Cover Page
Cover Page | 9 Months Ended |
Sep. 30, 2022 | |
Cover [Abstract] | |
Document Type | S-1 |
Amendment Flag | false |
Entity Registrant Name | MSP RECOVERY, INC. |
Entity Central Index Key | 0001802450 |
Entity Filer Category | Non-accelerated Filer |
Entity Small Business | true |
Entity Emerging Growth Company | true |
Entity Ex Transition Period | false |
Condensed Combined And Consolid
Condensed Combined And Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | ||||
Current assets | |||||||
Cash and cash equivalents | $ 14,268 | $ 1,664 | $ 11,879 | ||||
Restricted cash | 11,420 | ||||||
Accounts receivable | 7,525 | ||||||
Affiliate receivable | 1,774 | [1] | 4,070 | [1],[2] | 4,871 | [2] | |
Indemnification asset | [1] | 752,510 | |||||
Prepaid expenses and other current assets | 32,660 | [1] | 13,304 | [1] | 54 | ||
Total current assets | 820,157 | 19,038 | 16,804 | ||||
Property, plant and equipment, net | 2,480 | 750 | 612 | ||||
Deferred tax asset | 857 | ||||||
Intangible assets, net | 2,077,571 | 84,218 | 427 | ||||
Investment in rights to claim recovery cash flows | 3,673,610 | ||||||
Total assets | 6,574,675 | 104,006 | 17,843 | ||||
Current liabilities: | |||||||
Accounts payable | 32,468 | 4,609 | 398 | ||||
Affiliate payable | 19,822 | [1] | 45,252 | [1],[2] | 39,027 | [2] | |
Obligation to provide securities | 1,577 | ||||||
Commission payable | 540 | 465 | 448 | ||||
Deferred service fee income | 249 | 249 | 249 | ||||
Derivative Liability | 10,065 | ||||||
Warrant Liability | 4,700 | ||||||
Guaranty obligation | [1] | 752,510 | |||||
Other current liabilities | 62,638 | 3,489 | 426 | ||||
Total current liabilities | 882,992 | 54,064 | 42,125 | ||||
Claims financing obligation & notes payable | 170,844 | [1] | 106,805 | [1],[2] | 24,043 | [2] | |
Loan from related parties | [1] | 125,759 | |||||
Interest payable | 1,471 | 94,545 | 67,522 | ||||
Total liabilities | 1,181,066 | 255,414 | 133,690 | ||||
Commitments and Contingencies | |||||||
Class A common stock subject to possible redemption, 1,129,589 shares at redemption value as of September 30, 2022. | 1,356 | ||||||
Stockholders Equity Abstract | |||||||
Additional paid-in capital | 201,656 | ||||||
Members' deficit | (155,756) | (120,179) | |||||
Accumulated deficit | (23,537) | ||||||
Total Stockholders' Equity (Deficit) | 178,441 | (155,756) | |||||
Non-controlling interest | 5,213,812 | 4,348 | 4,332 | ||||
Total equity | 5,392,253 | (151,408) | (115,847) | ||||
Total liabilities and equity | 6,574,675 | $ 104,006 | $ 17,843 | ||||
Common Class A [Member] | |||||||
Stockholders Equity Abstract | |||||||
Common stock | 7 | ||||||
Common Class V [Member] | |||||||
Stockholders Equity Abstract | |||||||
Common stock | $ 315 | ||||||
[1]As of September 30, 2022 and December 31, 2021, the total affiliate receivable, indemnification asset, affiliate payable, guaranty obligation and loan from related parties balances are with related parties. In addition, the prepaid expenses and other current assets and claims financings obligation and notes payable includes balances with related parties. See Note 13, Related Party, for further details.[2]As of December 31, 2021 and December 31, 2020, the total affiliate receivable and affiliate payable balances are with related parties. In addition, the claims financings obligation & notes payable includes balances with related parties. See Note 11, Related Party, for further details. |
Condensed Combined And Consol_2
Condensed Combined And Consolidated Balance Sheets (Parenthetical) | Sep. 30, 2022 $ / shares shares |
Class A common stock subject to possible redemption, shares | 1,129,589 |
Common Class A [Member] | |
Common stock, par value | $ / shares | $ 0.0001 |
Common stock, shares authorized | 5,500,000,000 |
Common stock, shares issued | 72,909,609 |
Common stock, shares outstanding | 72,909,609 |
Common Class V [Member] | |
Common stock, par value | $ / shares | $ 0.0001 |
Common stock, shares authorized | 3,250,000,000 |
Common stock, shares issued | 3,148,720,212 |
Common stock, shares outstanding | 3,148,720,212 |
Condensed Combined and Consol_3
Condensed Combined and Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||||||||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | ||||||||
Claims recovery income | $ 2,571 | $ 48 | $ 3,999 | $ 63 | $ 126 | $ 255 | |||||||
Claims recovery service income | 5,748 | [1] | 2,439 | [1] | 17,795 | [1] | 9,213 | [1] | 14,500 | [2] | 13,632 | [2] | |
Total Claims Recovery | 8,319 | 2,487 | 21,794 | 9,276 | 14,626 | 13,887 | |||||||
Operating expenses | |||||||||||||
Cost of claim recoveries | 1,160 | [3] | 15 | [3] | 1,861 | [3] | 23 | [3] | 190 | 172 | |||
Claims amortization expense | 66,331 | 47 | 92,866 | 114 | |||||||||
General and administrative | 6,621 | [4] | 2,871 | [4] | 17,049 | [4] | 8,207 | [4] | 12,761 | [5] | 14,598 | [5] | |
Professional fees | 5,875 | 2,539 | 10,931 | 5,606 | 8,502 | 2,211 | |||||||
Professional fees - legal | [6] | 8,014 | 26 | 34,251 | 56 | ||||||||
Depreciation and amortization | 103 | 89 | 254 | 256 | 343 | 235 | |||||||
Total operating expenses | 88,104 | 5,587 | 157,212 | 14,262 | 21,796 | 17,216 | |||||||
Operating Loss | (79,785) | (3,100) | (135,418) | (4,986) | (7,170) | (3,329) | |||||||
Interest expense | (13,083) | (6,990) | (34,475) | (19,579) | (27,046) | (20,886) | |||||||
Other (expense) income, net | 63,138 | (169) | 63,175 | 1,154 | 1,139 | (51) | |||||||
Change in fair value of warrant and derivative liabilities | 2,670 | 0 | (11,683) | 0 | |||||||||
Net loss before provision for income taxes | (27,060) | (10,259) | (118,401) | (23,411) | |||||||||
Provision for income tax benefit (expense) | 0 | 0 | 326 | 0 | |||||||||
Net loss | (27,060) | (10,259) | (118,075) | [7] | (23,411) | [7] | (33,077) | (24,266) | |||||
Less: Net (income) loss attributable to non-controlling members | 26,597 | (16) | 116,324 | (16) | (16) | 18 | |||||||
Net loss attributable to controlling members | $ (463) | $ (10,275) | $ (1,751) | $ (23,427) | $ (33,093) | $ (24,248) | |||||||
Weighted average shares outstanding, diluted | [8] | 69,036,899 | 53,138,474 | ||||||||||
Common Class A [Member] | |||||||||||||
Operating expenses | |||||||||||||
Weighted average shares outstanding, basic | [8] | 69,036,899 | 53,138,474 | ||||||||||
Weighted average shares outstanding, diluted | 69,036,899 | 53,138,474 | |||||||||||
Basic net income per common share | [8] | $ (0.01) | $ (0.03) | ||||||||||
Diluted net income per common share | [8] | $ (0.01) | $ (0.03) | ||||||||||
[1]For the three and nine months ended September 30, 2022 and 2021, claims recovery service income included $0 million and $10.6 million, respectively, and $1.7 million and $7.0 million, respectively, of claims recovery service income from VRM MSP Recovery Partners LLC (“VRM MSP”). See Note 13, Related Party, for further details.[2]For the years ended December 31, 2021 and 2020, claims recovery service income included $11.5 million and $13.1 million, respectively, of claims recovery service income from VRM MSP Recovery Partners LLC (“VRM”). See Note 11, Related Party, for further details.[3]For the three and nine months ended September 30, 2022, cost of claim recoveries included $0 and $271 thousand, respectively, of related party expenses. This relates to contingent legal expenses earned from claims recovery income pursuant to legal service agreements with the La Ley con John H. Ruiz P.A., d/b/a MSP Recovery Law Firm (the “Law Firm”). See Note 13, Related Party, for further details. For the three and nine months ended September 30, 2021, there were no expenses related to contingent legal expenses.[4]For the three and nine months ended September 30, 2022 and 2021, general and administrative expenses included $150 thousand and $400 thousand, respectively, and $20 thousand and $39 thousand, respectively, of related party expenses. See Note 13, Related Party, for further details.[5]For the years ended December 31, 2021 and 2020, general and administrative expenses included $111 thousand and $773 thousand, respectively, of related party expenses. This includes legal expenses to the La Ley con John H. Ruiz P.A., d/b/a MSP Recovery Law Firm (the “Law Firm”) of $26 thousand and $– thousand, respectively. See Note 11, Related Party, for further details.[6]For the three and nine months ended September 30, 2022 and 2021, professional fees - legal included $4.6 million and $5.0 million, respectively, $0 thousand and $8 thousand, respectively, of related party expenses related to the Law Firm. See Note 13, Related Party, for further details.[7]Balances include related party transactions. See Note 13, Related Party, for further details.[8]Earnings per share information has not been presented for periods prior to the Business Combination (as defined in Note 1, Description of Business), as it resulted in values that would not be meaningful to the users of these unaudited condensed consolidated financial statements. Refer to Note 15, Net Loss Per Common Share for further information. |
Condensed Combined and Consol_4
Condensed Combined and Consolidated Statements of Operations (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||||||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | |||||||
Claims recovery service income | $ 5,748 | [1] | $ 2,439 | [1] | $ 17,795 | [1] | $ 9,213 | [1] | $ 14,500 | [2] | $ 13,632 | [2] |
Related party legal expense | 0 | 0 | 26 | 0 | ||||||||
General and Administrative Expense [Member] | ||||||||||||
Related party expenses | 150 | 20 | 400 | 39 | 111 | 773 | ||||||
VRM [Member] | ||||||||||||
Claims recovery service income | 0 | 1,700 | 10,600 | 7,000 | $ 11,500 | $ 13,100 | ||||||
MSP Recovery Law Firm [Member] | ||||||||||||
Related party expenses | 0 | 271 | ||||||||||
MSP Recovery Law Firm [Member] | Professional Fees Legal [Member] | ||||||||||||
Related party expenses | $ 4,600 | $ 0 | $ 5,000 | $ 8 | ||||||||
[1]For the three and nine months ended September 30, 2022 and 2021, claims recovery service income included $0 million and $10.6 million, respectively, and $1.7 million and $7.0 million, respectively, of claims recovery service income from VRM MSP Recovery Partners LLC (“VRM MSP”). See Note 13, Related Party, for further details.[2]For the years ended December 31, 2021 and 2020, claims recovery service income included $11.5 million and $13.1 million, respectively, of claims recovery service income from VRM MSP Recovery Partners LLC (“VRM”). See Note 11, Related Party, for further details. |
Combined and Consolidated State
Combined and Consolidated Statements of Changes in Equity - USD ($) $ in Thousands | Total | Additional Paid-in Capital [Member] | Members' Deficit [Member] | Accumulated Deficit [Member] | Non-Controlling Interests [Member] | Common Class A [Member] Common Stock [Member] | Common Class V [Member] Common Stock [Member] | Recapitalization Transaction [Member] | Recapitalization Transaction [Member] Additional Paid-in Capital [Member] | Recapitalization Transaction [Member] Members' Deficit [Member] | Recapitalization Transaction [Member] Non-Controlling Interests [Member] | Recapitalization Transaction [Member] Common Class A [Member] Common Stock [Member] | Recapitalization Transaction [Member] Common Class V [Member] Common Stock [Member] | ||
Balance at beginning of period at Dec. 31, 2019 | $ 4,350 | ||||||||||||||
Balance at beginning of period at Dec. 31, 2019 | $ (100,105) | $ (104,455) | |||||||||||||
Contributions | 8,524 | 8,524 | |||||||||||||
Net income(loss) | (24,266) | (24,248) | (18) | ||||||||||||
Balance at end of period at Dec. 31, 2020 | 4,332 | ||||||||||||||
Balance at end of period at Dec. 31, 2020 | (115,847) | (120,179) | |||||||||||||
Contributions | 227 | 227 | |||||||||||||
Distributions | (2,639) | (2,639) | |||||||||||||
Net income(loss) | (23,411) | [1] | (23,427) | 16 | |||||||||||
Balance at end of period at Sep. 30, 2021 | 4,348 | ||||||||||||||
Balance at end of period at Sep. 30, 2021 | (141,670) | (146,018) | |||||||||||||
Balance at beginning of period at Dec. 31, 2020 | 4,332 | ||||||||||||||
Balance at beginning of period at Dec. 31, 2020 | (115,847) | (120,179) | |||||||||||||
Contributions | 227 | 227 | |||||||||||||
Distributions | (2,711) | (2,711) | |||||||||||||
Net income(loss) | (33,077) | (33,093) | 16 | ||||||||||||
Balance at end of period at Dec. 31, 2021 | (155,756) | 4,348 | |||||||||||||
Balance at end of period, shares at Dec. 31, 2021 | 7,582,668 | 3,154,473,292 | |||||||||||||
Balance at end of period at Dec. 31, 2021 | (151,408) | (155,756) | 4,348 | $ 5,640,352 | $ 48,773 | $ 184,528 | $ 5,406,736 | $ 315 | |||||||
Balance at beginning of period at Jun. 30, 2021 | 4,332 | ||||||||||||||
Balance at beginning of period at Jun. 30, 2021 | (129,302) | (133,634) | |||||||||||||
Distributions | (2,109) | (2,109) | |||||||||||||
Net income(loss) | (10,259) | (10,275) | 16 | ||||||||||||
Balance at end of period at Sep. 30, 2021 | 4,348 | ||||||||||||||
Balance at end of period at Sep. 30, 2021 | (141,670) | (146,018) | |||||||||||||
Balance at beginning of period at Dec. 31, 2021 | (155,756) | 4,348 | |||||||||||||
Balance at beginning of period at Dec. 31, 2021 | (151,408) | (155,756) | 4,348 | $ 5,640,352 | $ 48,773 | $ 184,528 | $ 5,406,736 | $ 315 | |||||||
Contributions | 15 | 15 | |||||||||||||
Distributions | (147) | (147) | |||||||||||||
Net loss prior to recapitalization transaction | (28,640) | $ (28,640) | |||||||||||||
Net income(loss) | [1] | (118,075) | |||||||||||||
Opening net assets of Lionheart II Holdings, LLC acquired | (21,786) | $ (21,786) | |||||||||||||
Adjustment for value of derivative on temporary equity | 10,065 | $ 10,065 | |||||||||||||
Conversion of Warrants, shares | 7,908,198 | ||||||||||||||
Conversion of Warrants | 9,452 | 22,895 | (13,444) | $ 1 | |||||||||||
Class A Issuances, shares | 57,418,743 | (5,753,080) | |||||||||||||
Class A Issuances | 23,785 | 119,923 | (96,144) | $ 6 | |||||||||||
Net loss | (89,435) | (1,751) | (87,684) | ||||||||||||
Balance at end of period at Sep. 30, 2022 | 178,441 | ||||||||||||||
Balance at end of period, shares at Sep. 30, 2022 | 72,909,609 | 3,148,720,212 | |||||||||||||
Balance at end of period at Sep. 30, 2022 | 5,392,253 | 201,656 | (23,537) | 5,213,812 | $ 7 | $ 315 | |||||||||
Balance at beginning of period, shares at Jun. 30, 2022 | 66,051,029 | 3,154,473,292 | |||||||||||||
Balance at beginning of period at Jun. 30, 2022 | 5,416,354 | 187,269 | (23,074) | 5,251,837 | $ 7 | $ 315 | |||||||||
Net income(loss) | (27,060) | ||||||||||||||
Adjustment for value of derivative on temporary equity | 1,062 | 1,062 | |||||||||||||
Conversion of Warrants, shares | 706,176 | ||||||||||||||
Conversion of Warrants | 1,277 | 2,433 | (1,156) | ||||||||||||
Class A Issuances, shares | 6,152,404 | (5,753,080) | |||||||||||||
Class A Issuances | 620 | 10,892 | (10,272) | ||||||||||||
Net loss | (27,060) | (463) | (26,597) | ||||||||||||
Balance at end of period at Sep. 30, 2022 | 178,441 | ||||||||||||||
Balance at end of period, shares at Sep. 30, 2022 | 72,909,609 | 3,148,720,212 | |||||||||||||
Balance at end of period at Sep. 30, 2022 | $ 5,392,253 | $ 201,656 | $ (23,537) | $ 5,213,812 | $ 7 | $ 315 | |||||||||
[1]Balances include related party transactions. See Note 13, Related Party, for further details. |
Condensed Combined and Consol_5
Condensed Combined and Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended | |||||||
Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | ||||||
Cash flows from operating activities: | |||||||||
Net loss (1) | $ (118,075) | [1] | $ (23,411) | [1] | $ (33,077) | $ (24,266) | |||
Adjustments to reconcile net loss to net cash used in operating activities: | |||||||||
Depreciation and amortization | 254 | 256 | 343 | 235 | |||||
Amortization included in cost of claim recoveries | 164 | 125 | |||||||
Claims amortization expense | 92,866 | 114 | |||||||
Paid in kind interest | 34,475 | 19,557 | 27,023 | 20,843 | |||||
Change in fair value of derivatives | 10,065 | ||||||||
Deferred income taxes | (857) | ||||||||
Share based compensation | 20,055 | ||||||||
Change in fair value of warrant liability | 1,619 | ||||||||
PPP loan forgiveness | (1,043) | (1,043) | (44) | ||||||
Realized gain on equity securities | (201) | (201) | (18) | ||||||
Unrealized losses on investments—short position | 279 | ||||||||
Gain on debt extinguishment | (63,367) | ||||||||
Change in operating assets and liabilities: | |||||||||
Accounts receivable | (7,525) | ||||||||
Affiliate receivable | 2,296 | [1] | 755 | [1] | 801 | [2] | (3,346) | [2] | |
Affiliate payable | (25,430) | [1] | 1,868 | [1] | 6,225 | [2] | 5,670 | [2] | |
Prepaid expenses and other assets | (32,609) | (6,999) | 1 | (9) | |||||
Commission payable | 75 | ||||||||
Accounts payable and accrued liabilities | 15,394 | 2,848 | 2,013 | 268 | |||||
Deferred service fee income | 249 | ||||||||
Net cash provided by (used in) operating activities | (70,764) | (6,256) | 2,249 | (14) | |||||
Cash flows from investing activities: | |||||||||
Additions to property, plant, and equipment | (1,863) | (481) | (481) | (330) | |||||
Additions to intangible assets | (2,700) | (150) | |||||||
Proceeds from sale of short positions | 1,298 | ||||||||
Purchases of equity securities | (4,056) | (4,056) | (1,255) | ||||||
Proceeds from sale of equity securities | 4,450 | 4,450 | 1,273 | ||||||
Purchase of securities to cover short position | (1,770) | (1,770) | |||||||
Net cash used in investing activities | (4,563) | (1,857) | (2,007) | 986 | |||||
Cash flows from financing activities: | |||||||||
Proceeds from debt financing | 1,086 | ||||||||
Additions to deferred transaction costs | (7,973) | ||||||||
Proceeds from Business Combination | 12,009 | ||||||||
Transaction costs incurred for the Business Combination | (49,638) | ||||||||
Proceeds from related party loan | [1] | 125,759 | |||||||
Issuance of common stock | 8,804 | ||||||||
Issuance of temporary equity | 2,417 | ||||||||
Contributions from members | 227 | 227 | 8,524 | ||||||
Distributions to members | (2,639) | (2,711) | |||||||
Net cash used in financing activities | 99,351 | (2,412) | (10,457) | 9,610 | |||||
Increase (decrease) in cash and cash equivalents | 24,024 | (10,525) | (10,215) | 10,582 | |||||
Cash and cash equivalents at beginning of year | 1,664 | 11,879 | 11,879 | 1,297 | |||||
Cash and cash equivalents at end of year | 25,688 | 1,354 | 1,664 | 11,879 | |||||
Supplemental disclosure of non-cash investing and financing activities: | |||||||||
Purchase of intangible asset financed by note payable | 500 | 83,805 | |||||||
Purchase of intangible asset through issuance of Class A common stock | 10,000 | ||||||||
Purchase of intangible asset in accrued expenses | 48,167 | ||||||||
Payment of professional fees through issuance of Class A common stock | 1,326 | ||||||||
Transaction costs incurred included in accounts payable and accrued liabilities | $ 29,692 | ||||||||
Cash paid during the period for: | |||||||||
Interest | $ 22 | $ 23 | $ 43 | ||||||
[1]Balances include related party transactions. See Note 13, Related Party, for further details.[2]Balances include related party transactions. See Note 11, Related Party, for further details. |
Description of Business
Description of Business | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Description of Business | Note 1. DESCRIPTION OF BUSINESS On May 23, 2022 (the “Closing Date”), MSP Recovery, Inc., a Delaware corporation (formerly known as Lionheart Acquisition Corporation II (“LCAP,” the “Company,” or “MSP”) consummated the previously announced business combination pursuant to that certain Membership Interest Purchase Agreement, dated as of July 11, 2021 (as amended, the “MIPA”), by and among the Company, Lionheart II Holdings, LLC, a wholly owned subsidiary of the Company, MSP Recovery, LLC and combined and consolidated subsidiaries (“Legacy MSP”), the members of Legacy MSP (the “Members”), and John H. Ruiz, in his capacity as the representative of the Members (the “Members’ Representative”). Pursuant to the MIPA, the Members sold and assigned all of their membership interests in Legacy MSP to the Company in exchange for non-economic non-voting “Up-C Up-C Up-C Business Combination Legacy MSP was organized in 2014 as a Medicaid and Medicare Secondary Pay Act recovery specialist. The Company utilizes its proprietary internal data analytics platform to review health claims assigned by secondary payers such as Health Plans, Management Service Organizations (“MSO”), providers of medical services and Independent Physicians Associations. This platform allows the Company to identify claims cost recovery rights with potential recovery paths where claims either should not have been paid by the secondary payers or should have been reimbursed by third-party entities. MSP seeks the assignment of recovery rights from secondary payers by acquiring the recovery rights to claims from secondary payers via Claims Cost Recovery Agreements (“CCRAs”). Prior to executing a CCRA, the Company utilizes its proprietary internal data analytics platform to review the set of claims and identify claims with probable recovery paths. MSP’s assets are these irrevocable assignments of health claims recovery rights that are automatic, all-encompassing Investment Capacity Agreement On September 27, 2021, the Company entered into an Investment Capacity Agreement (the “ICA”) providing for potential future transactions regarding select healthcare claims recovery interests with its investment partner, Virage Capital Management LP (“Virage”), which transactions may include the sale of claims by MSP. The ICA provides that the maximum value of such claims will be $3 billion. When the Company takes an assignment, the Company takes an assignment of the entire recovery but often has a contractual obligation to pay the assignor 50% of any recoveries. This 50% interest typically is retained by the assignor (the “Retained Interest”), although in some cases, the Company has acquired all of the recoveries, and the applicable assignor has not kept any Retained Interest. The Retained Interest is not an asset of the Company, but an obligation to pay these assignors, with the Company keeping the other 50% interest of any recoveries. Virage’s funding in connection with future transactions generally will be used to purchase Retained Interests from existing assignors or new MSP assignors, although its funds can also be used to buy 50% of the recoveries from the Company, in the event the applicable assignor did not retain any Retained Interest. In connection with transactions consummated under the ICA, the Company may receive certain fees, including a finder’s fee for identifying the recoveries and a servicing fee for servicing the claims. Pursuant to the ICA, the Company will assist Virage in acquiring these Retained Interests for a cash price. Virage will be paid the recovery generated from the purchased Retained Interests when received through litigation or settlements. The ICA is separate and distinct from the equity investment in the Company by VRM MSP (an affiliate of Virage). LifeWallet On January 10, 2022, the Company announced the launch of LifeWallet, LLC (“LifeWallet”). LifeWallet is being designed to help first responders and healthcare providers quickly and easily access patient medical histories. LifeWallet is part of MSP Recovery’s Chase to Pay platform, providing real-time analytics at the point of care, helping identify the primary insurer, assisting providers in receiving reasonable and customary rates for accident-related treatment, shortening the Company’s collection time frame, and increasing revenue visibility and predictability. The Company absorbed part of the technology behind LifeWallet through an employment agreement with the developer of the technology. As such as of September 30, 2022, the Company’s investment related to LifeWallet included in the condensed consolidated balance sheets was limited to activity and expenses incurred during the nine months ended September 30, 2022. Through the date the financial statements were issued, LifeWallet has committed to advertising costs within the next 12 months of approximately $1.7 million. Committed Equity Facility On May 17, 2022, the Company entered into a Company Common Stock Purchase Agreement (the “Purchase Agreement”) with an affiliate of Cantor Fitzgerald (“CF”). Pursuant to the Purchase Agreement, after the closing of the Business Combination, the Company will have the right to sell to CF from time to time at its option up to $1 billion in Class A common stock shares, subject to the terms, conditions and limitations set forth in the Purchase Agreement. Sales of the shares of the Company’s common stock to CF under the Purchase Agreement, and the timing of any such sales, will be determined by the Company from time to time in its sole discretion and will depend on a variety of factors, including, among other things, market conditions, the trading price of the common stock, as well as determinations by the Company about the use of proceeds of such common stock sales. The net proceeds from any such sales under the Purchase Agreement will depend on the frequency with, and the price at, which the shares of common stock are sold to CF. Upon the initial satisfaction of the conditions to CF’s obligation to purchase shares of common stock set forth under the Purchase Agreement, including the completion of due diligence activities and registering shares through an S-1 Assignment and Sale of Proceeds Agreement