Marpai, Inc. (OTC:MRAI) Q2 2025 Earnings Call Transcript

Marpai, Inc. (OTC:MRAI) Q2 2025 Earnings Call Transcript August 14, 2025

Operator: Good morning, and welcome to the Marpai Second Quarter 2025 Earnings Webcast. [Operator Instructions] 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.

Steve Johnson: Thank you and welcome this morning to our Marpai second quarter earnings release. With me this morning is Damien Lamendola, Director and CEO of Marpai. Before we begin, I’d like to draw your attention to the forward-looking statements included in this presentation. All right, everybody have a chance to read all that. Good. We’ll move on. We found it helpful, especially for our new investors, to begin with outlining what exactly is a third-party administrator, or commonly referred to as a TPA. TPAs are organizations that handle the claims processing and reporting components of a self-funded health benefit plan. As employer considers, or maintains, a self-funded health program plan, they typically will engage the services of TPA.

TPAs offer standard services such as plan design and claim administration, but the real benefits come from the value-added solutions that a TPA can provide. Marpai offers a suite of cost containment products bundled under the umbrella of Marpai Saves. We also provide in-depth data analytics, giving employers valuable insights into the workforce’s health trends. These insights help identify services that would be most impactful for their members. A key advantage to TPA’s offer is transparency. Unlike traditional fully funded insurance solutions, our TPA model gives employers direct access to data and information they wouldn’t otherwise have, empowering them to make better decisions. In looking at the TPA market, the TPA industry has a massive total addressable market of over $150 billion.

Health care is complex, and the demand for services and technology solutions to navigate the complexity is growing with TPA services forecasted at a compounded annual growth rate of 12.1% through 2031. TPAs also enjoy a recurring revenue model, whereby our clients pay a monthly administrative fee based on a per employee, per month, or what we refer to as a PEPM basis. And finally, the TPA market is highly fragmented, which provides an attractive opportunity for a national independent TPA like Marpai to scale and realize the benefits of the operating leverage. I’ll turn it over to Damien to address the Marpai advantage.

Damien Francis Lamendola: Good morning. Marpai has a national footprint, allowing us to service employers with multi-state locations, which many of our regional competitors can’t do. Marpai also offers significant cost saving programs with the relaunch of our pharmacy benefit management company called MarpaiRx. This will be game changing. As a leading independent TPA, we put our clients first. With a robust arsenal of services, Marpai Assist would benefit plan design and aggressive — aggressively negotiate on our clients’ behalf to manage costs. A quick reminder, in case you are new to Marpai. I found it years ago, a pharmacy benefit management company called WellDyneRX, and sold it to a private equity firm called Carlyle back in 2017.

Q&A Session

My passion for health care and knowledge that the PBM space drove our strategy to relaunch MarpaiRx. MarpaiRx delivers savings for health plans and members. We will be slashing specialty drug costs for our clients, and our real-time technology will deliver better outcomes. Steve will now cover our second quarter results.

Steve Johnson: Thank you, Damien. In the second quarter, net revenues were $4.7 million for the 3 months ended June 30, 2025. $2.5 million, or approximately 35%, lower than the second quarter in 2024. Operating expenses were $4.4 million for the 3 months ended in quarter 2. $9.9 million, or a 70% improvement, over the second quarter of 2024. But as you look in the details of our 10-Q, you will see that we did have a $7.6 million goodwill impairment in the second quarter of 2024. And you see there, even excluding that, we maintained significant reductions in operating expenses. Our operating loss was $3.6 million in Q2, $8.7 million, or a 71% improvement, over the second quarter in 2024. Our net loss was $4.4 million for Q2, $8.7 million or a 66% improvement over the same period of last year.

And again, excluding the $7.6 million goodwill impairment, we’re still showing a $1.1 million improvement in our net loss year-over-year. Basic and diluted loss per share was $0.28 for the 3 months ended June 30, 2025, an improvement of $0.95 per share from the second quarter in 2024. Now we’d like to provide a little bit of an update for the second half of 2025, and early indications for 2026. Our year-over-year revenue decline reflects the successful execution of our strategic initiative to rightsize the business by exiting unprofitable legacy contracts. We’ve been sharing that information over the last, probably, 4 or 5 earnings calls, and sharing with that and we continue to move forward with that. Cost of revenues was higher as the company invested in new member engagement tools and system enhancements.

We expect this to continue in Q3 but taper off in Q4. These enhancements will help to further reduce costs and improve member experiences. Sales pipeline remains strong with a few deals already signed for Q4. We are moving into the busy season. And if you recall, is probably, roughly, 75% to 85% of employers out there renew their benefits on a calendar basis. And so January 1 is our Super Bowl. It’s a little bit earlier than the NFL from that side. But we’re — expect to provide more significant update in our next earnings call as we shared last quarter. Our next earnings call will probably be in early to mid-November, and we will have a much more solid report to share with our investors. The comprehensive relaunch of MarpaiRx is proceeding well with nearly 2,000 lives transferred to the program thus far in August.

With the continued execution of operating cost reductions, and anticipated net gain in lives for 2026, we expect that Marpai will be profitable in Q1 of 2026. I will now turn it over to Damien to share his final thoughts.

Damien Francis Lamendola: Marpai delivered strong second quarter results. Despite a year-over-year reduction in revenue, we believe the company is now much better positioned for substantial growth. This transformation was nothing short of extraordinary. We’ve evolved from a simple TPA into a technology powerhouse, leveraging industry-leading innovations to elevate the member experience. The journey is far from over, but we’re all excited about what we’re architecting for the next wave of enhancements for the second half of 2025. Leveraging my deep experience in pharmaceutical services we now have operational MarpaiRx, a PBM platform that is now — is not just an addition, but a true differentiator in the TPA space. This is more than a company.

It’s a movement. Our story has only just begun, and our mission is clear. To spearhead the market-wide revolution that will dramatically reduce health care costs for Americas self-funded employers, all while building a profitable enterprise. At this time, I’ll turn it back over to the operator to open the line for questions.

Operator: [Operator Instructions] This concludes our answer — our question-and-answer session. I would like to turn the conference back over to Steve Johnson for any closing remarks.

Steve Johnson: Thank you very much. And again, I appreciate everyone’s participation and continued support. Feel free to visit our Investor Relations website at ir.marpaihealth.com. And we look forward to speaking again and highlighting our third quarter results. Thank you very much.

Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.