were able to make some progress financially.
Now moving on to the full year highlights for the full year, net revenues were $37.2 million, an improvement of $12.8 million or 52.6% higher year over year and of course, much of that growth was due to the Maestro acquisition. Gross profit was $12.9 million, an improvement of $5.7 million or 79.2% higher than last year.
Operating expenses were $40.9 million for the year ended. It was an increase of $6.7 million or 19.7% higher than the previous year. Operating loss was $28 million for the year, an increase of about $1 million or 3.8% higher year over year. Net loss was $28.8 million for the year ended an increase of $2.3 million or 8.6% higher compared to the same period last year.
Basic and diluted earnings per share was a negative $4.14, an improvement of $9 per share compared to last year. And really the story here is Mark pay is starting to gain the benefits of the Maestro acquisition with much more to come.
Now let's shift over to some of the balance sheet. Highlights on our ending cash balance was $1.1 million. Our restricted cash was $12.3 million. And I wanted to highlight that on for our business from our base business, restricted cash primarily represents the funds on hand to pay for member benefit claims.
And then if you look at our balance sheet, there's an offset under current liabilities called accrued fiduciary obligations, which were $11.6 million. Simply, Mark pay collect the funds from our clients prior to the payment of the members benefit claims. So I wanted to highlight that for everyone, long term assets on in the fourth quarter marked a road down 50% of our goodwill or approximately $3 million. Our current liabilities, the key highlight there is our accounts payable were up $3.2 million from the previous year.
And our other long-term liabilities of $19.4 million are primarily related to the actual payable from the acquisition of Maestro health in that figure does not reflect the $3 million of discounts that we negotiated in February. Stockholders' equity was a negative $13.4 million.
Now we'll move over to the cash flow highlights net cash used in operations was $15.7 million, down $19.5 million from the prior year. Net cash provided by investing was approximately $1 million, which relates to the sale of our non-core FSA business mentioned earlier, net cash provided by financing activities was approximately $5.1 million, and that was primarily from the sale of common stock earlier last year and for the payments made during the year for the acquisition of Maestro health, overall, the company used $9.6 million in cash.
Our next steps I just want to highlight some of the key success factors and one on constant, our need is for our attention on execution. Our team needs to continue to reduce costs and achieve profitability. We must complete our ongoing technology projects to drive efficiencies in claims and customer service. We have an experienced sales team brought on by John Powers that will grow the top line, and we must utilize our artificial intelligence skill to reduce risk and continue to refine our proactive disease state models.
I'll turn it over to Damien for some final thoughts.

Thanks, again, Steve, as you've seen, the team is teed quite a bit over the past four months, but we have a long way to go on our journey of being the largest independent third-party administrators in the country while driving down the cost of health care for the cost for telco to filter down for our clients and members, we must and we will position the Company's capital structure for profitability and growth. The industry has just gotten a small taste for whatever Asia team is capable, and we addressed early on in our presentation. This morning, we have highly favorable and favorable opportunities in a growing industry with clients that need our help. We are just starting to leverage our deep industry relationships to enhance our market position and we must use our competitive advantage with our existing talent in artificial intelligence to drive operational cost reductions to become the lowest cost third-party administrator in the country.

Thanks for Damien This completes mark page Fourth Quarter and Fiscal Year 2023 earnings call. If you have questions or require further information, please see the information on our screen or go to our Investor Relations website. Again, this webcast will be available for replay, and thank you for joining us this morning.

Operator

The conference has now concluded. Thank you for attending today's presentation. You may now begin?