On June 30, 2022, the Company entered into an Assignment and Sale of Proceeds Agreement (the “Assignment Agreement”) and a Recovery Services Agreement (the “Services Agreement” and collectively, the “Agreements”) with the Prudent Group (“Prudent”) in order to monetize up to $250 million of the value of the Company’s net recovery interest in claim demand letters that the Company has commenced sending to insurers who admitted they had primary payer responsibility for the underlying accidents to the federal government (“MSPR’s Net Recovery Proceeds”). Pursuant to the Agreements, at the Company’s sole and absolute discretion, the Company has the right to direct Prudent to acquire, on a non-recourse Under the Services Agreement, the Company will service and recover on the demand letters and will retain any revenues generated in excess of the amount received from Prudent, plus up to an 18% annual return on the amount Prudent paid for MSPR’s Net Recovery Proceeds. Prudent may terminate the Services Agreement upon sixty (60) days prior written notice to the Company. The Company plans to utilize the Assignment Agreement as funding is needed. Liquidity As an early-stage growth company, the Company has incurred substantial net losses since inception. Our liquidity will depend on our ability to generate substantial claims recovery income and claims recovery services income in the near future. Our principal liquidity needs have been, and will continue to be, capital expenditures, working capital and claims financing obligation. Our capital expenditures support investments in our underlying infrastructure to enhance our solutions and technology for future growth. We expect our capital expenditures to increase primarily due to investments in our technology stack. Our strategy includes the expansion of our existing solutions and the development of new solutions, which will require cash expenditures over the next several years and the Company anticipates that it will be funded primarily by cash provided by operating activities and financing activities through resources noted below. We also expect our operating expenses to increase as we hire additional employees to support to the claim recovery team. We expect these investments to be a key driver of our long-term growth and competitiveness but to negatively impact our free cash flow. The Company anticipates funding to be available from the CF Purchase Agreement, Prudent Assignment Agreement and the ICA, as noted above. Additionally, on June 16, 2022, the Company executed a promissory note with John H. Ruiz and Frank C. Quesada, the Company’s Chief Executive Officer and director and Chief Legal Officer and director, respectively, to provide operating cash to the Company. The aggregate principal amount was $112.8 million and bears interest at an annual rate of 4%, which is payable in kind. The promissory note matures on the four year anniversary of issuance. A portion of the proceeds under the MSP Principal Promissory Note in an amount equal to $36.5 million was advanced to MSP Recovery Law Firm, an affiliate of certain Members (the “Law Firm”) for certain operating expenses as contemplated by the Legal Services Agreement. The MSP Principals Promissory Note contains customary events of default that would allow the MSP Principals to declare the MSP Principals Promissory Note immediately due and payable or the MSP Principals Promissory Note will immediately and automatically become due and payable without notice, presentment, demand, protest or other request of any kind. There were no events of default during the nine months ended September 30, 2022. This amount is reflected in prepaid expenses and other current assets within the condensed consolidated balance sheets and had a balance of $31.9 million as of September 30, 2022. Actual results, including sources and uses of cash, may differ from our current estimates due to the inherent uncertainty involved in making those estimates and any such differences may impact the Company’s ability to continue as a going concern in the future. | Note 1. DESCRIPTION OF BUSINESS MSP Recovery, LLC (“MSPR”) was organized as a limited liability company on July 8, 2014 as a Medicaid and Medicare Secondary Pay Act recovery specialist. Additional limited liability companies related to MSPR through common ownership were subsequently organized to facilitate MSPR’s operational or financial needs. These financial statements were prepared on a combined and consolidated basis as described in Note 2 below and include the following entities (collectively “MSP”, “MSP Recovery” or the “Company”): Entity Name Method MSP Recovery of Puerto Rico LLC (Puerto Rico) Combined MDA Series, LLC Combined MSP Recovery, LLC Combined MAO-MSO Consolidated (non-wholly MSP Recovery Services, LLC Combined MSPA Claims 1, LLC Consolidated (wholly owned) MSP National, LLC Consolidated (wholly owned) MSP Recovery Claims Prov Series LLC Combined MSP Recovery Claims CAID Series LLC Combined MSP WB LLC Combined MSP Recovery Claims HOSP Series LLC Combined MSP Productions, LLC Combined MSP Recovery Claims HP, Series LLC Combined MSP Recovery Claims COM, Series LLC Combined MSP utilizes its proprietary internal data analytics platform to review health claims assigned by secondary payers such as Health Plans, Management Service Organizations (“MSO”), providers of medical services and Independent Physicians Associations. This platform allows MSP to identify claims cost recovery rights with potential recovery paths where claims either should not have been paid by the secondary payers or should have been reimbursed by third-party entities. MSP seeks assignment of recovery rights from secondary payers by acquiring the recovery rights to claims from secondary payers via Claims Cost Recovery Agreements (“CCRA”). Prior to executing a CCRA, MSP utilizes its proprietary internal data analytics platform to review the set of claims and identify claims with probable recovery paths. MSP’s assets are these irrevocable assignments of health claims recovery rights that are automatic, all-encompassing Purchase Agreement On July 11, 2021, MSP entered into a Membership Interest Purchase Agreement (as it may be amended, supplemented or otherwise modified from time to time in accordance with its terms, the “MIPA”) by and among MSP, Lionheart Acquisition Corporation II, a Delaware corporation (“Lionheart”), Lionheart II Holdings, LLC, a Delaware corporation and a wholly owned subsidiary of Lionheart (“Opco”), the members of the MSP Purchased Companies (the “Members”), and John H. Ruiz, in his capacity as the representative of the Members (the “Members’ Representative”). Pursuant to the MIPA, the Members will sell and assign all of their membership interests in the MSP Purchased Companies to Opco in exchange for non-economic non-voting “Up-C Following the closing of the Business Combination (the “Closing”), Lionheart will be organized in an “Up-C” non-voting Up-C Subject to the terms and conditions set forth in the MIPA, the aggregate consideration to be paid to the Members (or their designees) will consist of (i) 3,250,000,000 Up-C Up-C Lionheart intends to apply to continue the listing of its publicly traded Class A Common Stock on the Nasdaq Capital Market (“Nasdaq”) under the new ticker symbol “MSPR” upon the closing of the Business Combination. In conjunction with the purchase agreement, during the year ended December 31, 2021, the Company incurred direct and incremental transaction costs related to the Business Combination. These costs incurred by the Company will be offset against Lionheart’s cash proceeds and deducted from the combined company’s additional paid-in Investment Capacity Agreement On September 27, 2021, the Company entered into an Investment Capacity Agreement (the “ICA”) providing for potential future transactions regarding select healthcare claims recovery interests with its investment partner, Virage Capital Management LP (“Virage”), which transactions may include the sale of claims by MSP. The ICA provides the maximum value of such claims would be $3 billion. When the Company takes an assignment, the Company takes an assignment of the entire recovery but often they have a contractual obligation to pay the assignor 50% of any recoveries. This 50% interest typically is retained by the assignor (the “Retained Interest”), although in some cases, the Company has acquired all of the recoveries, and the applicable assignor has not kept any Retained Interest. The Retained Interest is not an asset of the Company, but an obligation to pay these assignors, with the Company keeping the other 50% interest of any recoveries. Virage’s funding in connection with future transactions generally will be used to purchase Retained Interests from existing assignors or new MSP assignors, although its funds can also be used to buy 50% of the recoveries from the Company, in the event the applicable assignor did not retain any Retained Interest. In connection with transactions consummated under the ICA, the Company may receive certain fees, including a finders fee for identifying the recoveries and a servicing fee for servicing the claims. Pursuant to the ICA, the Company will assist Virage in acquiring these Retained Interests for a cash price. Virage will be paid the recovery generated from the purchased Retained Interests when received through litigation or settlements. The ICA is separate and distinct from Virage’s equity investment in the Company. The first purchase under the ICA is expected to occur before the end of the second quarter of 2022. Liquidity The Company’s operations are primarily funded by claims recovery service income related to a servicing agreement with VRM MSP Recovery Partners LLC (“VRM”), which was originally entered into on March 27, 2018, and amended on August 1, 2020 (the “Agreement”). As part of Virage Recovery Master LP’s investment in VRM, funds are set aside to pay service fees to the Company. Under the terms of the Agreement, VRM pays service fees to the Company, commensurate with the operational expenses and costs of the Company. As of December 31, 2021, VRM had $30.7 million reserved for the payment of services fees. On July 11, 2021, MSP entered into a Membership Interest Purchase Agreement (as it may be amended, supplemented or otherwise modified from time to time in accordance with its terms, the “MIPA”), See above for further details on the transaction. The Company plans on raising funds through the planned transaction. However, there is currently no public market for the Company’s common stock, and there can be no assurances that the transaction will be completed. As part of the transaction, the Company anticipates incurring additional costs, which are expected to be in excess of cash from claims recovery service income. The Company will, therefore, require additional financing to fund its operations for the next twelve months, including funding of transaction related costs. As such, if the transaction is not consummated, VRM has agreed to provide additional funding to cover transaction related costs in order to support the operations of the Company through twelve months following the issuance of the financial statements. |
Basis of Presentaton and Summar
Basis of Presentaton and Summary of Significant Accounting Policies | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Accounting Policies [Abstract] | ||
BASIS OF PRESENTATON AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | Note 2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation and Principles of Consolidation Basis of presentation These statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) and, in accordance with those rules and regulations do not include all information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). In the opinion of management, the unaudited condensed consolidated interim financial statements (the “Financial Statements”) reflect all adjustments, which consist only of normal recurring adjustments, necessary to state fairly the results of operations, financial condition and cash flows for the interim periods presented herein. Prior to the Business Combination, the unaudited condensed consolidated interim financial statements reflect Legacy MSP. These Financial Statements should be read in conjunction with the combined and consolidated financial statements and notes thereto included in Legacy MSP’s 2021 and 2020 combined and consolidated financial statements. The year-end All intercompany transactions and balances are eliminated from the condensed consolidated financial statements. Principles of consolidation The Company consolidates all entities that it controls through a majority voting interest or otherwise and the accompanying condensed consolidated financial statements include the accounts of the Company’s wholly owned subsidiaries and these entities for which the Company has a controlling interest in. The Company also consolidates all entities that it controls as the primary beneficiary of a variable interest entity (“VIE”). Under the VIE model, management first assesses whether the Company has a variable interest in an entity, which would include an equity interest. If the Company has a variable interest in an entity, management further assesses whether that entity is a VIE, and if so, whether the Company is the primary beneficiary under the VIE model. Generally, entities that are organized similar to a limited partnership, in which a general partner (or managing member) make the most relevant decisions that affect the entity’s economic performance, are considered to be VIEs which would require consolidation, unless the limited partners have substantive kickout or participating rights. Entities that do not qualify as VIEs are assessed for consolidation under the voting interest model. Under the VIE model, an entity is deemed to be the primary beneficiary of a VIE if it holds a controlling financial interest. A controlling financial interest is defined as (a) the power to direct the activities of a VIE that most significantly affect the entity’s economic performance and (b) the obligation to absorb losses of the entity or the right to receive benefits from the entity that could potentially be significant to the VIE. Management determines whether the Company is the primary beneficiary of a VIE at the time it becomes involved with a VIE and reconsiders that conclusion at each reporting date. This analysis includes an evaluation of the Company’s control rights, as well as the economic interests that the Company holds in the VIE, including indirectly through related parties. As a result of the Business Combination, the Company consolidates MSP Recovery, LLC under the VIE model. Estimates and Assumptions The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting periods. Actual results could differ from the Company’s estimates. Estimates are periodically reviewed considering changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known. Significant estimates and assumptions reflected in these condensed consolidated financial statements include but are not limited to claims recovery income and claims recovery service income recognition, recoverability of long-lived assets and cost of claims recoveries. Segments Operating segments are defined as components of an entity for which separate financial information is available and regularly reviewed by the chief operating decision maker (“CODM”). The Company manages its operations as a single COVID-19 The COVID-19 COVID-19 COVID-19 Concentration of credit risk and Off-Balance Cash and cash equivalents and affiliate receivable are financial instruments that are potentially subject to concentrations of credit risk. See Note 13, Related Party off-balance-sheet Cash and Cash Equivalents and Restricted Cash The Company considers all highly liquid investments purchased with original maturities of three months or less to be cash equivalents. Restricted Cash consists of cash held in escrow related to the Prepaid Forward Agreement with CF. See Note 16, Derivative Liability Fair Value Measurements The Company applies the provisions of Accounting Standards Codification (“ASC”) 820, Fair Value Measurements non-financial non-financial non-financial non-recurring Level 1: Quoted prices in active markets for identical assets or liabilities. Level 2: Quoted prices for similar assets and liabilities in active markets or inputs that are observable. Level 3: Unobservable inputs reflecting management’s own assumptions about the inputs used in pricing the asset or liability. The Company has determined the estimated fair value of its financial instruments based on appropriate valuation methodologies; however, for Level 2 and Level 3 inputs considerable judgment is required to develop these estimates. Accordingly, these estimated fair values are not necessarily indicative of the amounts the Company could realize in a current market exchange. The estimated fair values can be materially affected by using different assumptions or methodologies. The methods and assumptions used in estimating the fair values of financial instruments are based on carrying values and future cash flows. As of September 30, 2022 and December 31, 2021, the Company did not hold any Level 2 or Level 3 assets or liabilities. Cash and cash equivalents and restricted cash are stated at cost, which approximates their fair value. The carrying amounts reported in the balance sheets for affiliate receivable, accounts payable, affiliate payable and accrued liabilities approximate fair value, due to their short-term maturities. The Company’s investments in rights to claim recovery cash flows are carried at cost as noted in Note 4, Asset Acquisitions. Equity Method Investments Equity investments that are not consolidated, but over which the Company exercises significant influence, are accounted for in accordance with ASC 323, “Investments—Equity Method and Joint Ventures” (“ASC 323”). Whether or not the Company exercises significant influence with respect to an investee company depends on an evaluation of several factors including, among others, representation on the investee company’s board of directors and ownership level. An entity is presumptively assumed to have significant influence in a corporation when it holds 20% or more of the voting stock of the investee company, or at a lower level (e.g., 3% to 5%) for entities that track separate members capital accounts. Under the equity method of accounting, an investee company’s accounts are not reflected within the Company’s condensed consolidated balance sheets and statements of operations; however, the Company’s share of the earnings or losses of the investee company is reflected in the caption “Other income” in the condensed consolidated statements of operations. The Company’s carrying value in equity method investee companies is not reflected in the Company’s condensed consolidated balance sheets as of September 30, 2022 or December 31, 2021 as the carrying value is zero. When the Company’s carrying value in an equity method investee company is reduced to zero, no further losses are recorded in the Company’s condensed consolidated financial statements unless the Company has guaranteed obligations of the investee company or has committed additional funding. When the investee company subsequently reports income, the Company will not record its share of such income until it equals the amount of its share of losses not previously recognized. Property, Plant and Equipment Property and equipment are stated at historical cost less accumulated depreciation and accumulated impairment losses, if any. Major expenditures for property and equipment and those that substantially increase useful lives are capitalized. When assets are sold or otherwise disposed of, costs and related accumulated depreciation are removed from the financial statements and any resulting gains or losses are included in general and administrative expenses within our condensed consolidated statements of operations. The Company provides for depreciation and amortization on property and equipment using the straight-line method to allocate the cost of depreciable assets over their estimated lives as follows: Office and Computer Equipment 3 years Furniture and Fixtures 3 years Leasehold Improvements Lesser of lease term or estimated life Internal Use Software Internal-use Intangible assets In certain of its CCRAs, the Company makes upfront payments to acquire claims recovery rights from secondary payers, such as health plans, managed service organizations, providers or medical services and independent physicians associations. The Company recognizes intangible assets for costs incurred up front to acquire claims recovery rights from various assignors. The Company amortizes capitalized costs associated with CCRAs over 8 years, based on the typical expected timing to pursue recovery through litigation, including through potential appeals. Investment in rights to claim recovery cash flows As part of the Business Combination, the Company acquired rights to claims recovery cash flows. These assets were determined to be financial instruments under ASC 825. These assets are held at cost. As cash flows are received the Company evaluates, based on the projected cash flows, whether there was an excess of proceeds received (or receivable) over the portion of the financial asset deemed to be recovered. In the case of excess, the Company would recognize the excess as income in the same period and the remainder would reduce the asset value. In addition, the Company evaluates these assets for impairment whenever events or changes in circumstances indicate that the carrying value of the asset may not be recoverable. If the estimated future cash flows (undiscounted and without interest charges) from the use of an asset group are less than the carrying value, a write-down would be recorded to reduce the related asset group to its estimated fair value. There were no impairment indicators in the nine months ended September 30, 2022 and 2021. Leases Leases entered into by the Company, in which substantially all the benefits and risk of ownership are transferred to the Company, are recorded as obligations under capital leases. Obligations under capital leases, if any, reflect the present value of future lease payments, discounted at an appropriate interest rate, and are reduced by rental payments, net of imputed interest. Assets under capital leases are amortized based on the useful lives of the assets. All other leases are classified as operating leases, and leasing costs, including any rent holidays, leasehold incentives and rent concessions, are recorded on a straight-line basis over the lease term under general and administrative expense in the condensed consolidated statements of operations. See Note 8, Operating Leases Non-controlling As part of the Business Combination and described in Note 1, Description of Business non-controlling Up-C Up-C Up-C non-controlling non-controlling Changes in the Company’s ownership interest in MSP Recovery, LLC, due to Class V shareholders converting their shares to Class A, are accounted for as equity transactions. Each issuance of the Company’s Class A Common Stock requires a corresponding issuance of MSP Recovery, LLC units to the Company. The issuance would result in a change in ownership and would reduce the balance of non-controlling paid-in Impairment of Long-Lived Assets The Company evaluates long-lived assets, such as property and equipment, including capitalized software costs, and finite-lived intangibles such as claims recovery rights, for impairment whenever events or changes in circumstances indicate that the carrying value of an asset or asset group may not be recoverable. If the estimated future cash flows (undiscounted and without interest charges) from the use of an asset group are less than the carrying value, a write-down would be recorded to reduce the related asset group to its estimated fair value. There were no impairment indicators in the nine months ended September 30, 2022 and 2021. Claims Recovery The Company’s primary income-producing activities are associated with the pursuit and recovery of proceeds related to claims recovery rights that the Company obtains through CCRAs, in which it becomes the owner of those rights. As a result, such income is not generated from the transfer of control of goods or services to customers, but from the proceeds realized from perfection of claims recoveries from rights the Company holds outright. The Company also generates revenue by providing claims recovery services to other entities outside of the Company. Claims recovery income The Company recognizes claims recovery income based on a gain contingency model – that is, when the amounts are reasonably certain of collection. This typically occurs upon reaching a binding settlement or arbitration with the counterparty or when the legal proceedings, including any appellate process, are resolved. In some cases, the Company owes an additional payment to the original assignor in connection with the realized value of the recovery right. Claims recovery income is recognized on a gross basis, as the Company is entitled to the full value of proceeds, and makes a payment to the original assignor similar to a royalty arrangement. Such payments to prior owners are recognized as cost of claims recovery in the same period the claims recovery income is recognized. When the Company becomes entitled to proceeds from the settlement of a claim recovery pursuit or proceeding, it recognizes