Marpai, Inc. (Nasdaq: MRAI), a NY-based AI-technology company focused on the Third-Party Administrator (TPA) market supporting self-funded employer health plans, is to acquire Maestro Health, a Chicago, Illinois-based TPA servicing over 80 self-insured employers.
The purchase price of $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.
With the acquisition, 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. 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.
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.
Together, the companies will continue to provide innovative health plan administration for self-insured clients driven by technology.
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.
Marpai is a technology company bringing AI-powered health plan services to employers that directly pay for employee health benefits. 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, the company 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.
Maestro offers end-to-end health plan solutions, integrating in-house care management and cost containment services. The company has over 80 customers in over 40 states.
