Friday 05 August 2022

US-based AI-technology company Marpai, Inc (NASDAQ: MRAI), working in the third-party administrator market supporting self-funded employer health plans, has signed a definitive agreement to acquire Chicago, US-based third-party administrator Maestro Health, which services over 80 self-insured employers, the company said.

At the closing the combined company will serve over 40,000 employee lives with expected combined proforma annual revenues of approximately USD 40m in 2022.

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.

The purchase price of USD 22.1m 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.

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.

This 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 USD 22.1m 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 USD 5m, USD 6m, USD 8m and USD 9m 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 USD 15.79m 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, Inc. (NASDAQ: MRAI) is a technology company bringing AI-powered health plan services to employers that directly pay for employee health benefits.

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.