the amount in accounts receivable. Claims recovery service income, ASC 606, Revenue from Contracts with Customers The guidance under ASC 606, Revenue from Contracts with Customers, provides that an entity should apply the following steps: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when, or as, the entity satisfies a performance obligation. The Company derives revenues from contracts with customers primarily from claims recovery services arrangements (“claims recovery services”). Claims recovery services include services to related parties or third parties to assist those entities with pursuit of claims recovery rights. The Company has determined it has a single performance obligation for the series of daily activities that comprise claims recovery services, which are recognized over time using a time-based progress measure and are typically based on (1) budgeted expenses for the current month with an adjustment for the variance between budget and actual expenses from the prior month or (2) on a contingent basis dependent on actual settlements or resolved litigation. Amounts estimated and recognized, but not yet fully settled or resolved as part of litigation are recognized as contract assets. There were no contract assets at September 30, 2022 or December 31, 2021, as amounts associated with unresolved litigation were fully constrained. Claims recovery services are generally paid in advance on a monthly basis. The Company did not recognize any material revenue for the nine months ended September 30, 2022 and 2021 for performance obligations that were fully satisfied in previous periods. For the nine months ended September 30, 2022 and 2021, the majority of the Company’s claims recovery service income was related to a servicing agreement with VRM MSP, which was entered into on March 27, 2018. As part of the Business Combination, the Company acquired rights to cash flows in the assets, after certain required returns to VRM MSP, that had been part of the servicing agreement. As part of this acquisition, the Company no longer receives service income from this agreement and instead recognizes revenue and reductions in the asset when cash flows are received as outlined in Note 4, Asset Acquisitions The Company does not have material unfulfilled performance obligation balances for contracts with an original length greater than one year in any years presented. Additionally, the Company does not have material costs related to obtaining a claims recovery service contract with amortization periods greater than one year for any period presented. The Company applies ASC 606 utilizing the following allowable exemptions or practical expedients: • Exemption to not disclose the unfulfilled performance obligation balance for contracts with an original length of one year or less. • Practical expedient to recognize the incremental costs of obtaining a contract as an expense when incurred if the amortization period of the asset that the entity otherwise would have recognized is one year or less. • Election to present revenue net of sales taxes and other similar taxes, if any. • Practical expedient not requiring the entity to adjust the promised amount of consideration for the effects of a significant financing component if the entity expects, at contract inception, that the period between when the entity transfers a promised good or service to a customer and when the customer pays for that good or service will be one year or less. Transfers of Claims Cost Recovery Rights to Others In some cases, the Company has entered into arrangements to transfer CCRAs or rights to proceeds from CCRAs to other parties. The Company evaluates whether such transfers are sales of nonfinancial assets, sales of future revenues treated as debt, in-kind When they are treated as sales of nonfinancial assets, the Company recognizes a gain on the sale when control transfers to the counterparty based on the difference between the fair value of consideration (including cash) received and the recognized carrying value of the CCRAs. In some cases, such sales include variable consideration in the form of payments that will be made only upon achievement of certain recoveries, or based on a percentage of actual recoveries. The Company estimates and constrains the amounts that will ultimately be realized based on these variable payment terms and includes those amounts in the determination of gain or loss; the gain or loss is subsequently updated based on changes in those estimates. In other cases, such transfers are considered to be sales of future revenue that are debt-like in nature. These arrangements are recognized as debt based on the proceeds received, and are imputed an interest rate based on the expected timing and amount of payments to achieve contractual hurdles. These are subject to revisions of estimates of that timing and amount based on the contractual provisions and the Company’s assumptions from changes in facts and circumstances. Such changes are reflected through revision of the imputed interest rate on a cumulative catch up basis. Cost of Claims Recoveries Costs of claims recoveries consist of all directly attributable costs specifically associated with claims processing activities, including contingent payments to assignors (i.e., settlement expenses). Claims amortization expense Claims amortization expense includes amortization of CCRAs acquired as part of the business combination, shown as Intangibles, net in the condensed consolidated balance sheets, and CCRA intangible assets for which the Company made upfront payments for claims recovery rights. For further details on CCRAs see Note 7 , Intangible Assets, Net Income Taxes Our income tax expense, deferred tax assets and liabilities, and reserves for unrecognized tax benefits reflect management’s best assessment of estimated current and future taxes to be paid. As a result of the Business Combination, the Company became the sole managing member of MSP Recovery, LLC, which is treated as a partnership for U.S. federal, state and local income tax purposes. As a partnership, MSP Recovery, LLC is not subject to U.S. federal and certain state and local income taxes. Any taxable income or loss generated by MSP Recovery, LLC is passed through to and included in the taxable income or loss of its partners, including MSP Recovery, Inc. The Company is subject to U.S. federal income taxes, in addition to state and local income taxes, with respect to the Company’s allocable share of income of MSP Recovery, LLC. The Company’s deferred tax balances reflect the impact of temporary differences between the carrying amount of assets and liabilities and the Company’s tax basis. The balances are stated at the tax rates in effect when the temporary differences are expected to be recovered or settled. The Company reviewed the anticipated future realization of the tax benefit of the Company’s existing deferred tax assets and concluded that it is more likely than not that all of the deferred tax assets will not be realized in the future. Recent Accounting Pronouncements New Accounting Pronouncements Recently Adopted ASU 2019-12, Simplifying the Accounting for Income Taxes (Topic 740) 2019-12, Simplifying the Accounting for Income Taxes (Topic 740) step-up ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting ASU 2020-06, Debt — Debt With Conversion and Other Options (Subtopic 470-20) 815- 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) 815-40): December 15, 2021 ASU 2022-03, Fair Value Measurement (Topic 820)—Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions 2022-03, Fair Value Measurement (Topic 820)—Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions June 2022 Asset Acquisitions New Accounting Pronouncements Issued but Not Yet Adopted In February 2016, the FASB issued ASU 2016-02, Leases 2018-10 , Codification Improvements to ASC 2016-02 Leases 2016-02. 2018-11, Leases: Targeted Improvements 2020-03, Codification Improvements to Financial Instruments, Leases 2016-02. not-for-profits not-for-profits 2020-05, Revenue from Contracts with Customers and Leases ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments including subsequent amendments to the initial guidance 2019-04, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825. Financial Instruments, ASU 2019-05, 2019-11, Codification Improvements to Topic 326, Financial Instruments - Credit Losses 2022-02, Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures | Note 2. BASIS OF PRESENTATON AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation and Principles of Combination and Consolidation Basis of presentation The accompanying combined and consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). All intercompany transactions and balances are eliminated from the combined and consolidated financial statements. The Company consolidates all entities that it controls through a majority voting interest or otherwise and the accompanying combined and consolidated financial statements include the accounts of the Company’s wholly owned subsidiaries and these entities for which the Company has a controlling interest in. Principles of combination and consolidation The combined and consolidated financial statements (the “Financial Statements”) have been prepared on a stand-alone basis and include the accounts of MSPR, entities in which MSP has a controlling financial interest, and certain entities under common control (see Note 1). The Company also combines all entities that it controls through a majority voting interest or as the primary beneficiary of a variable interest entity (“VIE”). Under the VIE model, management first assesses whether the Company has a variable interest in an entity, which would include an equity interest. If the Company has a variable interest in an entity, management further assesses whether that entity is a VIE, and if so, whether the Company is the primary beneficiary under the VIE model. Generally, entities that are organized similar to a limited partnership, in which a general partner (or managing member) make the most relevant decisions that affect the entity’s economic performance, are considered to be VIEs which would require consolidation, unless the limited partners have substantive kickout or participating rights. Entities that do not qualify as VIEs are assessed for consolidation under the voting interest model. Under the VIE model, an entity is deemed to be the primary beneficiary of a VIE if it holds a controlling financial interest. A controlling financial interest is defined as (a) the power to direct the activities of a VIE that most significantly affect the entity’s economic performance and (b) the obligation to absorb losses of the entity or the right to receive benefits from the entity that could potentially be significant to the VIE. Management determines whether the Company is the primary beneficiary of a VIE at the time it becomes involved with a VIE and reconsiders that conclusion at each reporting date. This analysis includes an evaluation of the Company’s control rights, as well as the economic interests that the Company holds in the VIE, including indirectly through related parties. Entities that comprise the Company are under common control. When an entity within the structure controls another entity, it is presented on a consolidated basis. When the common control owner is outside of the Company, the entities are presented on a combined basis. The inclusion of entities on a combined or consolidated basis is depicted in Note 1. Non-Controlling For entities that are consolidated, but not 100% owned, a portion of the income or loss and corresponding equity is allocated to the other owners based on the distribution requirements in each entity’s operating agreement. The aggregate of the income or loss and corresponding equity that is not allocated to MSP is included in non-controlling Non-controlling non-controlling Non-Controlling Estimates and Assumptions The preparation of combined and consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting periods. Actual results could differ from the Company’s estimates. Estimates are periodically reviewed considering changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known. Significant estimates and assumptions reflected in these combined and consolidated financial statements include but are not limited to claims recovery income and claims recovery service income recognition, recoverability of long-lived assets and cost of claims recoveries. Segments Operating segments are defined as components of an entity for which separate financial information is available and regularly reviewed by the chief operating decision maker (“CODM”). The Company manages its operations as a single COVID-19 During the years ended December 31, 2021 and 2020, an outbreak of the novel coronavirus (“COVID-19”) COVID-19 COVID-19 including COVID-19 Concentration of credit risk and Off-Balance Cash and cash equivalents and affiliate receivable are financial instruments that are potentially subject to concentrations of credit risk. See Note 11, Related Party off-balance-sheet Cash and Cash Equivalents The Company considers all highly liquid investments purchased with original maturities of three months or less to be cash equivalents. Fair Value Measurements The Company applies the provisions of ASC 820, Fair Value Measurements non-financial non-financial non-financial non-recurring Level 1: Quoted prices in active markets for identical assets or liabilities. Level 2: Quoted prices for similar assets and liabilities in active markets or inputs that are observable. Level 3: Unobservable inputs reflecting management’s own assumptions about the inputs used in pricing the asset or liability. The Company has determined the estimated fair value of its financial instruments based on appropriate valuation methodologies; however, for level 2 and level 3 inputs considerable judgment is required to develop these estimates. Accordingly, these estimated fair values are not necessarily indicative of the amounts the Company could realize in a current market exchange. The estimated fair values can be materially affected by using different assumptions or methodologies. The methods and assumptions used in estimating the fair values of financial instruments are based on carrying values and future cash flows. As of December 31, 2021 and 2020, the Company did not hold any level 2 or level 3 assets or liabilities. Cash and cash equivalents are stated at cost, which approximates their fair value. The carrying amounts reported in the balance sheets for affiliate receivable, accounts payable, affiliate payable and accrued liabilities approximate fair value, due to their short-term maturities. The carrying amounts of the Company’s outstanding borrowings that qualify as financial instruments are carried at cost, which approximates their fair value as of December 31, 2021 and 2020. The Company had an outstanding obligation to provide equity securities (a “short position”) as of December 31, 2020. The short position was classified as a liability, marked-to-market Investments in Equity Securities and Obligations to Deliver Securities. Equity Method Investments Equity investments that are not consolidated, but over which the Company exercises significant influence, are accounted for in accordance with ASC Topic 323, “Investments—Equity Method and Joint Ventures” (“ASC 323”). Whether or not the Company exercises significant influence with respect to an investee company depends on an evaluation of several factors including, among others, representation on the investee company’s board of directors and ownership level. An entity is presumptively assumed to have significant influence in a corporation when it holds 20% or more of the voting stock of the investee company, or at a lower level (e.g., 3% to 5%) for entities that track separate members capital accounts. Under the equity method of accounting, an investee company’s accounts are not reflected within the Company’s combined and consolidated balance sheets and statements of operations; however, the Company’s share of the earnings or losses of the investee company is reflected in the caption “Other income” in the combined and consolidated statements of operations. The Company’s carrying value in an equity method investee company is not reflected in the Company’s combined and consolidated balance sheets as of December 31, 2021 or December 31, 2020 as the carrying value is zero. When the Company’s carrying value in an equity method investee company is reduced to zero, no further losses are recorded in the Company’s combined and consolidated financial statements unless the Company guaranteed obligations of the investee company or has committed additional funding. When the investee company subsequently reports income, the Company will not record its share of such income until it equals the amount of its share of losses not previously recognized. Property, Plant and Equipment Property and equipment are stated at historical cost less accumulated depreciation and accumulated impairment losses, if any. Major expenditures for property and equipment and those that substantially increase useful lives are capitalized. When assets are sold or otherwise disposed of, costs and related accumulated depreciation are removed from the financial statements and any resulting gains or losses are included in general and administrative expenses within our combined and consolidated statements of operations. The Company provides for depreciation and amortization on property and equipment using the straight-line method to allocate the cost of depreciable assets over their estimated lives as follows: Office and Computer Equipment 3 years Furniture and Fixtures 3 years Leasehold Improvements Lesser of lease term or estimated life Internal Use Software Internal-use Intangible assets (CCRAs) In certain of its CCRAs, the Company makes upfront payments to acquire claims recovery rights from secondary payers, such as health plans, managed service organizations, providers or medical services and independent physicians associations. The Company recognizes intangible assets for costs incurred up front to acquire claims recovery rights from various assignors. The Company amortizes capitalized costs associated with CCRAs over 8 years, based on the typical expected timing to pursue recovery through litigation, including through potential appeals. Leases Leases entered into by the Company, in which substantially all the benefits and risk of ownership are transferred to the Company, are recorded as obligations under capital leases. Obligations under capital leases, if any, reflect the present value of future lease payments, discounted at an appropriate interest rate, and are reduced by rental payments, net of imputed interest. Assets under capital leases are amortized based on the useful lives of the assets. All other leases are classified as operating leases, and leasing costs, including any rent holidays, leasehold incentives and rent concessions, are recorded on a straight-line basis over the lease term under general and administrative expense in the combined and consolidated statements of operations. See Note 6, Operating Lease Impairment of Long-Lived Assets The Company evaluates long-lived assets, such as property and equipment including capitalized software costs, and finite-lived intangibles such as claims recovery rights, for impairment whenever events or changes in circumstances indicate that the carrying value of an asset or asset group may not be recoverable. If the estimated future cash flows (undiscounted and without interest charges) from the use of an asset group are less than the carrying value, a write-down would be recorded to reduce the related asset group to its estimated fair value. There were no impairment indicators in the years ended December 31, 2021 and 2020. Claims Recovery The Company’s primary income-producing activities are associated with the pursuit and recovery of proceeds related to claims recovery rights that the Company obtains through CCRAs, in which it becomes the owner of those rights. As such, such income is not generated from the transfer of control of goods or services to customers, but through the proceeds realized from perfection of claims recoveries from rights the Company holds outright. The Company also generates revenue by providing claims recovery services to other entities outside of the Company. Claims recovery income The Company recognizes claims recovery income based on a gain contingency model – that is, when the amounts are reasonably certain of collection. This typically occurs upon reaching a binding settlement or arbitration with the counterparty or when the legal proceedings, including any appellate process, are resolved. In some cases, the Company owes an additional payment to the original assignor in connection with the realized value of the recovery right. Claims recovery income is recognized on a gross basis, as the Company is entitled to the full value of proceeds, and makes a payment to the original assignor similar to a royalty arrangement. Such payments to prior owners are recognized as cost of claims recovery in the same period the claims recovery income is recognized. When the Company becomes entitled to proceeds from the settlement of a claim recovery pursuit or proceeding, it recognizes the amount in accounts receivable. Claims recovery service income, ASC 606, Revenue from Contracts with Customers On January 1, 2019, the Company adopted ASC 606, Revenue from Contracts with Customers, using the modified retrospective method for those contracts with customers which were not completed as of January 1, 2019. The adoption of ASC 606 did not have a material effect on the Company’s financial statements. The guidance provides that an entity should apply the following steps: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when, or as, the entity satisfies a performance obligation. The Company derives revenues from contracts with customers primarily from claims recovery services arrangements (“claims recovery services”). Claims recovery services include services to related parties or third parties to assist those entities with pursuit of claims recovery rights. The Company has determined it has a single performance obligation for the series of daily activities that comprise claims recovery services, which are recognized over time using a time-based progress measure and are typically based on 1) budgeted expenses for the current month with an adjustment for the variance between budget and actual expenses from the prior month or 2) on a contingent basis dependent on actual settlements or resolved litigation. Amounts estimated and recognized, but not yet fully settled or resolved as part of litigation are recognized as contract assets. There were no contract assets at December 31, 2021 or December 31, 2020, as amounts associated with unresolved litigation were fully constrained. Claims recovery services are generally paid in advance on a monthly basis. The Company did not recognize any material revenue for the years ended December 31, 2021 and 2020 for performance obligations that were fully satisfied in previous periods. For the years ended December 31, 2021 and 2020, the majority of the Company’s claims recovery service income was related to a servicing agreement with VRM MSP Recovery Partners LLC (“VRM”), which was entered into on March 27, 2018. As part of Virage Recovery Master LP’s investment in VRM, funds are set aside to pay service fees to the Company. As of December 31, 2021, VRM had $30.7 million reserved for the payment of services fees. The Company does not have material unfulfilled performance obligation balances for contracts with an original length greater than one year in any years presented. Additionally, the Company does not have material costs related to obtaining a claims recovery service contract with amortization periods greater than one year for any period presented. The Company applies ASC 606 utilizing the following allowable exemptions or practical expedients: • Exemption to not disclose the unfulfilled performance obligation balance for contracts with an original length of one year or less. • Practical expedient to recognize the incremental costs of obtaining a contract as an expense when incurred if the amortization period of the asset that the entity otherwise would have recognized is one year or less. • Election to present revenue net of sales taxes and other similar taxes, if any. • Practical expedient not requiring the entity to adjust the promised amount of consideration for the effects of a significant financing component if the entity expects, at contract inception, that the period between when the entity transfers a promised good or service to a customer and when the customer pays for that good or service will be one year or less. Transfers of Claims Cost Recovery Rights to Others In some cases, the Company has entered into arrangements to transfer CCRAs or rights to proceeds from CCRAs to other parties. The Company evaluates whether such transfers are sales of nonfinancial assets, sales of future revenues treated as debt, in-kind When they are treated as sales of nonfinancial assets, the Company recognizes a gain on the sale when control transfers to the counterparty based on the difference between the fair value of consideration (including cash) received and the recognized carrying value of the CCRAs. In some cases, such sales include variable consideration in the form of payments that will be made only upon achievement of certain recoveries, or based on a percentage of actual recoveries. The Company estimates and constrains the amounts that will ultimately be realized based on these variable payment terms and includes those amounts in the determination of gain or loss; the gain or loss is subsequently updated based on changes in those estimates. In other cases, such transfers are considered to be sales of future revenue that are debt-like in nature. These arrangements are recognized as debt based on the proceeds received, and are imputed an interest rate based on the expected timing and amount of payments to achieve contractual hurdles. These are subject to revisions of estimates of that timing and amount based on the contractual provisions and the Company’s assumptions from changes in facts and circumstances. Such changes are reflected through revision of the imputed interest rate on a cumulative catch up basis. Cost of Claims Recoveries Costs of claims recoveries consist of all directly attributable costs specifically associated with claims processing activities, including contingent payments to assignors (i.e., settlement expenses) as well as amortization of CCRA intangible assets for those in which the Company made upfront payments for claims recovery rights. Income Taxes The various entities that comprise the Company, including consolidated affiliates, have elected to be treated as a partnership for federal income tax purposes. As such, the Company entities are treated as disregarded entities and are not subject to federal income taxation at the legal entity level. Instead, the Company’s members are liable for federal and state income taxes on their respective share of the Company’s taxable income or loss, subject to each member’s own adjustments for its capital accounts for tax purposes. Consequently, no income tax, income tax payable, or deferred tax assets and liabilities are recorded for any financial reporting date. It is not practical to provide information about each member’s tax basis in the entities, as they are varied by member and subject to basis adjustments that exist outside of the Company’s financial accounting records. For tax years beginning on or after January 1, 2018, the legal entities that comprise the Company are subject to partnership audit rules enacted as part of the Bipartisan Budget Act of 2015 (the “Centralized Partnership Audit Regime”). Under the Centralized Partnership Audit Regime, any Internal Revenue Service (“IRS”) audit of any or all of the legal entities that comprise the Company would be conducted at the partnership level. If the IRS determines an adjustment is warranted, the entities that comprise the Company that are implicated by such an adjustment will pay an “imputed underpayment,” including any applicable interest and penalties. The entities that comprise the Company may instead make a “push-out” Recent Accounting Pronouncements New Accounting Pronouncements Recently Adopted ASU 2018-15, Intangibles-Goodwill and Other—Internal-Use 350-40)—Customer’s for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract 2018-15, Intangibles-Goodwill and Other—Internal-Use 350- Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. internal-use internal-use ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Change to the Disclosure Requirements for Fair Value Measurement 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Change to the Disclosure Requirements for Fair Value Measurement New Accounting Pronouncements Issued but Not Yet Adopted In February 2016, the FASB issued ASU 2016-02, Leases 2018-10 , Codification Improvements to ASC 2016-02 Leases 2016-02. 