Marpai, Inc. held its second quarter 2024 earnings call, announcing a significant reduction in cash operating expenses and a notable improvement in cash flow. CEO Damien Lamendola emphasized the company's commitment to achieving positive cash flow and growth in the $22 billion third-party administrator (TPA) market.
Despite a 28% year-over-year revenue decline, cost-cutting measures and balance sheet adjustments led to a $600,000 net cash increase for the quarter, a stark contrast to the $2.3 million decrease in the same quarter of the previous year.
Key Takeaways
- Marpai's revenue declined by 28% year-over-year, but cash operating expenses were cut by 38%, saving about $4 million.
- The company's cash operating loss reduced from approximately $7.3 million to $4.7 million for Q2 2024.
- Balance sheet rightsizing and maturity extension of net debt were implemented to facilitate growth.
- Net cash increased by $600,000 in Q2 2024, improving from a $2.3 million decrease in Q2 2023.
- CEO Damien Lamendola expressed dissatisfaction with the current undervalued stock price but remains optimistic about the company's future.
Company Outlook
- Marpai aims to continue its turnaround strategy to achieve positive cash flow and growth within the growing TPA market valued at $22 billion.
Bearish Highlights
- The company experienced a significant revenue decline of 28% compared to the same quarter last year.
Bullish Highlights
- Marpai's aggressive cost-cutting measures have resulted in substantial savings and a smaller cash operating loss.
- Improvements in the company's financial metrics suggest a positive trajectory for future growth.
Misses
- Despite progress, the CEO is not satisfied with Marpai's current stock price and believes the company is undervalued.
Q&A Highlights
- No Q&A session highlights were provided as the conference concluded without a Q&A segment.
In summary, Marpai's second quarter of 2024 reflects a company in the midst of a strategic turnaround, focusing on cost reduction and balance sheet management to improve its financial position. While revenue has declined, the efforts to streamline operations have led to an improved cash position, which the company leadership believes will support future growth and address the perceived undervaluation in the market.
InvestingPro Insights
Marpai, Inc.'s latest earnings report revealed a challenging financial landscape, with a notable year-over-year revenue decline. InvestingPro data shows a market capitalization of $7.33 million, underscoring the small size of the company within the TPA market. Despite this, the company's cost-cutting measures and balance sheet adjustments have led to a positive cash flow trajectory.
InvestingPro Data indicates a P/E Ratio (Adjusted) of -0.33 for the last twelve months as of Q2 2024, suggesting that investors are cautious about the company's profitability potential. The company's Revenue Growth (Quarterly) for Q2 2024 plummeted by -28.45%, aligning with the reported decline in the article. However, the Gross Profit Margin for the same period stood at 33.0%, reflecting the effectiveness of Marpai's cost management strategies.
InvestingPro Tips reveal that Marpai's Price % of 52 Week High is at 19.19%, indicating that the stock is trading significantly below its highest value over the past year. This could be an opportunity for investors looking for undervalued stocks, especially since the CEO has expressed that the current stock price does not reflect the company's value. Additionally, Marpai's fair value is estimated at $0.78 by InvestingPro, compared to the analyst target of $6.00, suggesting there might be room for stock price appreciation if the company's turnaround strategy proves successful.
InvestingPro currently lists several additional tips that provide deeper insights into Marpai's financial health and investment potential, which could be particularly valuable for investors considering this stock.
Full transcript - Market Access RICI Agriculture UCITS (MRAI) Q2 2024:
Operator: Good morning, and welcome to the Marpai Second Quarter 2024 Earnings Conference Call. All participants will be in a listen-only mode. [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: Good morning, and welcome to the Marpai’s second quarter 2024 earnings release webcast. With me this morning is Damien Lamendola, CEO and Director of Marpai. If you turn your attention to the slide, it is that we have our required safe harbor and forward-looking statement disclosure.
Damien Lamendola: Hello. Since I became CEO, our team has worked tirelessly on Marpai’s turnaround. As many of you know, I have invested not only in my time, but millions of dollars into our company. I have never been more committed to our company and our stakeholders. This commitment stems from what we see in the TPA marketplace. Our new leadership and our employees’ commitment to turning Marpai into a positive cash flow company. Our focus has been on profitably growing the company and achieving positive cash flow, which is beginning to manifest in our financial results, including significantly cutting costs, rightsizing our balance sheet, and improving our cash from operations. I am highly encouraged by our improvements. Our sales team has done a great job of repositioning Marpai to new and existing customers. I remind you that our total addressable market is $22 billion in growing. I will now turn the call back to Steve to discuss our financial results.
Steve Johnson: Thanks, Damien. We filed our 10-Q yesterday after the market closed, along with the earnings release, and I would invite you to review the details in those documents. I will briefly cover some highlights of the following achievements year-to-date. While our revenue declined by 28% year-over-year, we cut cash operating expense by 38%, saving approximately $4 million. Our cash operating loss was reduced from approximately $7.3 million to approximately $4.7 million for the second quarter. As Damien alluded to, we rightsized our balance sheet by selling non-core assets, adjusting assets to the current fair value, as well as extending the maturity of our net debt. These changes will provide resources for growth and make future investment yields a higher return on capital. As a result of our turnaround plan, our cash used in operations improved by approximately $2.3 million in the second quarter of 2024 versus the second quarter of 2023. Leading to a net cash increase of approximately $0.6 million in the second quarter of 2024, which is a decrease of the cash in the second quarter of 2023 of approximately $2.3 million. Again, in the second quarter of 2024, we had a net cash increase of $600,000, up from the previous year’s decrease in cash of $2.3 million. I would now like to turn it back over to Damien.
Damien Lamendola: Thank you. Marpai is all about saving enterprises of all sizes significant money in managing employees’ healthcare costs. As I mentioned earlier, it is a $22 billion industry and growing. Our company is undergoing substantial changes that point to growth and positive cash flow. My commitment to all stakeholders has never been stronger. One area I am not happy with is our stock price. I believe we are horribly undervalued. As the turnaround unfolds and we continue to improve our financial metrics, and we continue to grow our market presence, I believe the financial markets will take notice. Thank you for your time today. I remain committed and excited to be leading your company. Thank you for your continued confidence and support.
Steve Johnson: Thank you, Damien. This completes Marpai’s second quarter 2024 earnings call. If you have questions or require further information, please see the information on the screen or go to our Investor Relations website. This webcast will be available for replay. Thank you again for joining us this morning.
Q -:
Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.
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