2018-11, Leases: Targeted Improvements 2020-03, Codification Improvements to Financial Instruments, Leases 2016-02. not-for-profits not-for-profits 2020-05, Revenue from Contracts with Customers and Leases ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments including subsequent amendments to the initial guidance 2019-04, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825. Financial Instruments, ASU 2019-05, Transition Relief 2019-11, Codification Improvements to Topic 326, Financial Instruments—Credit Losses ASU 2019-12, Simplifying the Accounting for Income Taxes (Topic 740) 2019-12, Simplifying the Accounting for Income Taxes (Topic 740) liabilities for outside basis differences. The standard also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting ASU 2020-06, Debt — Debt With Conversion and Other Options (Subtopic 470-20) — Contracts in Entity’s Own Equity (Subtopic 815- Entity’s Own Equity 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) 815-40): Convertible Instruments and Contracts in an Entity’s Own Equity |
Business Combination
Business Combination | 9 Months Ended |
Sep. 30, 2022 | |
Business Combinations [Abstract] | |
Business Combinations | Note 3. BUSINESS COMBINATION On May 23, 2022, MSP Recovery, Inc. consummated the previously announced Business Combination pursuant to the MIPA as noted in Note 1. As a result of the closing of the Business Combination (the “Closing”), the Company is organized in an “Up-C” non-voting Up-C Up-C Up-C In connection with the Closing, the Company changed its name from “Lionheart Acquisition Corporation II” to “MSP Recovery, Inc.” The Business Combination is accounted for as a reverse recapitalization in accordance with GAAP. Under this method of accounting, the Company is treated as the acquirer for financial statement reporting purposes. The reverse recapitalization was treated as the equivalent of Legacy MSP issuing stock for the net assets of LCAP, accompanied by a recapitalization. The net assets of LCAP are stated at historical cost, with no goodwill or other intangible assets recorded. The Company received net proceeds in the business combination transaction of approximately $23.4 million, which includes the restricted cash received as part of FEF shares as defined in Note 16, Derivative Liability paid-in Warrants As part of the business combination transaction, the Company assumed the liability related to the LCAP public warrants (“Public Warrants”) of $12.5 million. Pursuant to the terms of the Existing Warrant Agreement, and after giving effect to the issuance of the New Warrants, as defined below, the exercise price of the Public Warrants decreased to $0.0001 per share of Class A Common Stock. During the period from the Closing Date to September 30, 2022, approximately 7.9 million warrants of the original 11.8 million warrants had been exercised and the fair value of the remaining warrants decreased resulting in other income of $3.7 million for the three months ended September 30, 2022. For the nine months ended September 30, 2022, the fair value of the warrants increased resulting in other expense of $1.6 million. Following anti-dilution adjustments made in connection with the Business Combination, the Public Warrants have an exercise price of $0.0001 per share, which have become exercisable as of 10 days after closing of the Business Combination, on a cashless basis. Additionally, in connection with the Business Combination, the Company declared the New Warrant Dividend comprising approximately 1,028 million New Warrants payable to the holders of record of the Class A Common Stock as of the close of business on the Closing Date, after giving effect to the waiver of the right, title and interest in, to or under, participation in any such dividend by the Members, on behalf of themselves and any of their designees. The New Warrants will be exercisable 30 days following the Closing Date until their expiration date, which will be the fifth anniversary of the Closing Date or earlier redemption. The record date for the determination of the holders of record of the outstanding shares of Class A Common Stock entitled to receive the New Warrant Dividend was the close of business on the Closing Date. Pursuant to the terms of the LLC Agreement, at least twice a month, to the extent any New Warrants have been exercised in accordance with their terms, the Company is required to purchase from the MSP Principals, proportionately, the number of Up-C Public Warrants and New Warrants are currently listed on Nasdaq under the symbols “MSPRZ” and “MSPRW”, respectively. Tax Receivable Agreement In connection with the Business Combination, the Company also entered into a Tax Receivable Agreement (the “TRA”). Pursuant to the TRA, the Company is required to pay the sellers 85% of the amount of tax benefits that the Company actually realizes as a result of (i) the Company’s direct and indirect allocable share of existing tax basis acquired in the Business Combination, (ii) increases in the Company’s allocable share of existing tax basis and tax basis adjustments that will increase the tax basis of the tangible and intangible assets of the Company as a result of the Business Combination and as a result of sales or exchanges of Up-C Non-Controlling As a result of the Business Combination, the Company reflects non-controlling Up-C non-voting non-controlling non-controlling Noncontrolling Interest Nomura Promissory Note On May 27, 2022, the Company issued an unsecured promissory note to Nomura in a principal amount of approximately $24.5 million related to advisory fees and deferred underwriting fees and expenses that became due and payable by the Company to Nomura, in connection with the consummation of the Business Combination. The maturity date of the promissory note is May 29, 2023. On the maturity date, the Company is required to pay Nomura an amount in cash equal to the outstanding principal amount, plus accrued and unpaid interest, plus any other obligations then due or payable under the promissory note. Upon two days prior written notice to Nomura, the Company may prepay all or any portion of the then outstanding principal amount under the promissory note together with all accrued and unpaid interest thereon. |
Asset Acquisitions
Asset Acquisitions | 9 Months Ended |
Sep. 30, 2022 | |
Business Combination and Asset Acquisition [Abstract] | |
Asset Acquisitions | Note 4. ASSET ACQUISITIONS On May 23, 2022 as part of the closing of the Business Combination, the Company acquired assets through the issuance of Up-C Up-C Intangible Assets, Net Investment in rights to claim recovery cash flows On May 23, 2022 as part of the closing of the Business Combination, the Company acquired assets through the issuance of Up-C Up-C At Closing, an additional 65 million Up-C one-year one-year Up-C |
Investment In Equity Method Inv
Investment In Equity Method Investees | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Equity Method Investments and Joint Ventures [Abstract] | ||
Equity Method Investments and Joint Ventures Disclosure | Note 5. INVESTMENT IN EQUITY METHOD INVESTEES The Company holds three investments which are accounted for using the equity method: MAO-MSO MAO-MSO MAO-MSO “MAO-MSO Series PMPI is a series of MAO-MSO The MAO-MSO MAO-MSO MAO-MSO Summary financial information for equity accounted investees, not adjusted for the percentage ownership of the Company is as follows: For the three months ended, For the nine months ended, Series PMPI (in thousands) September 30, September 30, September 30, September 30, Revenue $ 16 — 16 1 Amortization 500 500 1,500 1,500 Other expenses 8 — 8 — Profit (Loss) $ (492 ) (500 ) (1,492 ) (1,499 ) Series PMPI (in thousands) September 30, December 31, Total Assets $ 3,841 5,390 Total Liabilities $ 274 266 | Note 3. INVESTMENT IN EQUITY METHOD INVESTEES MSP holds three investments which are accounted for using equity method: MAO-MSO MAO-MSO MAO-MSO “MAO-MSO Series PMPI is a series entity of MAO-MSO The MAO-MSO MAO-MSO MAO-MSO Summary financial information for equity accounted investees, not adjusted for the percentage ownership of the Company is as follows (in thousands): Series PMPI Revenue Amortization Other expenses Profit (Loss) For the year ended December 31, 2021 $ 1 $ 2,000 $ — $ (1,999 ) For the year ended December 31, 2020 $ 34 $ 2,000 $ 20 $ (1,986 ) Series PMPI Total Assets Total Liabilities As of December 31, 2021 $ 5,390 $ 266 As of December 31, 2020 $ 7,393 $ 270 |
Property, plant and equipment,
Property, plant and equipment, net | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Property, Plant and Equipment [Abstract] | ||
Property, Plant and Equipment Disclosure [Text Block] | Note 6. PROPERTY, PLANT AND EQUIPMENT, NET Property, plant and equipment, net consist of the following: (In thousands) September 30, December 31, Office and computer equipment $ 416 $ 356 Leasehold improvements 113 113 Internally developed software 2,944 1,020 Other software 67 66 Property, plant and equipment, gross $ 3,540 $ 1,555 Less: accumulated depreciation and amortization of software (1,060 ) (805 ) Property, plant and equipment, net $ 2,480 $ 750 For the three and nine months ended September 30, 2022 and 2021, depreciation expense and amortization expense was $103 thousand and $254 thousand, respectively, and $89 thousand and $256 thousand, respectively. | Note 4. PROPERTY, PLANT AND EQUIPMENT, NET Property, plant and equipment, net consist of the following (in thousands): December 31, 2021 2020 Office and computer equipment $ 356 $ 305 Leasehold improvements 113 113 Internally developed software 1,020 589 Other software 66 67 Property, plant and equipment, gross $ 1,555 $ 1,074 Less: accumulated depreciation and amortization of software (805 ) (462 ) Property, plant and equipment, net $ 750 $ 612 Depreciation expense and amortization expense of software was $343 thousand and $235 thousand for the years ended December 31, 2021 and 2020, respectively. |
Intangible Assets, Net
Intangible Assets, Net | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | ||
Intangible Assets, Net | Note 7. INTANGIBLE ASSETS, NET During the nine months ended September 30, 2022, the Company acquired CCRAs held by Series MRCS. The assets were acquired through the issuance of equity as part of the Business Combination. The assets are held at cost and treated as a finite intangible asset with a useful life of 8 years, similar to Intangible assets, net. Intangible assets, net consists of the following: (in thousands) September 30, 2022 December 31, 2021 Intangible assets, gross $ 2,171,174 $ 84,955 Accumulated amortization (93,603 ) (737 ) Net $ 2,077,571 $ 84,218 During the three months ended September 30, 2022, the Company purchased $48.2 million of CCRAs included in Intangible Assets, net, all payable in cash or through Class A common stock issuance. The payment is due March 31, 2023 and is recorded within Other Current Liabilities in the condensed consolidated balance sheet as of September 30, 2022. During the nine months ended September 30, 2022, in addition to the CCRAs acquired as part of the Business Combination and the acquired CCRAs noted for the three months ended September 30, 2022, the Company also purchased $12.7 million of CCRAs included in Intangible assets, net, of which $2.7 million was paid in cash and $10.0 million was paid through Class A Common Stock issuance. For the CCRAs acquired through equity issuance, the Company is required to provide additional shares or cash if the value of the shares provided is not equal to $10.0 million or greater within 1 year of issuance. As such, the Company recorded a liability of $8.7 million within Other current liabilities in the condensed consolidate balance sheet for the difference between $10.0 million and the fair value of the shares as of September 30, 2022. For the three and nine months ended September 30, 2022 and 2021, claims amortization expense was $66.0 million and $92.5 million, respectively, and $47 thousand and $114 thousand, respectively. Future amortization for CCRAs is expected to be as follows: (in thousands) CCRAs Amortization 2022 (remaining) $ 67,849 2023 271,397 2024 271,324 2025 271,272 2026 271,272 Thereafter 924,457 Total $ 2,077,571 | Note 5. INTANGIBLE ASSETS, NET Intangible assets, net consists of the following (in thousands): December 31, 2021 CCRAs Gross $ 84,955 Accumulated amortization (737 ) Net $ 84,218 December 31, 2020 CCRAs Gross $ 1,000 Accumulated amortization (573 ) Net $ 427 During the year ended December 31, 2021, the Company purchased $84.0 million of CCRAs, of which $500 thousand was through the issuance of a note payable, $150 thousand was paid in cash and the remaining amount was through assignment as noted in Note 1. The full principal amount of the note payable is due June 1, 2030 with interest only payments required on an annual basis prior to due date. The interest rate is 2%. Amortization of CCRA expense was $164 thousand and $125 thousand for the years ended December 31, 2021 and 2020, respectively. Future amortization for CCRAs is expected to be as follows (in thousands): 2022 10,620 2023 10,620 2024 10,547 2025 10,495 2026 10,495 Thereafter 331,441 Total $ 84,218 |
Operating Leases
Operating Leases | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Leases [Abstract] | ||
Operating Leases | Note 8. OPERATING LEASES The Company leases office space under a non-cancellable month-to-month The future minimum lease payments under non-cancelable (In thousands) Lease Payments Year Ending December 31, 2022 (remaining) $ 58 2023 (1) 217 Total $ 275 (1) Operating lease expires before or during the year ending December 31, 2023 | Note 6. OPERATING LEASE The Company leases an office space under a non-cancellable The future minimum lease payments under non-cancelable Year Ending December 31, Lease 2022 $ 231 2023(1) 217 Total $ 448 (1) Operating lease expires before or during the year ending December 31, 2023 |
Variable Interest Entities
Variable Interest Entities | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Variable Interest Entity Disclosure [Abstract] | ||
Variable Interest Entities | Note 9. VARIABLE INTEREST ENTITIES The Company evaluates its ownership, contractual, and other interests in entities to determine if they are VIEs, if the Company has a variable interest in those entities, and the nature and extent of those interests. These evaluations are highly complex and involve management judgment and the use of estimates and assumptions based on available historical information, among other factors. Based on its evaluations, if the Company determines it is the primary beneficiary of such VIEs, it consolidates such entities into its financial statements. VIEs information below is presented on aggregate basis based on similar risk and reward characteristics and MSP’s involvement with the VIEs. Investments in unconsolidated Variable Interest Entities The Company is involved with VIEs in which it has investments in equity but does not consolidate because it does not have the power to direct the activities that most significantly impact their economic performance and thus is not considered the primary beneficiary of the entities. Those VIEs are reflected as equity method investments. Total assets and liabilities for these VIEs were $3.8 million and $0.3 million, respectively, at September 30, 2022 and $5.4 million and $0.3 million, respectively, at December 31, 2021. Generally, MSP’s exposure is limited to its investment in those VIEs (see Note 5, Investment in Equity Method Investees MAO-MSO | Note 7. VARIABLE INTEREST ENTITIES Consolidated Variable Interest Entities The Company evaluates its ownership, contractual, and other interests in entities to determine if they are VIEs, if it has a variable interest in those entities, and the nature and extent of those interests. These evaluations are highly complex and involve management judgment and the use of estimates and assumptions based on available historical information, among other factors. Based on its evaluations, if the Company determines it is the primary beneficiary of such VIEs, it consolidates such entities into its financial statements. VIEs information below is presented on aggregate basis based on similar risk and reward characteristics and MSP’s involvement with the VIEs. The Company includes a number of entities that are determined to be VIEs and which are combined under common control (see Note 1), and for which the common control group can direct the use of the entities’ assets and resources for other purposes. The Company consolidates VIEs in which one of the combined entities is the primary beneficiary. The assets of the consolidated VIEs may only be used to settle obligations of these VIEs and to settle any investors’ ownership liquidation requests. There is no recourse to MSP for the consolidated VIEs’ liabilities. The assets of the consolidated VIEs are not available to MSP’s creditors. Total assets and liabilities included in its combined and consolidated balance sheets for these VIEs were $9.7 million and $122.7 million, respectively, at December 31, 2021 and $9.7 million and $95.1 million, respectively, at December 31, 2020. Investments in unconsolidated Variable Interest Entities The Company is involved with VIEs in which it has investments in equity but does not consolidate because it does not have the power to direct the activities that most significantly impact their economic performance and thus is not considered the primary beneficiary of the entities. Those VIEs are reflected as equity method investments. Total assets and liabilities for these VIEs were $5.4 million and $0.3 million, respectively, at December 31, 2021 and $7.4 million and $0.3 million, respectively, at December 31, 2020. Generally, MSP’s exposure is limited to its investment in those VIEs (see Note 3). For MAO-MSO |
Claims Financing Obligations an
Claims Financing Obligations and Notes Payable | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Debt Disclosure [Abstract] | ||
Claims Financing Obligations and Notes Payable | Note 10. CLAIMS FINANCING OBLIGATIONS AND NOTES PAYABLE During the three months ended September 30, 2022, the Company finalized an Amendment to Claim Proceeds Investment Agreement and a Warrant Agreement with Brickell Key Investments LP (the “Holder”), pursuant to which the parties have agreed to amend the original Claims Proceeds Investment Agreement (“CPIA”) and required payment terms. The Amendment and Warrant Agreement were executed effective September 30, 2022. Pursuant to the agreements, the Company grants to the Holder the right to purchase Class A common shares in the Company (the “Class A Shares”) in accordance with the terms and conditions of the Agreement. The maximum amount of Class A Shares that the Holder may purchase from the Company is 66,666,666 (the “Amount”) for a purchase price equal to $6,666.67 ($0.0001 per Class A Share), and is payable in cash. This Warrant (the “Warrant”) will expire at 5:00 p.m. (Eastern Time), on September 30, 2027 and may be exercised in whole or in part by Holder at any time prior to such date. The Holder can only sell a maximum of 15% per month of the Class A Shares obtained through the Warrant. In exchange for the Company issuing the Warrant, the amounts owed to the Holder pursuant to CPIA are amended to equal $80 million. The Holder has the right to receive the $80 million owed through proceeds as outlined in the CPIA, cash paid by the Company or monetization of the Warrant (through the sale of the Warrant or sale of the underlying Class A Shares). If the Holder monetizes the Warrant, the amount owed will be reduced at a measure of $1.20 per Class A Share. In connection with the Amendment and Warrant Agreement, the Holder also executed a Stock Pledge Agreement (the “Pledge Agreement”) with MSP Founders, John H. Ruiz and Frank Quesada (the “Founders”). As part of the agreement, the Founders agreed to pledge 50 million shares to secure payment of the original principal amount of the CPIA. If the Holder were to receive amounts in excess of $80 million, the Founders would receive interest of 10% on the original principal amount of the CPIA. In addition, the Pledge Agreement provides the right to repurchase the Warrant from the Holder on or before June 30, 2023. The Founders entered into an agreement with the Company where this repurchase right has been assigned to the Company (the “Side Agreement”). The Pledge Agreement and Side Agreement were executed effective September 30, 2022. As the Company has, at its option, the ability to pay its obligation through cash proceeds or through monetization of the Warrants, the amount owed as of September 30, 2022 was included as Claims financing obligation and notes payable on the condensed consolidated balance sheet. Also the liability related to the remaining amounts due was recorded as $80 million as of September 30, 2022 as the Company, at its option, has the ability to repurchase the Warrants for $80 million on or before June 30, 2023. The resulting gain on debt extinguishment from the amendment was $63.4 million and was recorded in Other (expense) income, net within the condensed consolidated statement of operations for the three and nine months ended September 30, 2022. Based on claims financing obligations and notes payable agreements, as of September 30, 2022 and December 31, 2021, the present value of amounts owed under these obligations were $172.3 million and $201.4 million, respectively, including unpaid interest to date of $1.5 million and $94.5 million, respectively. The weighted average interest rate is 5.8% based on the current book value of $172.3 million with rates that range from 2% to 11%. The Company is expected to repay these obligations from cash flows from claim recovery income or potentially for the renegotiated debt through class A common stock issuances. As of September 30, 2022, the minimum required payments on these agreements are $330.5 million. Certain of these agreements have priority of payment regarding any proceeds until full payment of the balance due is satisfied. The maturity of the commitments range from the date sufficient claims recoveries are received to cover the required return or in some cases by 2031. Also, during 2020, the Company obtained funds under the Paycheck Protection Program (the “PPP Loan”) in the amount of $1,086 thousand. Since the amount must be repaid unless forgiven in accordance with the Paycheck Protection Program, the Company accounted for the funds as debt under ASC 470. As of December 31, 2021, the total amount of the PPP Loans have been forgiven. | Note 8. CLAIMS FINANCING OBLIGATIONS AND NOTES PAYABLE Based on claims financing obligations and notes payable agreements, as of December 31, 2021 and 2020, the present value of amounts owed under these obligations were $201.4 million and $90.5 million, respectively, including unpaid interest to date of $94.5 million and $67.5 million, respectively. The weighted average interest rate is 22% based on the current book value of $201.4 million with rates that range from 2% to 30%. The Company is expected to repay these obligations from cash flows from claim recovery income. As December 31, 2021, the minimum required payments on these agreements are $368.0 million with $117.5 million of the required payments being non-recourse. Also, during 2020, the Company obtained funds under the Paycheck Protection Program (the “PPP Loan”) in the amount of $1,086 thousand. Since the amount must be repaid unless forgiven in accordance with the Paycheck Protection Program, the Company accounted for the funds as debt under ASC 470. The PPP Loan bears interest of 1%, with repayments to be made from 2022 to 2025. The Company may apply to have the loan forgiven in part or in full, depending if certain requirements are met, in 2021. Any amounts forgiven will be recognized as other income in the period in which they are officially relieved. As of December 31, 2021, the total amount of the PPP Loans have been forgiven. As of December 31, 2020, the total amounts owed under the PPP Loans was $1,043 thousand. |
Noncontrolling Interest
Noncontrolling Interest | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Noncontrolling Interest [Abstract] | ||
Noncontrolling Interest | Note 11. NONCONTROLLING INTEREST The non-controlling Up-C Common Units Ownership Percentage Ownership of Class A Common Units 72,909,609 2.3 % Ownership of Class V Common Units 3,148,720,212 97.7 % Balance at end of period 3,221,629,821 100.0 % The non-controlling Up-C Up-C non-controlling non-controlling paid-in-capital Up-C In addition to the non-controlling Up-C non-controlling MAO-MSO non-wholly non-controlling | Note 9. MEMBERS’ EQUITY AND NONCONTROLLING INTEREST The entities included in the Financial Statements that are under common control (see Note 1) generally have a single class of units and are controlled by a single individual or entities controlled by that individual (the “Controlling Member”). The Controlling Member and other noncontrolling members generally retain similar rights and privileges in these entities, based on their respective ownership percentages. MAO-MSO non-wholly |
Members' Equity and Non-control
Members' Equity and Non-controlling Interest | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Noncontrolling Interest [Abstract] | ||
Members' Equity and Non-controlling Interest | Note 11. NONCONTROLLING INTEREST The non-controlling Up-C Common Units Ownership Percentage Ownership of Class A Common Units 72,909,609 2.3 % Ownership of Class V Common Units 3,148,720,212 97.7 % Balance at end of period 3,221,629,821 100.0 % The non-controlling Up-C Up-C non-controlling non-controlling paid-in-capital Up-C In addition to the non-controlling Up-C non-controlling MAO-MSO non-wholly non-controlling | Note 9. MEMBERS’ EQUITY AND NONCONTROLLING INTEREST The entities included in the Financial Statements that are under common control (see Note 1) generally have a single class of units and are controlled by a single individual or entities controlled by that individual (the “Controlling Member”). The Controlling Member and other noncontrolling members generally retain similar rights and privileges in these entities, based on their respective ownership percentages. MAO-MSO non-wholly |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Commitments and Contingencies | Note 12. COMMITMENTS AND CONTINGENCIES The Company is subject to certain legal proceedings, claims, investigations, and administrative proceedings in the ordinary course of its business. The Company records a provision for a liability when it is both probable that the liability has been incurred and the amount of the liability can be reasonably estimated. These provisions, if any, are reviewed and adjusted to reflect the impacts of negotiations, settlements, rulings, advice of legal counsel and other information and events pertaining to a particular case. Depending on the nature and timing of any such proceedings that may arise, an unfavorable resolution of a matter could materially affect the Company’s future consolidated results of operations, cash flows or financial position in a particular period. As of September 30, 2022, there was no material pending or threatened litigation against us. The Company pursues claims recoveries through settlement, arbitration and legal proceedings. The accounting policy for these activities is discussed under Claims recovery income in Note 2, Basis of presentation and summary of significant accounting policies Approximately 88% of the Company’s expected recoveries arise from claims being brought under the Medicare Secondary Payer Act. This law allows the Company to pursue recoveries against primary payers for reimbursement of medical expenses that the Company’s assignors paid for when primary payers (i.e. liability insurers) were responsible for payment. The Repair Abuses of MSP Payments Act (“RAMP Act”) introduced to the U.S. House of Representatives in June 2022 seeks to repeal the private cause of action under the Medicare Secondary Payer Act – a fundamental component of how the Company is able to calculate damages. The Medicare Secondary Payer Act’s private cause of action incentivizes private parties, such as MSP Recovery, to pursue reimbursement of conditional payments by rewarding them with double damages. The repeal of the private cause of action would remove the possibility of recovering double damages. If the Medicare Secondary Payer Act is substantially changed or repealed, or if the RAMP Act were enacted to apply retroactively, it could significantly reduce the Company’s potential recoveries and have a material adverse effect on its business, financial condition and results of operations. | Note 10. COMMITMENTS AND CONTINGENCIES The Company is subject to certain legal proceedings, claims, investigations, and administrative proceedings in the ordinary course of its business. The Company records a provision for a liability when it is both probable that the liability has been incurred and the amount of the liability can be reasonably estimated. These provisions, if any, are reviewed and adjusted to reflect the impacts of negotiations, settlements, rulings, advice of legal counsel and other information and events pertaining to a particular case. Depending on the nature and timing of any such proceedings that may arise, an unfavorable resolution of a matter could materially affect the Company’s future combined and consolidated results of operations, cash flows or financial position in a particular period. As of December 31, 2021, there were no material pending or threatened litigations against us. The Company pursues claims recoveries through settlement, arbitration and legal proceedings. The accounting policy for these activities is discussed under Claims recovery income Basis of presentation and summary of significant accounting policies |
Related Party
Related Party | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Related Party Transactions [Abstract] | ||
Related Party | Note 13. RELATED PARTY Loan from related parties During the nine months ended September 30, 2022, the Company issued an unsecured promissory note in an aggregate principal amount of $112.8 million (the “Promissory Note”) to John H. Ruiz and Frank C. Quesada, the Company’s Chief Executive Officer and director and Chief Legal Officer and director, respectively (collectively, the “MSP Principals”), to provide operating cash to the Company. The Promissory Note bears interest at an annual rate of 4%, payable in kind, and will mature on the four year anniversary of the issuance. The Promissory Note is payable by the Company at any time, without prepayment penalties, fees, or other expenses. During the three and nine months ended September 30, 2022, the Company recorded $1.3 million and $1.5 million, respectively, on interest expense related to the Promissory Note. A portion of the proceeds under the Promissory Note in an amount equal to $36.5 million was advanced to the Law Firm, an affiliate of certain Members, for certain operating expenses as contemplated by the Legal Services Agreement. This amount is reflected in prepaid expenses and other current assets within the condensed consolidated balance sheets and had a balance of $31.9 million as of September 30, 2022. The payments of Law Firm expenses is reflected in Professional fees - legal within the condensed consolidated statement of operations. Legal Services – MSP Recovery Law Firm Certain Company entities have previously entered into legal services agreements (the “Existing LSAs”) with the Law Firm, an affiliate of certain Members, for the recovery of claims. Pursuant to the terms of the Existing LSAs, the Law Firm provides the Company with investigation, case management, research and legal services in the pursuit of recovery of claims in exchange for a portion of the recovered proceeds relating to such claims. The Existing LSAs also provide that the Law Firm serves as exclusive lead counsel for any litigation relating to such claims. As of September 30, 2022 there was no amount due, and December 31, 2021, $5.5 million, respectively, was due to the Law Firm and included in the condensed consolidated balance sheets in Affiliate Payable. For the three and nine months ended September 30, 2022, $4.6 million and $24.7 million, respectively was included in Professional fees - legal for expenses related to the Law Firm in the condensed consolidated statements of operations. The amounts were largely due to share base compensation as noted below and the payment of Law Firm expenses per the related party loan as noted above. For the three and nine months ended September 30, 2021, the amounts were de minimus. For the three and nine months ended September 30, 2022, $0 thousand and $271 thousand, respectively, were included in cost of claims recoveries for expenses related to the Law Firm in the condensed consolidated statements of operations. For the three and nine months ended September 30, 2021, no amounts were included cost of claims recoveries for expenses related to the Law Firm in the condensed consolidated statements of operations. The Law Firm may also collect and/or hold cash on behalf of the Company in the ordinary course of business. As of September 30, 2022 and December 31, 2021, $1.5 million and $3.4 million, respectively, was due from the Law Firm and included in the condensed consolidated balance sheets in Affiliate Receivable. In addition, the Company rents office space from the Law Firm as discussed in Note 8, Operating Lease For the nine months ended September 30, 2022, the Company issued 8,022,000 Class A common stock shares to the Law Firm employees, which was deemed to be share based compensation. As such $20.1 million of expense was included within Professional fees - legal for expenses related to the Law Firm in the condensed consolidated statements of operations for the nine months ended September 30, 2022. MSP Recovery Aviation, LLC The Company may make payments related to operational expenses on behalf of its affiliate, MSP Recovery Aviation, LLC (“MSP Aviation”). MSP Aviation was created to provide aircraft rental to third party customers and the Company. The Company has made payments in the periods of the financial statements only related to specifically billed flights and these rates are at or below the market rate for such services. As of September 30, 2022 and December 31, 2021, $153 thousand and $153 thousand, respectively was due from MSP Aviation and included in the condensed consolidated balance sheets in Affiliate Receivable. For the three and nine months ended September 30, 2022, $150 thousand and $400 thousand, respectively was included in General and Administrative expenses related to MSP Aviation in the condensed consolidated statements of operations. For the three and nine months ended September 30, 2021, the amounts were de minimus. Funds held for other entities The Company may collect and/or hold cash on behalf of its affiliates in the ordinary course of business. As of September 30, 2022 and December 31, 2021, $19.8 million and $39.7 million was due to affiliates of the Company and included in the condensed consolidated balance sheets in Affiliate Payable. These amounts were primarily due to Series MRCS, and will be repaid either through excess cash flows from operations or other financing. During the year ended December 31, 2021, the Company also entered into a note payable with Series MRCS as outlined in Note 7, Intangible Assets, Net As of December 31, 2021, $0.4 million was due to MSP National, LLC from Series MRCS and as of September 30, 2022 and December 31, 2021, there were additional receivables from other affiliates of $146 thousand and $92 thousand, respectively. These were included in the condensed consolidated balance sheets in Affiliate Receivable. VRM Historically, MSP Recovery, LLC has received claims recovery service income for services provided to VRM MSP. The Company concluded that VRM MSP is a related party due to ownership interests in the entity held by Series MRCS LLC. During the nine months ended September 30, 2022 and 2021, $0 million and $10.6 million, respectively, and $1.7 million and $7.0 million, respectively, of claims recovery service income was received from VRM MSP as part of the servicing agreement and was included in the condensed consolidated statements of operations. | Note 11. RELATED PARTY Legal Services—MSP Recovery Law Firm Certain Company entities have previously entered into legal services agreements (the “Existing LSAs”) with the Law Firm, an affiliate of certain Members, for the recovery of Claims. Pursuant to the terms of the Existing LSAs, the Law Firm provides MSP with investigation, case management, research and legal services in the pursuit of recovery of Claims in exchange for a portion of the recovered proceeds relating to such Claims. The Existing LSAs also provide that the Law Firm serve as exclusive lead counsel for any litigation relating to such Claims. As of December 31, 2021 and 2020, $5.5 million and $0.2 million, respectively, was due to the Law Firm and included in the combined and consolidated balance sheets in Affiliate Payable. The Law Firm may also collect and/or hold cash on behalf of the Company in the ordinary course of business. As of December 31, 2021 and 2020, $3.4 million and $4.3 million, respectively, was due from the Law Firm and included in the combined and consolidated balance sheets in Affiliate Receivable. In addition, the Company rents office space from the Law Firm as discussed in Note 6. MSP Recovery Aviation, LLC MSP Recovery, LLC may make payments related to operational expenses on behalf of its affiliate, MSP Recovery Aviation, LLC (“MSP Aviation”). As of both December 31, 2021 and 2020, $153 thousand was due from the MSP Aviation and included in the combined and consolidated balance sheets in Affiliate Receivable. Funds held for other entities MSP Recovery, LLC may collect and/or hold cash on behalf of its affiliates in the ordinary course of business. As of December 31, 2021 and 2020, $39.7 million and $38.8 million, respectively, was due to affiliates of the Company and included in the combined and consolidated balance sheets in Affiliate Payable. These amounts were primarily due to Series MRCS LLC, an affiliate of MSP, and will be repaid either through excess cash flows from operations, other financing or in connection with the transaction noted in Note 1. During the year ended December 31, 2021, the Company also entered into a note payable with Series MRCS as outlined in Note 5. As of December 31, 2021, the balance of the note payable was $500 thousand and included in the combined and consolidated balance sheets in Claims financing obligation & notes payable. As of both December 31, 2021 and 2020, $0.4 million was due to MSP National, LLC from Series MRCS LLC and as of December 31, 2021 and 2020, there were additional receivables from other affiliates of $92 thousand and $17 thousand, respectively. These were included in the combined and consolidated balance sheets in Affiliate Receivable. VRM MSP Recovery, LLC receives claims recovery service income for services provided to VRM. The Company concluded that VRM is a related party due to ownership interests in the entity held by Series MRCS LLC, an affiliate of MSP. During the years ended December 31, 2021 and 2020, $11.5 million and $13.1 million, respectively, of claims recovery service income was received from VRM as part of the servicing agreement and was included in the combined and consolidated statements of operations. |
Investments in Equity Securitie
Investments in Equity Securities and Obligations to Deliver Securities | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Investments, Debt and Equity Securities [Abstract] | ||
Investments in Equity Securities and Obligations to Deliver Securities | Note 14. INVESTMENTS IN EQUITY SECURITIES AND OBLIGATIONS TO DELIVER SECURITIES The Company had an outstanding obligation to provide equity securities (a “short position”) as of December 31, 2020. The short position was classified as a liability, marked-to-market | Note 12. INVESTMENTS IN EQUITY SECURITIES AND OBLIGATIONS TO DELIVER SECURITIES The Company had an outstanding obligation to provide equity securities (a “short position”) as of December 31, 2020. The short position was classified as a liability, marked-to-market |
Net Loss Per Common Share
Net Loss Per Common Share | 9 Months Ended |
Sep. 30, 2022 | |
Earnings Per Share [Abstract] | |
Net Loss Per Common Share | Note 15. NET LOSS PER COMMON SHARE Basic earnings per share of Class A common stock is computed by dividing net income attributable to common shareholders by the weighted-average number of shares of Class A common stock outstanding during the period. Diluted earnings per share of Class A common stock is computed by dividing net income attributable to common shareholders adjusted for the assumed exchange of all potentially dilutive securities, by the weighted-average number of shares of Class A common stock outstanding adjusted to give effect to potentially dilutive elements. Diluted loss per share for all period presented is the same as basic loss per share as the inclusion of the potentially issuable shares would be anti-dilutive. Prior to the Business Combination, the equity structure of MSP Recovery, LLC included units which shared in the profits and losses of MSP Recovery, LLC. In reviewing the calculation of earnings per unit for periods prior to the Business Combination, the Company concluded that it resulted in values that would not be meaningful to the users of the unaudited condensed consolidated financial statements. As such, earnings per share information for the three and nine months ended September 30, 2021 has not been presented. The basic and diluted earnings per share for the three and nine months ended September 30, 2022 represent income (loss) from only the period from the Closing Date to September 30, 2022 for the Company. The following table sets forth the computation of basic and diluted earnings per share of Class A common stock: (In thousands except shares and per share amounts) Three months ended Nine months ended Numerator - basic and diluted: Net loss $ (27,060 ) $ (118,075 ) Less: Net loss attributable to MSP Recovery, LLC pre Business Combination — 28,639 Less: Net loss attributable to the noncontrolling interest post Business Combination $ 26,597 $ 87,685 Net loss attributable to common shareholders $ (463 ) $ (1,751 ) Denominator - basic and diluted: Weighed-average shares of Class A common stock outstanding 69,036,899 53,138,474 Earnings per share of Class A common stock - basic and diluted $ (0.01 ) $ (0.03 ) Shares of the Company’s Class V common stock do not participate in the earnings or losses of the Company and are therefore not participating securities. As such, separate presentation of basic and diluted earnings per share of Class V common stock under the two-class In the calculation for earnings per share for the three and nine months ended September 30, 2022, the Company excluded from the calculation of diluted earnings per share 3,148,720,212 shares of Class V common stock, 3,916,725 Public Warrants outstanding, and 1,028,046,326 shares of New Warrants outstanding because their effect would have been anti-dilutive. |
Derivative Liability
Derivative Liability | 9 Months Ended |
Sep. 30, 2022 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Liability | Note 16. DERIVATIVE LIABILITY The Company and CF entered into an agreement for an OTC Equity Prepaid Forward Transaction (the “Transaction”). Pursuant to the terms of the Transaction, CF agreed to (a) transfer to the Company for cancellation any warrants to purchase shares received as a result of being the stockholder of record of a share as of the close of business on the closing date of the Business Combination, pursuant to the previously announced and declared LCAP dividend and (b) waive any redemption right that would require the redemption of the Subject Shares (as defined below) in exchange for a pro rata amount of the funds held in LCAP’s trust account. At closing of the Business Combination, the Company transferred from the trust account to an escrow account an amount equal to (a) the aggregate number of such Subject Shares (approximately 1.1 million shares), multiplied by (b) the per share redemption price for shares out of the trust account, as a prepayment to CF of the amount to be paid to CF in settlement of the Transaction for the number of shares owned by CF at the closing of the Business Combination (the “FEF Shares”). CF may sell the Subject Shares at its sole discretion in one or more transactions, publicly or privately. Any such sale shall constitute an optional early termination of the Transaction upon which (a) CF will receive from the escrow account an amount equal to the positive excess, if any, of (x) the product of the redemption price and the aggregate number of shares over (y) an amount equal to the proceeds received by CF in connection with sales of the shares, and (b) the Company will receive from the escrow account the amount set forth in (y) above. The Company concluded that the instrument includes an embedded derivative for the change in value of the Company’s Class A common stock and as such, at the end of each period the Company will mark to market the shares through booking a derivative liability/asset. The calculation of the derivative liability/asset would be the difference between the restricted cash and current fair value of the outstanding FEF shares (number of FEF shares multiplied by market price of the Company’s Class A common stock as of period end). As of September 30, 2022, CF had not sold any FEF shares. The aggregate purchase price of $11.4 million is reflected in restricted cash with the fair value of the shares of $1.4 million included as Class A common stock subject to possible redemption within temporary equity and the derivative liability of $10.0 million reflected in current liabilities in the condensed consolidated balance sheets. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2021 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 13. SUBSEQUENT EVENTS The Company has evaluated subsequent events from the balance sheet date through March 10, 2022, the date the financial statements were available to be issued. On January 10, 2022, the Company announced the launch of LifeWallet LLC (“LifeWallet”). LifeWallet is being designed to help first responders and healthcare providers quickly and easily access patient medical histories. LifeWallet is part of MSP Recovery’s Chase to Pay platform, providing real-time analytics at the point of care, helping identify the primary insurer, assisting providers in receiving reasonable and customary rates for accident-related treatment, shortening the Company’s collection time frame, and increasing revenue visibility and predictability. The Company absorbed part of the technology behind LifeWallet through an employment agreement with the developer of the technology. As such as of December 31, 2021, the Company had no investment related to LifeWallet included in the combined and consolidated balance sheets. Through the date the financial statements were available to be issued, LifeWallet has committed to advertising costs within the next 12 months of approximately $1.5 million. |
Basis of Presentaton and Summ_2
Basis of Presentaton and Summary of Significant Accounting Policies (Policies) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Accounting Policies [Abstract] | ||
Basis of presentation | Basis of presentation These statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) and, in accordance with those rules and regulations do not include all information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). In the opinion of management, the unaudited condensed consolidated interim financial statements (the “Financial Statements”) reflect all adjustments, which consist only of normal recurring adjustments, necessary to state fairly the results of operations, financial condition and cash flows for the interim periods presented herein. Prior to the Business Combination, the unaudited condensed consolidated interim financial statements reflect Legacy MSP. These Financial Statements should be read in conjunction with the combined and consolidated financial statements and notes thereto included in Legacy MSP’s 2021 and 2020 combined and consolidated financial statements. The year-end All intercompany transactions and balances are eliminated from the condensed consolidated financial statements. | Basis of presentation The accompanying combined and consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). All intercompany transactions and balances are eliminated from the combined and consolidated financial statements. The Company consolidates all entities that it controls through a majority voting interest or otherwise and the accompanying combined and consolidated financial statements include the accounts of the Company’s wholly owned subsidiaries and these entities for which the Company has a controlling interest in. |
Principles of consolidation | Principles of consolidation The Company consolidates all entities that it controls through a majority voting interest or otherwise and the accompanying condensed consolidated financial statements include the accounts of the Company’s wholly owned subsidiaries and these entities for which the Company has a controlling interest in. The Company also consolidates all entities that it controls as the primary beneficiary of a variable interest entity (“VIE”). Under the VIE model, management first assesses whether the Company has a variable interest in an entity, which would include an equity interest. If the Company has a variable interest in an entity, management further assesses whether that entity is a VIE, and if so, whether the Company is the primary beneficiary under the VIE model. Generally, entities that are organized similar to a limited partnership, in which a general partner (or managing member) make the most relevant decisions that affect the entity’s economic performance, are considered to be VIEs which would require consolidation, unless the limited partners have substantive kickout or participating rights. Entities that do not qualify as VIEs are assessed for consolidation under the voting interest model. Under the VIE model, an entity is deemed to be the primary beneficiary of a VIE if it holds a controlling financial interest. A controlling financial interest is defined as (a) the power to direct the activities of a VIE that most significantly affect the entity’s economic performance and (b) the obligation to absorb losses of the entity or the right to receive benefits from the entity that could potentially be significant to the VIE. Management determines whether the Company is the primary beneficiary of a VIE at the time it becomes involved with a VIE and reconsiders that conclusion at each reporting date. This analysis includes an evaluation of the Company’s control rights, as well as the economic interests that the Company holds in the VIE, including indirectly through related parties. As a result of the Business Combination, the Company consolidates MSP Recovery, LLC under the VIE model. | Principles of combination and consolidation The combined and consolidated financial statements (the “Financial Statements”) have been prepared on a stand-alone basis and include the accounts of MSPR, entities in which MSP has a controlling financial interest, and certain entities under common control (see Note 1). The Company also combines all entities that it controls through a majority voting interest or as the primary beneficiary of a variable interest entity (“VIE”). Under the VIE model, management first assesses whether the Company has a variable interest in an entity, which would include an equity interest. If the Company has a variable interest in an entity, management further assesses whether that entity is a VIE, and if so, whether the Company is the primary beneficiary under the VIE model. Generally, entities that are organized similar to a limited partnership, in which a general partner (or managing member) make the most relevant decisions that affect the entity’s economic performance, are considered to be VIEs which would require consolidation, unless the limited partners have substantive kickout or participating rights. Entities that do not qualify as VIEs are assessed for consolidation under the voting interest model. Under the VIE model, an entity is deemed to be the primary beneficiary of a VIE if it holds a controlling financial interest. A controlling financial interest is defined as (a) the power to direct the activities of a VIE that most significantly affect the entity’s economic performance and (b) the obligation to absorb losses of the entity or the right to receive benefits from the entity that could potentially be significant to the VIE. Management determines whether the Company is the primary beneficiary of a VIE at the time it becomes involved with a VIE and reconsiders that conclusion at each reporting date. This analysis includes an evaluation of the Company’s control rights, as well as the economic interests that the Company holds in the VIE, including indirectly through related parties. Entities that comprise the Company are under common control. When an entity within the structure controls another entity, it is presented on a consolidated basis. When the common control owner is outside of the Company, the entities are presented on a combined basis. The inclusion of entities on a combined or consolidated basis is depicted in Note 1. |
Non-Controlling interest | Non-controlling As part of the Business Combination and described in Note 1, Description of Business non-controlling Up-C Up-C Up-C non-controlling non-controlling Changes in the Company’s ownership interest in MSP Recovery, LLC, due to Class V shareholders converting their shares to Class A, are accounted for as equity transactions. Each issuance of the Company’s Class A Common Stock requires a corresponding issuance of MSP Recovery, LLC units to the Company. The issuance would result in a change in ownership and would reduce the balance of non-controlling paid-in | Non-Controlling For entities that are consolidated, but not 100% owned, a portion of the income or loss and corresponding equity is allocated to the other owners based on the distribution requirements in each entity’s operating agreement. The aggregate of the income or loss and corresponding equity that is not allocated to MSP is included in non-controlling Non-controlling non-controlling Non-Controlling |
Estimates and Assumptions | Estimates and Assumptions The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting periods. Actual results could differ from the Company’s estimates. Estimates are periodically reviewed considering changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known. Significant estimates and assumptions reflected in these condensed consolidated financial statements include but are not limited to claims recovery income and claims recovery service income recognition, recoverability of long-lived assets and cost of claims recoveries. | Estimates and Assumptions The preparation of combined and consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting periods. Actual results could differ from the Company’s estimates. Estimates are periodically reviewed considering changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known. Significant estimates and assumptions reflected in these combined and consolidated financial statements include but are not limited to claims recovery income and claims recovery service income recognition, recoverability of long-lived assets and cost of claims recoveries. |
Segments | Segments Operating segments are defined as components of an entity for which separate financial information is available and regularly reviewed by the chief operating decision maker (“CODM”). The Company manages its operations as a single | Segments Operating segments are defined as components of an entity for which separate financial information is available and regularly reviewed by the chief operating decision maker (“CODM”). The Company manages its operations as a single |
COVID-19 Impact | COVID-19 The COVID-19 COVID-19 COVID-19 | COVID-19 During the years ended December 31, 2021 and 2020, an outbreak of the novel coronavirus (“COVID-19”) COVID-19 COVID-19 including COVID-19 |
Concentration of credit risk and Off-Balance Sheet Risk | Concentration of credit risk and Off-Balance Cash and cash equivalents and affiliate receivable are financial instruments that are potentially subject to concentrations of credit risk. See Note 13, Related Party off-balance-sheet | Concentration of credit risk and Off-Balance Cash and cash equivalents and affiliate receivable are financial instruments that are potentially subject to concentrations of credit risk. See Note 11, Related Party off-balance-sheet |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investments purchased with original maturities of three months or less to be cash equivalents. | |
Cash and Cash Equivalents and Restricted Cash | Cash and Cash Equivalents and Restricted Cash The Company considers all highly liquid investments purchased with original maturities of three months or less to be cash equivalents. Restricted Cash consists of cash held in escrow related to the Prepaid Forward Agreement with CF. See Note 16, Derivative Liability | |
Fair Value Measurements | Fair Value Measurements The Company applies the provisions of Accounting Standards Codification (“ASC”) 820, Fair Value Measurements non-financial non-financial non-financial non-recurring Level 1: Quoted prices in active markets for identical assets or liabilities. Level 2: Quoted prices for similar assets and liabilities in active markets or inputs that are observable. Level 3: Unobservable inputs reflecting management’s own assumptions about the inputs used in pricing the asset or liability. The Company has determined the estimated fair value of its financial instruments based on appropriate valuation methodologies; however, for Level 2 and Level 3 inputs considerable judgment is required to develop these estimates. Accordingly, these estimated fair values are not necessarily indicative of the amounts the Company could realize in a current market exchange. The estimated fair values can be materially affected by using different assumptions or methodologies. The methods and assumptions used in estimating the fair values of financial instruments are based on carrying values and future cash flows. As of September 30, 2022 and December 31, 2021, the Company did not hold any Level 2 or Level 3 assets or liabilities. Cash and cash equivalents and restricted cash are stated at cost, which approximates their fair value. The carrying amounts reported in the balance sheets for affiliate receivable, accounts payable, affiliate payable and accrued liabilities approximate fair value, due to their short-term maturities. The Company’s investments in rights to claim recovery cash flows are carried at cost as noted in Note 4, Asset Acquisitions. | Fair Value Measurements The Company applies the provisions of ASC 820, Fair Value Measurements non-financial non-financial non-financial non-recurring Level 1: Quoted prices in active markets for identical assets or liabilities. Level 2: Quoted prices for similar assets and liabilities in active markets or inputs that are observable. Level 3: Unobservable inputs reflecting management’s own assumptions about the inputs used in pricing the asset or liability. The Company has determined the estimated fair value of its financial instruments based on appropriate valuation methodologies; however, for level 2 and level 3 inputs considerable judgment is required to develop these estimates. Accordingly, these estimated fair values are not necessarily indicative of the amounts the Company could realize in a current market exchange. The estimated fair values can be materially affected by using different assumptions or methodologies. The methods and assumptions used in estimating the fair values of financial instruments are based on carrying values and future cash flows. As of December 31, 2021 and 2020, the Company did not hold any level 2 or level 3 assets or liabilities. Cash and cash equivalents are stated at cost, which approximates their fair value. The carrying amounts reported in the balance sheets for affiliate receivable, accounts payable, affiliate payable and accrued liabilities approximate fair value, due to their short-term maturities. The carrying amounts of the Company’s outstanding borrowings that qualify as financial instruments are carried at cost, which approximates their fair value as of December 31, 2021 and 2020. The Company had an outstanding obligation to provide equity securities (a “short position”) as of December 31, 2020. The short position was classified as a liability, marked-to-market Investments in Equity Securities and Obligations to Deliver Securities. |
Equity Method Investments | Equity Method Investments Equity investments that are not consolidated, but over which the Company exercises significant influence, are accounted for in accordance with ASC 323, “Investments—Equity Method and Joint Ventures” (“ASC 323”). Whether or not the Company exercises significant influence with respect to an investee company depends on an evaluation of several factors including, among others, representation on the investee company’s board of directors and ownership level. An entity is presumptively assumed to have significant influence in a corporation when it holds 20% or more of the voting stock of the investee company, or at a lower level (e.g., 3% to 5%) for entities that track separate members capital accounts. Under the equity method of accounting, an investee company’s accounts are not reflected within the Company’s condensed consolidated balance sheets and statements of operations; however, the Company’s share of the earnings or losses of the investee company is reflected in the caption “Other income” in the condensed consolidated statements of operations. The Company’s carrying value in equity method investee companies is not reflected in the Company’s condensed consolidated balance sheets as of September 30, 2022 or December 31, 2021 as the carrying value is zero. When the Company’s carrying value in an equity method investee company is reduced to zero, no further losses are recorded in the Company’s condensed consolidated financial statements unless the Company has guaranteed obligations of the investee company or has committed additional funding. When the investee company subsequently reports income, the Company will not record its share of such income until it equals the amount of its share of losses not previously recognized. | Equity Method Investments Equity investments that are not consolidated, but over which the Company exercises significant influence, are accounted for in accordance with ASC Topic 323, “Investments—Equity Method and Joint Ventures” (“ASC 323”). Whether or not the Company exercises significant influence with respect to an investee company depends on an evaluation of several factors including, among others, representation on the investee company’s board of directors and ownership level. An entity is presumptively assumed to have significant influence in a corporation when it holds 20% or more of the voting stock of the investee company, or at a lower level (e.g., 3% to 5%) for entities that track separate members capital accounts. Under the equity method of accounting, an investee company’s accounts are not reflected within the Company’s combined and consolidated balance sheets and statements of operations; however, the Company’s share of the earnings or losses of the investee company is reflected in the caption “Other income” in the combined and consolidated statements of operations. The Company’s carrying value in an equity method investee company is not reflected in the Company’s combined and consolidated balance sheets as of December 31, 2021 or December 31, 2020 as the carrying value is zero. When the Company’s carrying value in an equity method investee company is reduced to zero, no further losses are recorded in the Company’s combined and consolidated financial statements unless the Company guaranteed obligations of the investee company or has committed additional funding. When the investee company subsequently reports income, the Company will not record its share of such income until it equals the amount of its share of losses not previously recognized. |
Property, Plant and Equipment | Property, Plant and Equipment Property and equipment are stated at historical cost less accumulated depreciation and accumulated impairment losses, if any. Major expenditures for property and equipment and those that substantially increase useful lives are capitalized. When assets are sold or otherwise disposed of, costs and related accumulated depreciation are removed from the financial statements and any resulting gains or losses are included in general and administrative expenses within our condensed consolidated statements of operations. The Company provides for depreciation and amortization on property and equipment using the straight-line method to allocate the cost of depreciable assets over their estimated lives as follows: Office and Computer Equipment 3 years Furniture and Fixtures 3 years Leasehold Improvements Lesser of lease term or estimated life | Property, Plant and Equipment Property and equipment are stated at historical cost less accumulated depreciation and accumulated impairment losses, if any. Major expenditures for property and equipment and those that substantially increase useful lives are capitalized. When assets are sold or otherwise disposed of, costs and related accumulated depreciation are removed from the financial statements and any resulting gains or losses are included in general and administrative expenses within our combined and consolidated statements of operations. The Company provides for depreciation and amortization on property and equipment using the straight-line method to allocate the cost of depreciable assets over their estimated lives as follows: Office and Computer Equipment 3 years Furniture and Fixtures 3 years Leasehold Improvements Lesser of lease term or estimated life |
Internal Use Software | Internal Use Software Internal-use | Internal Use Software Internal-use |
Intangible assets | Intangible assets In certain of its CCRAs, the Company makes upfront payments to acquire claims recovery rights from secondary payers, such as health plans, managed service organizations, providers or medical services and independent physicians associations. The Company recognizes intangible assets for costs incurred up front to acquire claims recovery rights from various assignors. The Company amortizes capitalized costs associated with CCRAs over 8 years, based on the typical expected timing to pursue recovery through litigation, including through potential appeals. | Intangible assets (CCRAs) In certain of its CCRAs, the Company makes upfront payments to acquire claims recovery rights from secondary payers, such as health plans, managed service organizations, providers or medical services and independent physicians associations. The Company recognizes intangible assets for costs incurred up front to acquire claims recovery rights from various assignors. The Company amortizes capitalized costs associated with CCRAs over 8 years, based on the typical expected timing to pursue recovery through litigation, including through potential appeals. |
Investment in rights to claim recovery cash flows | Investment in rights to claim recovery cash flows As part of the Business Combination, the Company acquired rights to claims recovery cash flows. These assets were determined to be financial instruments under ASC 825. These assets are held at cost. As cash flows are received the Company evaluates, based on the projected cash flows, whether there was an excess of proceeds received (or receivable) over the portion of the financial asset deemed to be recovered. In the case of excess, the Company would recognize the excess as income in the same period and the remainder would reduce the asset value. In addition, the Company evaluates these assets for impairment whenever events or changes in circumstances indicate that the carrying value of the asset may not be recoverable. If the estimated future cash flows (undiscounted and without interest charges) from the use of an asset group are less than the carrying value, a write-down would be recorded to reduce the related asset group to its estimated fair value. There were no impairment indicators in the nine months ended September 30, 2022 and 2021. | |
Leases | Leases Leases entered into by the Company, in which substantially all the benefits and risk of ownership are transferred to the Company, are recorded as obligations under capital leases. Obligations under capital leases, if any, reflect the present value of future lease payments, discounted at an appropriate interest rate, and are reduced by rental payments, net of imputed interest. Assets under capital leases are amortized based on the useful lives of the assets. All other leases are classified as operating leases, and leasing costs, including any rent holidays, leasehold incentives and rent concessions, are recorded on a straight-line basis over the lease term under general and administrative expense in the condensed consolidated statements of operations. See Note 8, Operating Leases | Leases Leases entered into by the Company, in which substantially all the benefits and risk of ownership are transferred to the Company, are recorded as obligations under capital leases. Obligations under capital leases, if any, reflect the present value of future lease payments, discounted at an appropriate interest rate, and are reduced by rental payments, net of imputed interest. Assets under capital leases are amortized based on the useful lives of the assets. All other leases are classified as operating leases, and leasing costs, including any rent holidays, leasehold incentives and rent concessions, are recorded on a straight-line basis over the lease term under general and administrative expense in the combined and consolidated statements of operations. See Note 6, Operating Lease |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets The Company evaluates long-lived assets, such as property and equipment, including capitalized software costs, and finite-lived intangibles such as claims recovery rights, for impairment whenever events or changes in circumstances indicate that the carrying value of an asset or asset group may not be recoverable. If the estimated future cash flows (undiscounted and without interest charges) from the use of an asset group are less than the carrying value, a write-down would be recorded to reduce the related asset group to its estimated fair value. There were no impairment indicators in the nine months ended September 30, 2022 and 2021. | Impairment of Long-Lived Assets The Company evaluates long-lived assets, such as property and equipment including capitalized software costs, and finite-lived intangibles such as claims recovery rights, for impairment whenever events or changes in circumstances indicate that the carrying value of an asset or asset group may not be recoverable. If the estimated future cash flows (undiscounted and without interest charges) from the use of an asset group are less than the carrying value, a write-down would be recorded to reduce the related asset group to its estimated fair value. There were no impairment indicators in the years ended December 31, 2021 and 2020. |
Claims Recovery | Claims Recovery The Company’s primary income-producing activities are associated with the pursuit and recovery of proceeds related to claims recovery rights that the Company obtains through CCRAs, in which it becomes the owner of those rights. As a result, such income is not generated from the transfer of control of goods or services to customers, but from the proceeds realized from perfection of claims recoveries from rights the Company holds outright. The Company also generates revenue by providing claims recovery services to other entities outside of the Company. Claims recovery income The Company recognizes claims recovery income based on a gain contingency model – that is, when the amounts are reasonably certain of collection. This typically occurs upon reaching a binding settlement or arbitration with the counterparty or when the legal proceedings, including any appellate process, are resolved. In some cases, the Company owes an additional payment to the original assignor in connection with the realized value of the recovery right. Claims recovery income is recognized on a gross basis, as the Company is entitled to the full value of proceeds, and makes a payment to the original assignor similar to a royalty arrangement. Such payments to prior owners are recognized as cost of claims recovery in the same period the claims recovery income is recognized. When the Company becomes entitled to proceeds from the settlement of a claim recovery pursuit or proceeding, it recognizes the amount in accounts receivable. Claims recovery service income, ASC 606, Revenue from Contracts with Customers The guidance under ASC 606, Revenue from Contracts with Customers, provides that an entity should apply the following steps: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when, or as, the entity satisfies a performance obligation. The Company derives revenues from contracts with customers primarily from claims recovery services arrangements (“claims recovery services”). Claims recovery services include services to related parties or third parties to assist those entities with pursuit of claims recovery rights. The Company has determined it has a single performance obligation for the series of daily activities that comprise claims recovery services, which are recognized over time using a time-based progress measure and are typically based on (1) budgeted expenses for the current month with an adjustment for the variance between budget and actual expenses from the prior month or (2) on a contingent basis dependent on actual settlements or resolved litigation. Amounts estimated and recognized, but not yet fully settled or resolved as part of litigation are recognized as contract assets. There were no contract assets at September 30, 2022 or December 31, 2021, as amounts associated with unresolved litigation were fully constrained. Claims recovery services are generally paid in advance on a monthly basis. The Company did not recognize any material revenue for the nine months ended September 30, 2022 and 2021 for performance obligations that were fully satisfied in previous periods. For the nine months ended September 30, 2022 and 2021, the majority of the Company’s claims recovery service income was related to a servicing agreement with VRM MSP, which was entered into on March 27, 2018. As part of the Business Combination, the Company acquired rights to cash flows in the assets, after certain required returns to VRM MSP, that had been part of the servicing agreement. As part of this acquisition, the Company no longer receives service income from this agreement and instead recognizes revenue and reductions in the asset when cash flows are received as outlined in Note 4, Asset Acquisitions The Company does not have material unfulfilled performance obligation balances for contracts with an original length greater than one year in any years presented. Additionally, the Company does not have material costs related to obtaining a claims recovery service contract with amortization periods greater than one year for any period presented. The Company applies ASC 606 utilizing the following allowable exemptions or practical expedients: • Exemption to not disclose the unfulfilled performance obligation balance for contracts with an original length of one year or less. • Practical expedient to recognize the incremental costs of obtaining a contract as an expense when incurred if the amortization period of the asset that the entity otherwise would have recognized is one year or less. • Election to present revenue net of sales taxes and other similar taxes, if any. • Practical expedient not requiring the entity to adjust the promised amount of consideration for the effects of a significant financing component if the entity expects, at contract inception, that the period between when the entity transfers a promised good or service to a customer and when the customer pays for that good or service will be one year or less. | Claims Recovery The Company’s primary income-producing activities are associated with the pursuit and recovery of proceeds related to claims recovery rights that the Company obtains through CCRAs, in which it becomes the owner of those rights. As such, such income is not generated from the transfer of control of goods or services to customers, but through the proceeds realized from perfection of claims recoveries from rights the Company holds outright. The Company also generates revenue by providing claims recovery services to other entities outside of the Company. Claims recovery income The Company recognizes claims recovery income based on a gain contingency model – that is, when the amounts are reasonably certain of collection. This typically occurs upon reaching a binding settlement or arbitration with the counterparty or when the legal proceedings, including any appellate process, are resolved. In some cases, the Company owes an additional payment to the original assignor in connection with the realized value of the recovery right. Claims recovery income is recognized on a gross basis, as the Company is entitled to the full value of proceeds, and makes a payment to the original assignor similar to a royalty arrangement. Such payments to prior owners are recognized as cost of claims recovery in the same period the claims recovery income is recognized. When the Company becomes entitled to proceeds from the settlement of a claim recovery pursuit or proceeding, it recognizes the amount in accounts receivable. Claims recovery service income, ASC 606, Revenue from Contracts with Customers On January 1, 2019, the Company adopted ASC 606, Revenue from Contracts with Customers, using the modified retrospective method for those contracts with customers which were not completed as of January 1, 2019. The adoption of ASC 606 did not have a material effect on the Company’s financial statements. The guidance provides that an entity should apply the following steps: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when, or as, the entity satisfies a performance obligation. The Company derives revenues from contracts with customers primarily from claims recovery services arrangements (“claims recovery services”). Claims recovery services include services to related parties or third parties to assist those entities with pursuit of claims recovery rights. The Company has determined it has a single performance obligation for the series of daily activities that comprise claims recovery services, which are recognized over time using a time-based progress measure and are typically based on 1) budgeted expenses for the current month with an adjustment for the variance between budget and actual expenses from the prior month or 2) on a contingent basis dependent on actual settlements or resolved litigation. Amounts estimated and recognized, but not yet fully settled or resolved as part of litigation are recognized as contract assets. There were no contract assets at December 31, 2021 or December 31, 2020, as amounts associated with unresolved litigation were fully constrained. Claims recovery services are generally paid in advance on a monthly basis. The Company did not recognize any material revenue for the years ended December 31, 2021 and 2020 for performance obligations that were fully satisfied in previous periods. For the years ended December 31, 2021 and 2020, the majority of the Company’s claims recovery service income was related to a servicing agreement with VRM MSP Recovery Partners LLC (“VRM”), which was entered into on March 27, 2018. As part of Virage Recovery Master LP’s investment in VRM, funds are set aside to pay service fees to the Company. As of December 31, 2021, VRM had $30.7 million reserved for the payment of services fees. The Company does not have material unfulfilled performance obligation balances for contracts with an original length greater than one year in any years presented. Additionally, the Company does not have material costs related to obtaining a claims recovery service contract with amortization periods greater than one year for any period presented. The Company applies ASC 606 utilizing the following allowable exemptions or practical expedients: • Exemption to not disclose the unfulfilled performance obligation balance for contracts with an original length of one year or less. • Practical expedient to recognize the incremental costs of obtaining a contract as an expense when incurred if the amortization period of the asset that the entity otherwise would have recognized is one year or less. • Election to present revenue net of sales taxes and other similar taxes, if any. • Practical expedient not requiring the entity to adjust the promised amount of consideration for the effects of a significant financing component if the entity expects, at contract inception, that the period between when the entity transfers a promised good or service to a customer and when the customer pays for that good or service will be one year or less. |
Transfers of Claims Cost Recovery Rights to Others | Transfers of Claims Cost Recovery Rights to Others In some cases, the Company has entered into arrangements to transfer CCRAs or rights to proceeds from CCRAs to other parties. The Company evaluates whether such transfers are sales of nonfinancial assets, sales of future revenues treated as debt, in-kind When they are treated as sales of nonfinancial assets, the Company recognizes a gain on the sale when control transfers to the counterparty based on the difference between the fair value of consideration (including cash) received and the recognized carrying value of the CCRAs. In some cases, such sales include variable consideration in the form of payments that will be made only upon achievement of certain recoveries, or based on a percentage of actual recoveries. The Company estimates and constrains the amounts that will ultimately be realized based on these variable payment terms and includes those amounts in the determination of gain or loss; the gain or loss is subsequently updated based on changes in those estimates. In other cases, such transfers are considered to be sales of future revenue that are debt-like in nature. These arrangements are recognized as debt based on the proceeds received, and are imputed an interest rate based on the expected timing and amount of payments to achieve contractual hurdles. These are subject to revisions of estimates of that timing and amount based on the contractual provisions and the Company’s assumptions from changes in facts and circumstances. Such changes are reflected through revision of the imputed interest rate on a cumulative catch up basis. | Transfers of Claims Cost Recovery Rights to Others In some cases, the Company has entered into arrangements to transfer CCRAs or rights to proceeds from CCRAs to other parties. The Company evaluates whether such transfers are sales of nonfinancial assets, sales of future revenues treated as debt, in-kind When they are treated as sales of nonfinancial assets, the Company recognizes a gain on the sale when control transfers to the counterparty based on the difference between the fair value of consideration (including cash) received and the recognized carrying value of the CCRAs. In some cases, such sales include variable consideration in the form of payments that will be made only upon achievement of certain recoveries, or based on a percentage of actual recoveries. The Company estimates and constrains the amounts that will ultimately be realized based on these variable payment terms and includes those amounts in the determination of gain or loss; the gain or loss is subsequently updated based on changes in those estimates. In other cases, such transfers are considered to be sales of future revenue that are debt-like in nature. These arrangements are recognized as debt based on the proceeds received, and are imputed an interest rate based on the expected timing and amount of payments to achieve contractual hurdles. These are subject to revisions of estimates of that timing and amount based on the contractual provisions and the Company’s assumptions from changes in facts and circumstances. Such changes are reflected through revision of the imputed interest rate on a cumulative catch up basis. |
Cost of Claims Recoveries | Cost of Claims Recoveries Costs of claims recoveries consist of all directly attributable costs specifically associated with claims processing activities, including contingent payments to assignors (i.e., settlement expenses). | Cost of Claims Recoveries Costs of claims recoveries consist of all directly attributable costs specifically associated with claims processing activities, including contingent payments to assignors (i.e., settlement expenses) as well as amortization of CCRA intangible assets for those in which the Company made upfront payments for claims recovery rights. |
Claims amortization expense | Claims amortization expense Claims amortization expense includes amortization of CCRAs acquired as part of the business combination, shown as Intangibles, net in the condensed consolidated balance sheets, and CCRA intangible assets for which the Company made upfront payments for claims recovery rights. For further details on CCRAs see Note 7 , Intangible Assets, Net | |
Income Taxes | Income Taxes Our income tax expense, deferred tax assets and liabilities, and reserves for unrecognized tax benefits reflect management’s best assessment of estimated current and future taxes to be paid. As a result of the Business Combination, the Company became the sole managing member of MSP Recovery, LLC, which is treated as a partnership for U.S. federal, state and local income tax purposes. As a partnership, MSP Recovery, LLC is not subject to U.S. federal and certain state and local income taxes. Any taxable income or loss generated by MSP Recovery, LLC is passed through to and included in the taxable income or loss of its partners, including MSP Recovery, Inc. The Company is subject to U.S. federal income taxes, in addition to state and local income taxes, with respect to the Company’s allocable share of income of MSP Recovery, LLC. The Company’s deferred tax balances reflect the impact of temporary differences between the carrying amount of assets and liabilities and the Company’s tax basis. The balances are stated at the tax rates in effect when the temporary differences are expected to be recovered or settled. The Company reviewed the anticipated future realization of the tax benefit of the Company’s existing deferred tax assets and concluded that it is more likely than not that all of the deferred tax assets will not be realized in the future. | Income Taxes The various entities that comprise the Company, including consolidated affiliates, have elected to be treated as a partnership for federal income tax purposes. As such, the Company entities are treated as disregarded entities and are not subject to federal income taxation at the legal entity level. Instead, the Company’s members are liable for federal and state income taxes on their respective share of the Company’s taxable income or loss, subject to each member’s own adjustments for its capital accounts for tax purposes. Consequently, no income tax, income tax payable, or deferred tax assets and liabilities are recorded for any financial reporting date. It is not practical to provide information about each member’s tax basis in the entities, as they are varied by member and subject to basis adjustments that exist outside of the Company’s financial accounting records. For tax years beginning on or after January 1, 2018, the legal entities that comprise the Company are subject to partnership audit rules enacted as part of the Bipartisan Budget Act of 2015 (the “Centralized Partnership Audit Regime”). Under the Centralized Partnership Audit Regime, any Internal Revenue Service (“IRS”) audit of any or all of the legal entities that comprise the Company would be conducted at the partnership level. If the IRS determines an adjustment is warranted, the entities that comprise the Company that are implicated by such an adjustment will pay an “imputed underpayment,” including any applicable interest and penalties. The entities that comprise the Company may instead make a “push-out” |
Recent Accounting Pronouncements | Recent Accounting Pronouncements New Accounting Pronouncements Recently Adopted ASU 2019-12, Simplifying the Accounting for Income Taxes (Topic 740) 2019-12, Simplifying the Accounting for Income Taxes (Topic 740) step-up ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting ASU 2020-06, Debt — Debt With Conversion and Other Options (Subtopic 470-20) 815- 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) 815-40): December 15, 2021 ASU 2022-03, Fair Value Measurement (Topic 820)—Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions 2022-03, Fair Value Measurement (Topic 820)—Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions June 2022 Asset Acquisitions New Accounting Pronouncements Issued but Not Yet Adopted In February 2016, the FASB issued ASU 2016-02, Leases 2018-10 , Codification Improvements to ASC 2016-02 Leases 2016-02. 2018-11, Leases: Targeted Improvements 2020-03, Codification Improvements to Financial Instruments, Leases 2016-02. not-for-profits not-for-profits 2020-05, Revenue from Contracts with Customers and Leases ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments including subsequent amendments to the initial guidance 2019-04, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825. Financial Instruments, ASU 2019-05, 2019-11, Codification Improvements to Topic 326, Financial Instruments - Credit Losses 2022-02, Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures | Recent Accounting Pronouncements New Accounting Pronouncements Recently Adopted ASU 2018-15, Intangibles-Goodwill and Other—Internal-Use 350-40)—Customer’s for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract 2018-15, Intangibles-Goodwill and Other—Internal-Use 350- Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. internal-use internal-use ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Change to the Disclosure Requirements for Fair Value Measurement 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Change to the Disclosure Requirements for Fair Value Measurement New Accounting Pronouncements Issued but Not Yet Adopted In February 2016, the FASB issued ASU 2016-02, Leases 2018-10 , Codification Improvements to ASC 2016-02 Leases 2016-02. 2018-11, Leases: Targeted Improvements 2020-03, Codification Improvements to Financial Instruments, Leases 2016-02. not-for-profits not-for-profits 2020-05, Revenue from Contracts with Customers and Leases ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments including subsequent amendments to the initial guidance 2019-04, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825. Financial Instruments, ASU 2019-05, Transition Relief 2019-11, Codification Improvements to Topic 326, Financial Instruments—Credit Losses ASU 2019-12, Simplifying the Accounting for Income Taxes (Topic 740) 2019-12, Simplifying the Accounting for Income Taxes (Topic 740) liabilities for outside basis differences. The standard also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting ASU 2020-06, Debt — Debt With Conversion and Other Options (Subtopic 470-20) — Contracts in Entity’s Own Equity (Subtopic 815- Entity’s Own Equity 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) 815-40): Convertible Instruments and Contracts in an Entity’s Own Equity |
Description of Business (Tables
Description of Business (Tables) | 12 Months Ended |
Dec. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Summary of Entity Name and Adopted Method | Entity Name Method MSP Recovery of Puerto Rico LLC (Puerto Rico) Combined MDA Series, LLC Combined MSP Recovery, LLC Combined MAO-MSO Consolidated (non-wholly MSP Recovery Services, LLC Combined MSPA Claims 1, LLC Consolidated (wholly owned) MSP National, LLC Consolidated (wholly owned) MSP Recovery Claims Prov Series LLC Combined MSP Recovery Claims CAID Series LLC Combined MSP WB LLC Combined MSP Recovery Claims HOSP Series LLC Combined MSP Productions, LLC Combined MSP Recovery Claims HP, Series LLC Combined MSP Recovery Claims COM, Series LLC Combined |
Basis of Presentaton and Summ_3
Basis of Presentaton and Summary of Significant Accounting Policies (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Accounting Policies [Abstract] | ||
Summary of disclosure in tabular form of useful lives of property plant and useful lives | The Company provides for depreciation and amortization on property and equipment using the straight-line method to allocate the cost of depreciable assets over their estimated lives as follows: Office and Computer Equipment 3 years Furniture and Fixtures 3 years Leasehold Improvements Lesser of lease term or estimated life | The Company provides for depreciation and amortization on property and equipment using the straight-line method to allocate the cost of depreciable assets over their estimated lives as follows: Office and Computer Equipment 3 years Furniture and Fixtures 3 years Leasehold Improvements Lesser of lease term or estimated life |
Investment In Equity Method I_2
Investment In Equity Method Investees (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Equity Method Investments and Joint Ventures [Abstract] | ||
Disclosure In Tabular Form Of Summarized Financial Information Of Equity Method Investees | Summary financial information for equity accounted investees, not adjusted for the percentage ownership of the Company is as follows: For the three months ended, For the nine months ended, Series PMPI (in thousands) September 30, September 30, September 30, September 30, Revenue $ 16 — 16 1 Amortization 500 500 1,500 1,500 Other expenses 8 — 8 — Profit (Loss) $ (492 ) (500 ) (1,492 ) (1,499 ) Series PMPI (in thousands) September 30, December 31, Total Assets $ 3,841 5,390 Total Liabilities $ 274 266 | Summary financial information for equity accounted investees, not adjusted for the percentage ownership of the Company is as follows (in thousands): Series PMPI Revenue Amortization Other expenses Profit (Loss) For the year ended December 31, 2021 $ 1 $ 2,000 $ — $ (1,999 ) For the year ended December 31, 2020 $ 34 $ 2,000 $ 20 $ (1,986 ) Series PMPI Total Assets Total Liabilities As of December 31, 2021 $ 5,390 $ 266 As of December 31, 2020 $ 7,393 $ 270 |
Property, plant and equipment_2
Property, plant and equipment, net (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Property, Plant and Equipment [Abstract] | ||
Property, Plant and Equipment [Table Text Block] | Property, plant and equipment, net consist of the following: (In thousands) September 30, December 31, Office and computer equipment $ 416 $ 356 Leasehold improvements 113 113 Internally developed software 2,944 1,020 Other software 67 66 Property, plant and equipment, gross $ 3,540 $ 1,555 Less: accumulated depreciation and amortization of software (1,060 ) (805 ) Property, plant and equipment, net $ 2,480 $ 750 | Property, plant and equipment, net consist of the following (in thousands): December 31, 2021 2020 Office and computer equipment $ 356 $ 305 Leasehold improvements 113 113 Internally developed software 1,020 589 Other software 66 67 Property, plant and equipment, gross $ 1,555 $ 1,074 Less: accumulated depreciation and amortization of software (805 ) (462 ) Property, plant and equipment, net $ 750 $ 612 |
Intangible Assets, Net (Tables)
Intangible Assets, Net (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Intangible Assets, Net (Excluding Goodwill) [Abstract] | ||
Summary Of Intangible Assets Net | Intangible assets, net consists of the following: (in thousands) September 30, 2022 December 31, 2021 Intangible assets, gross $ 2,171,174 $ 84,955 Accumulated amortization (93,603 ) (737 ) Net $ 2,077,571 $ 84,218 | Intangible assets, net consists of the following (in thousands): December 31, 2021 CCRAs Gross $ 84,955 Accumulated amortization (737 ) Net $ 84,218 December 31, 2020 CCRAs Gross $ 1,000 Accumulated amortization (573 ) Net $ 427 |
Schedule Of Expected Future Amortization Expense Of Intangible Assets | Future amortization for CCRAs is expected to be as follows: (in thousands) CCRAs Amortization 2022 (remaining) $ 67,849 2023 271,397 2024 271,324 2025 271,272 2026 271,272 Thereafter 924,457 Total $ 2,077,571 | Future amortization for CCRAs is expected to be as follows (in thousands): 2022 10,620 2023 10,620 2024 10,547 2025 10,495 2026 10,495 Thereafter 331,441 Total $ 84,218 |
Operating Leases (Tables)
Operating Leases (Tables) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Leases [Abstract] | ||
Schedule Of Future Minimum Lease Payments Under Non-cancelable Operating Leases | The future minimum lease payments under non-cancelable (In thousands) Lease Payments Year Ending December 31, 2022 (remaining) $ 58 2023 (1) 217 Total $ 275 (1) Operating lease expires before or during the year ending December 31, 2023 | The future minimum lease payments under non-cancelable Year Ending December 31, Lease 2022 $ 231 2023(1) 217 Total $ 448 (1) Operating lease expires before or during the year ending December 31, 2023 |
Noncontrolling Interest (Tables
Noncontrolling Interest (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Noncontrolling Interest [Abstract] | |
Summary of Ownership Units | The following table summarizes the ownership of Units in the Company as of September 30, 2022: Common Units Ownership Percentage Ownership of Class A Common Units 72,909,609 2.3 % Ownership of Class V Common Units 3,148,720,212 97.7 % Balance at end of period 3,221,629,821 100.0 % |
Net Loss Per Common Share (Tabl
Net Loss Per Common Share (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Earnings Per Share [Abstract] | |
Schedule of Computation of Basic and Diluted Earnings Per Share | The following table sets forth the computation of basic and diluted earnings per share of Class A common stock: (In thousands except shares and per share amounts) Three months ended Nine months ended Numerator - basic and diluted: Net loss $ (27,060 ) $ (118,075 ) Less: Net loss attributable to MSP Recovery, LLC pre Business Combination — 28,639 Less: Net loss attributable to the noncontrolling interest post Business Combination $ 26,597 $ 87,685 Net loss attributable to common shareholders $ (463 ) $ (1,751 ) Denominator - basic and diluted: Weighed-average shares of Class A common stock outstanding 69,036,899 53,138,474 Earnings per share of Class A common stock - basic and diluted $ (0.01 ) $ (0.03 ) |
Description of Business - Summa
Description of Business - Summary of Entity Name and Adopted Method (Detail) | 12 Months Ended |
Dec. 31, 2021 | |
MSP Recovery Puerto Rico [Member] | |
Disclosure In Tabular Form Of The Method Adopted By The Companies In Preparing And Consolidating The Financial Statements [Line Items] | |
Description Of Method Used In Preparing Financial Statements | Combined |
MDA Series LLC [Member] | |
Disclosure In Tabular Form Of The Method Adopted By The Companies In Preparing And Consolidating The Financial Statements [Line Items] | |
Description Of Method Used In Preparing Financial Statements | Combined |
MSP Recovery LLC [Member] | |
Disclosure In Tabular Form Of The Method Adopted By The Companies In Preparing And Consolidating The Financial Statements [Line Items] | |
Description Of Method Used In Preparing Financial Statements | Combined |
MAO MSC Recovery LLC Series FHCP [Member] | |
Disclosure In Tabular Form Of The Method Adopted By The Companies In Preparing And Consolidating The Financial Statements [Line Items] | |
Description Of Method Used In Preparing Financial Statements | Consolidated (non-wholly owned) |
MSP Recovery Services LLC [Member] | |
Disclosure In Tabular Form Of The Method Adopted By The Companies In Preparing And Consolidating The Financial Statements [Line Items] | |
Description Of Method Used In Preparing Financial Statements | Combined |
MSPA Claims One LLC [Member] | |
Disclosure In Tabular Form Of The Method Adopted By The Companies In Preparing And Consolidating The Financial Statements [Line Items] | |
Description Of Method Used In Preparing Financial Statements | Consolidated (wholly owned) |
MSP National LLC [Member] | |
Disclosure In Tabular Form Of The Method Adopted By The Companies In Preparing And Consolidating The Financial Statements [Line Items] | |
Description Of Method Used In Preparing Financial Statements | Consolidated (wholly owned) |
MSP Recovery Claims Prov Series LLC [Member] | |
Disclosure In Tabular Form Of The Method Adopted By The Companies In Preparing And Consolidating The Financial Statements [Line Items] | |
Description Of Method Used In Preparing Financial Statements | Combined |
MSP Recovery Claims CAID Series LLC [Member] | |
Disclosure In Tabular Form Of The Method Adopted By The Companies In Preparing And Consolidating The Financial Statements [Line Items] | |
Description Of Method Used In Preparing Financial Statements | Combined |
MSP WB LLC [Member] | |
Disclosure In Tabular Form Of The Method Adopted By The Companies In Preparing And Consolidating The Financial Statements [Line Items] | |
Description Of Method Used In Preparing Financial Statements | Combined |
MSP Recovery Claims HOSP Series LLC [Member] | |
Disclosure In Tabular Form Of The Method Adopted By The Companies In Preparing And Consolidating The Financial Statements [Line Items] | |
Description Of Method Used In Preparing Financial Statements | Combined |
MSP Productions LLC [Member] | |
Disclosure In Tabular Form Of The Method Adopted By The Companies In Preparing And Consolidating The Financial Statements [Line Items] | |
Description Of Method Used In Preparing Financial Statements | Combined |
MSP Recovery Claims HP Series LLC [Member] | |
Disclosure In Tabular Form Of The Method Adopted By The Companies In Preparing And Consolidating The Financial Statements [Line Items] | |
Description Of Method Used In Preparing Financial Statements | Combined |
MSP Recovery Claims COM Series LLC [Member] | |
Disclosure In Tabular Form Of The Method Adopted By The Companies In Preparing And Consolidating The Financial Statements [Line Items] | |
Description Of Method Used In Preparing Financial Statements | Combined |
Description of Business - Addit
Description of Business - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Thousands | 9 Months Ended | |||||||||
Jun. 16, 2022 | Sep. 30, 2022 | May 23, 2022 | May 17, 2022 | Dec. 31, 2021 | Sep. 27, 2021 | Jul. 11, 2021 | Dec. 31, 2020 | |||
Nature Of Operations [Line Items] | ||||||||||
Prepaid expenses and other current assets | $ 32,660 | [1] | $ 13,304 | [1] | $ 54 | |||||
Life Wallet LLC [Member] | Advertising Costs Commitment [Member] | ||||||||||
Nature Of Operations [Line Items] | ||||||||||
Other commitments remainder of fiscal year | 1,700 | |||||||||
John H. Ruiz and Frank C [Member] | Promissory Notes [Member] | ||||||||||
Nature Of Operations [Line Items] | ||||||||||
Aggregate principal amount | $ 112,800 | |||||||||
Interest rate | 4% | |||||||||
Debt instrument, maturity term | 4 years | |||||||||
MSP Recovery Law Firm [Member] | ||||||||||
Nature Of Operations [Line Items] | ||||||||||
Payment of advances | $ 36,500 | |||||||||
Prepaid expenses and other current assets | 31,900 | |||||||||
Cantor Fitzgerald [Member] | Common Stock Purchase Agreement [Member] | ||||||||||
Nature Of Operations [Line Items] | ||||||||||
Percentage of volume of weighted average price of common stock to sell under purchase agreement | 98% | |||||||||
Prudent Group [Member] | Assignment Agreement And Services Agreement [Member] | ||||||||||
Nature Of Operations [Line Items] | ||||||||||
Maximum monetize amount of net recovery interest in claim demand | $ 250,000 | |||||||||
Percentage of amount paid on claim | 90% | |||||||||
Virage Capital Management LP [Member] | Investment Capacity Agreement [Member] | ||||||||||
Nature Of Operations [Line Items] | ||||||||||
Maximum amount of paid amount purchasable pursuant to Agreement | $ 3,000,000 | |||||||||
Percentage of recoveries payable to assignor | 50% | |||||||||
Percentage of recoveries from the assignor | 50% | |||||||||
Membership Interest Purchase Agreement [Member] | ||||||||||
Nature Of Operations [Line Items] | ||||||||||
Common stock units issued or issuable pursuant to business combination | 3,250,000,000 | |||||||||
Common stock units to be deposited in the escrow account | 6,000,000 | |||||||||
Membership Interest Purchase Agreement [Member] | Other Current Assets [Member] | ||||||||||
Nature Of Operations [Line Items] | ||||||||||
Business combination acquisition costs not expensed | 13,300 | |||||||||
Investment Capacity Agreement [Member] | Virage Capital Management LP [Member] | ||||||||||
Nature Of Operations [Line Items] | ||||||||||
Maximum amount of paid amount purchasable pursuant to Agreement | $ 3,000,000 | |||||||||
Percentage of recoveries payable to assignor | 50% | |||||||||
Percentage of recoveries from the assignor | 50% | |||||||||
Servicing Agreement [Member] | Virage Recovery Master LP [Member] | ||||||||||
Nature Of Operations [Line Items] | ||||||||||
Reserved for the payment of service fees | $ 30,700 | |||||||||
Servicing Agreement [Member] | Prudent Group [Member] | ||||||||||
Nature Of Operations [Line Items] | ||||||||||
Percentage of annual return on amount paid for net recovery proceeds | 18% | |||||||||
Class V Common Stock [Member] | Non Economic Voting Shares [Member] | ||||||||||
Nature Of Operations [Line Items] | ||||||||||
Common stock par or stated value per share | $ 0.0001 | |||||||||
Class V Common Stock [Member] | Non Economic Voting Shares [Member] | Lion Heart [Member] | ||||||||||
Nature Of Operations [Line Items] | ||||||||||
Common stock par or stated value per share | $ 0.0001 | |||||||||
Common Class B [Member] | Non Economic Voting Shares [Member] | Opco [Member] | ||||||||||
Nature Of Operations [Line Items] | ||||||||||
Common stock par or stated value per share | $ 0.0001 | |||||||||
Common Class A [Member] | ||||||||||
Nature Of Operations [Line Items] | ||||||||||
Common stock par or stated value per share | $ 0.0001 | |||||||||
Common Class A [Member] | Cantor Fitzgerald [Member] | Common Stock Purchase Agreement [Member] | ||||||||||
Nature Of Operations [Line Items] | ||||||||||
Option to sell maximum shares value under purchase agreement | $ 1,000,000 | |||||||||
[1]As of September 30, 2022 and December 31, 2021, the total affiliate receivable, indemnification asset, affiliate payable, guaranty obligation and loan from related parties balances are with related parties. In addition, the prepaid expenses and other current assets and claims financings obligation and notes payable includes balances with related parties. See Note 13, Related Party, for further details. |
Basis of Presentaton and Summ_4
Basis of Presentaton and Summary of Significant Accounting Policies - Summary Of Disclosure In Tabular Form Of Useful Lives Of Property Plant And Useful Lives (Detail) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Office And Computer Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Useful Life | 3 years | 3 years |
Furniture and Fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Useful Life | 3 years | 3 years |
Leaseholds and Leasehold Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Estimated Useful Lives | Lesser of lease term or estimated life | |
Leasehold Improvements [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property, Plant and Equipment, Estimated Useful Lives | Lesser of lease term or estimated life |
Basis of Presentaton and Summ_5
Basis of Presentaton and Summary of Significant Accounting Policies - Additional Information (Detail) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||||||
Sep. 30, 2022 USD ($) | Sep. 30, 2021 USD ($) | [1] | Sep. 30, 2022 USD ($) SEGMENT | Sep. 30, 2021 USD ($) | Dec. 31, 2021 USD ($) SEGMENT | Dec. 31, 2020 USD ($) | ||||||
Accounting Policies [Line Items] | ||||||||||||
Number of operating segments | SEGMENT | 1 | 1 | ||||||||||
Equity Method Investments | $ 0 | $ 0 | $ 0 | |||||||||
Finite lived intangible assets useful lives | 8 years | 8 years | ||||||||||
Impairment of long lived assets | $ 0 | $ 0 | $ 0 | $ 0 | ||||||||
Claims recovery service income | 5,748,000 | [1] | $ 2,439,000 | $ 17,795,000 | [1] | $ 9,213,000 | [1] | 14,500,000 | [2] | $ 13,632,000 | [2] | |
Specific Contract [Member] | ||||||||||||
Accounting Policies [Line Items] | ||||||||||||
Claims recovery service income | $ 5,000,000 | |||||||||||
Up-C Unit Holders [Member] | Class A Common Stock [Member] | ||||||||||||
Accounting Policies [Line Items] | ||||||||||||
Non-controlling interests ownership percentage | 99.76% | 99.76% | ||||||||||
Class V Shareholders [Member] | Class A Common Stock [Member] | ||||||||||||
Accounting Policies [Line Items] | ||||||||||||
Non-controlling interests ownership percentage | 97.70% | 97.70% | ||||||||||
ASU 2019-12 | ||||||||||||
Accounting Policies [Line Items] | ||||||||||||
Change in accounting principle, accounting standards update, adopted [true false] | true | true | ||||||||||
Change in accounting principle, accounting standards update, adoption date | Jan. 01, 2022 | Jan. 01, 2022 | ||||||||||
Change in accounting principle, accounting standards update, immaterial effect [true false] | true | true | ||||||||||
ASU 2020-04 | ||||||||||||
Accounting Policies [Line Items] | ||||||||||||
Change in accounting principle, accounting standards update, adopted [true false] | true | true | ||||||||||
Change in accounting principle, accounting standards update, adoption date | Jan. 01, 2022 | Jan. 01, 2022 | ||||||||||
Change in accounting principle, accounting standards update, immaterial effect [true false] | true | true | ||||||||||
ASU 2020-06 | ||||||||||||
Accounting Policies [Line Items] | ||||||||||||
Change in accounting principle, accounting standards update, adopted [true false] | true | true | ||||||||||
Change in accounting principle, accounting standards update, adoption date | Jan. 01, 2022 | Jan. 01, 2022 | ||||||||||
Change in accounting principle, accounting standards update, immaterial effect [true false] | false | false | ||||||||||
ASU 2022-03 | ||||||||||||
Accounting Policies [Line Items] | ||||||||||||
Change in accounting principle, accounting standards update, adopted [true false] | true | true | ||||||||||
Change in accounting principle, accounting standards update, adoption date | Jun. 30, 2022 | Jun. 30, 2022 | ||||||||||
Change in accounting principle, accounting standards update, immaterial effect [true false] | false | false | ||||||||||
Change in accounting principle, accounting standards update, early adoption [true false] | true | true | ||||||||||
Virage Recovery Master LP [Member] | Servicing Agreement [Member] | ||||||||||||
Accounting Policies [Line Items] | ||||||||||||
Reserved for the payment of service fees | $ 30,700,000 | |||||||||||
Minimum [Member] | ||||||||||||
Accounting Policies [Line Items] | ||||||||||||
Equity method ownership percentage for entities that track separate capital accounts | 3% | 3% | 3% | |||||||||
Minimum [Member] | Equity Method Investment Investee [Member] | ||||||||||||
Accounting Policies [Line Items] | ||||||||||||
Equity method investments ownership percentage | 20% | 20% | 20% | |||||||||
Maximum [Member] | ||||||||||||
Accounting Policies [Line Items] | ||||||||||||
Equity method ownership percentage for entities that track separate capital accounts | 5% | 5% | 5% | |||||||||
Maximum [Member] | Equity Method Investment Investee [Member] | ||||||||||||
Accounting Policies [Line Items] | ||||||||||||
Equity method investments ownership percentage | 20% | |||||||||||
Fair Value, Inputs, Level 2 [Member] | ||||||||||||
Accounting Policies [Line Items] | ||||||||||||
Assets at fair value | $ 0 | $ 0 | $ 0 | $ 0 | ||||||||
Liabilities at fair value | 0 | 0 | 0 | 0 | ||||||||
Fair Value, Inputs, Level 3 [Member] | ||||||||||||
Accounting Policies [Line Items] | ||||||||||||
Assets at fair value | 0 | 0 | 0 | 0 | ||||||||
Liabilities at fair value | $ 0 | $ 0 | $ 0 | $ 0 | ||||||||
[1]For the three and nine months ended September 30, 2022 and 2021, claims recovery service income included $0 million and $10.6 million, respectively, and $1.7 million and $7.0 million, respectively, of claims recovery service income from VRM MSP Recovery Partners LLC (“VRM MSP”). See Note 13, Related Party, for further details.[2]For the years ended December 31, 2021 and 2020, claims recovery service income included $11.5 million and $13.1 million, respectively, of claims recovery service income from VRM MSP Recovery Partners LLC (“VRM”). See Note 11, Related Party, for further details. |
Business Combination - Addition
Business Combination - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
May 27, 2022 | May 23, 2022 | Sep. 30, 2022 | Sep. 30, 2022 | |
Business Acquisition [Line Items] | ||||
Change in fair value of warrant liability | $ 1,619 | |||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 0.0001 | $ 0.0001 | ||
Period of new warrants exercisable closing date | 30 days | |||
Warrant [Member] | ||||
Business Acquisition [Line Items] | ||||
Class of warrants or rights exercisable period | 10 days | |||
Tax Receivable Agreement [Member] | ||||
Business Acquisition [Line Items] | ||||
Percentage of pay sellers to amount of tax benefit | 85% | |||
Nomura Promissory Note [Member] | ||||
Business Acquisition [Line Items] | ||||
Principal amount of unsecured promissory note | $ 24,500 | |||
Maturity date | May 29, 2023 | |||
Debt description | On the maturity date, the Company is required to pay Nomura an amount in cash equal to the outstanding principal amount, plus accrued and unpaid interest, plus any other obligations then due or payable under the promissory note. Upon two days prior written notice to Nomura, the Company may prepay all or any portion of the then outstanding principal amount under the promissory note together with all accrued and unpaid interest thereon. | |||
Common Class A [Member] | ||||
Business Acquisition [Line Items] | ||||
Change in fair value of warrant liability | $ 3,700 | $ 1,600 | ||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 11.5 | $ 11.5 | ||
Business combination units issued | 3,250,000,000 | |||
Warrant, exercise price, decrease per share | $ 0.0001 | |||
Warrants exercised | 11,800,000 | 11,800,000 | ||
Period of subject to certain ant dilution adjustments exercisable | 30 days | |||
Dividend comprising number of new warrants payable holders | 1,028,000,000 | |||
Subject to certain ant dilution adjustments exercisable term | 5 years | |||
Warrants issued | 7,900,000 | 7,900,000 | ||
Common Class A [Member] | Canceled Units [Member] | ||||
Business Acquisition [Line Items] | ||||
Business combination units issued | 95,526,708 | |||
Common Class A [Member] | UPC Units [Member] | ||||
Business Acquisition [Line Items] | ||||
Business combination units issued | 50,022,000 | |||
Common Class A [Member] | Warrant [Member] | ||||
Business Acquisition [Line Items] | ||||
Business combination transaction, assumed liability | $ 12,500 | |||
Common Class A [Member] | Membership Interest Purchase Agreement [Member] | ||||
Business Acquisition [Line Items] | ||||
Business combination units issued | 3,154,473,292 | |||
Business combination, share price per share | $ 0.0001 | |||
Business combination, direct and incremental costs | $ 80,600 | |||
Common Class A [Member] | Forced Expiratory Flow Shares [Member] | ||||
Business Acquisition [Line Items] | ||||
Net proceeds in business combination | $ 23,400 | |||
Common Stock [Member] | ||||
Business Acquisition [Line Items] | ||||
Exchange of stock units to common stock | 5,753,080 |
Asset Acquisitions - Additional
Asset Acquisitions - Additional Information (Detail) - USD ($) shares in Millions, $ in Millions | May 23, 2022 | Sep. 30, 2022 |
Series MRCS LLC [Member] | Claims Cost Recovery Agreements | ||
Business Acquisition [Line Items] | ||
Number of Up C units issued in exchange of assets acquired | 196.6 | |
Finite life intangible assets acquired useful life | 8 years | |
Series MRCS LLC [Member] | Claims Cost Recovery Agreements | Common Class A [Member] | ||
Business Acquisition [Line Items] | ||
Percentage of discount on shares lack of marketability | 4.50% | |
Vrm Msp Recovery Partners Llc | Investment In Rights To Claim Recovery Cash Flows [Member] | ||
Business Acquisition [Line Items] | ||
Number of Up C units issued in exchange of assets acquired | 356.8 | |
Percentage of discount on shares lack of marketability | 4.50% | |
VRM [Member] | ||
Business Acquisition [Line Items] | ||
Number of Up C units issued in exchange of assets acquired | 65 | |
VRM [Member] | Reserved Shares [Member] | ||
Business Acquisition [Line Items] | ||
Annual compounded return percentage on contribution | 20% | |
Value of full return | $ 752.5 |
Investment In Equity Method I_3
Investment In Equity Method Investees - Summary of Financial Information For Equity Accounted Investees (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | |||
Disclosure In Tabular Form Of Summarized Financial Information Of Equity Method Investees [Line Items] | ||||||||
Profit (Loss) | $ (27,060) | $ (10,259) | $ (118,075) | [1] | $ (23,411) | [1] | $ (33,077) | $ (24,266) |
Total Assets | 6,574,675 | 6,574,675 | 104,006 | 17,843 | ||||
Total Liabilities | 1,181,066 | 1,181,066 | 255,414 | 133,690 | ||||
Equity Method Investee [Member] | ||||||||
Disclosure In Tabular Form Of Summarized Financial Information Of Equity Method Investees [Line Items] | ||||||||
Revenue | 16 | 0 | 16 | 1 | 1 | 34 | ||
Amortization | 500 | 500 | 1,500 | 1,500 | 2,000 | 2,000 | ||
Other expenses | 8 | 0 | 8 | 0 | 0 | 20 | ||
Profit (Loss) | (492) | $ (500) | (1,492) | $ (1,499) | (1,999) | (1,986) | ||
Total Assets | 3,841 | 3,841 | 5,390 | 7,393 | ||||
Total Liabilities | $ 274 | $ 274 | $ 266 | $ 270 | ||||
[1]Balances include related party transactions. See Note 13, Related Party, for further details. |
Investment In Equity Method I_4
Investment In Equity Method Investees - Additional Information (Detail) $ in Thousands | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2022 USD ($) INVESTMENT | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | |
Schedule of Equity Method Investments [Line Items] | |||
Equity Method Investments | $ 0 | $ 0 | |
Number of holding investments | Investment | INVESTMENT | 3 | ||
PMPI [Member] | |||
Schedule of Equity Method Investments [Line Items] | |||
Equity Method Investments | $ 0 | $ 0 | $ 0 |
Percentage of preferred return for the controlling | 20% | 20% | 20% |
Percentage of recovery claims for the controlling | 50% | 50% | 50% |
Percentage of costs allocated to non controlling | 100% | 100% | 100% |
MAO [Member] | |||
Schedule of Equity Method Investments [Line Items] | |||
Equity Method Investments | $ 0 | $ 0 | $ 0 |
Equity method investment ownership percentage | 50% | 50% | 50% |
MSO [Member] | |||
Schedule of Equity Method Investments [Line Items] | |||
Equity Method Investments | $ 0 | $ 0 | $ 0 |
Equity method investment ownership percentage | 50% | 50% | 50% |
Property, plant and equipment_3
Property, plant and equipment, net (Detail) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Property, Plant and Equipment [Line Items] | |||
Property, Plant and Equipment, Gross | $ 3,540 | $ 1,555 | $ 1,074 |
Less: accumulated depreciation and amortization of software | (1,060) | (805) | (462) |
Property, Plant and Equipment, Net | 2,480 | 750 | 612 |
Office and computer equipment | |||
Property, Plant and Equipment [Line Items] | |||
Property, Plant and Equipment, Gross | 416 | 356 | 305 |
Leasehold improvements | |||
Property, Plant and Equipment [Line Items] | |||
Property, Plant and Equipment, Gross | 113 | 113 | 113 |
Internally developed software | |||
Property, Plant and Equipment [Line Items] | |||
Property, Plant and Equipment, Gross | 2,944 | 1,020 | 589 |
Other software | |||
Property, Plant and Equipment [Line Items] | |||
Property, Plant and Equipment, Gross | $ 67 | $ 66 | $ 67 |
Property, plant and equipment_4
Property, plant and equipment, net (Parenthetical) (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | |
Property, Plant and Equipment [Line Items] | ||||||
Depreciation and amortization expense | $ 103 | $ 89 | $ 254 | $ 256 | $ 343 | $ 235 |
Software Development [Member] | ||||||
Property, Plant and Equipment [Line Items] | ||||||
Depreciation and amortization expense | $ 343 | $ 235 |
Intangible Assets, Net - Summar
Intangible Assets, Net - Summary Of Intangible Assets Net (Detail) - Claims Cost Recovery Rights [Member] - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Finite-Lived Intangible Assets [Line Items] | |||
Gross | $ 2,171,174 | $ 84,955 | $ 1,000 |
Accumulated amortization | (93,603) | (737) | (573) |
Total | $ 2,077,571 | $ 84,218 | $ 427 |
Intangible Assets, Net - Schedu
Intangible Assets, Net - Schedule Of Expected Future Amortization Expense Of Intangible Assets (Detail) - Claims Cost Recovery Rights [Member] - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Finite Lived Intangible Assets Future Amortization Expense [Line Items] | |||
Remaining 2022 | $ 67,849 | ||
2022 and 2023 | 271,397 | $ 10,620 | |
2023 and 2024 | 271,324 | 10,620 | |
2024 and 2025 | 271,272 | 10,547 | |
2025 and 2026 | 271,272 | 10,495 | |
2026 | 10,495 | ||
Thereafter | 924,457 | ||
Thereafter | 331,441 | ||
Total | $ 2,077,571 | $ 84,218 | $ 427 |
Intangible Assets, Net - Additi
Intangible Assets, Net - Additional Information (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | |
Notes Payable Due June One Two Thousand And Twenty Three [Member] | ||||||
Intangible Assets, Net [Line Items] | ||||||
Maturity date | Jun. 01, 2030 | |||||
Interest rate | 2% | |||||
Claims Cost Recovery Rights [Member] | ||||||
Intangible Assets, Net [Line Items] | ||||||
Intangible assets paid for with cash | $ 150 | |||||
Amortization expense | $ 66,000 | $ 47 | $ 92,500 | $ 114 | 164 | $ 125 |
Purchase of CCRAs | 84,000 | |||||
Issuance of notes payable | $ 500 | |||||
Issuance Value Of Shares | 10,000 | 10,000 | ||||
Claims Cost Recovery Rights [Member] | Series MRCS LLC [Member] | ||||||
Intangible Assets, Net [Line Items] | ||||||
Finite-lived Intangible Assets Acquired | 48,200 | |||||
Additional Finite Lived Intangible Assets Acquired | 12,700 | |||||
Payments to Acquire Businesses, Gross | 2,700 | |||||
Minimum Required Issuance Value Within One Year To Avoid Additional Cash Or Equity Payments | 10,000 | 10,000 | ||||
Difference Between Fair Value And Issuance Value Of Shares | 8,700 | 8,700 | ||||
Claims Cost Recovery Rights [Member] | Series MRCS LLC [Member] | Common Class A [Member] | ||||||
Intangible Assets, Net [Line Items] | ||||||
Business Acquisition, Equity Interest Issued or Issuable, Value Assigned | $ 10,000 | $ 10,000 |
Operating Leases - Schedule Of
Operating Leases - Schedule Of Future Minimum Lease Payments Under Non-cancelable Operating Leases (Detail) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Lessee, Operating Lease, Liability, Payment, Due [Abstract] | ||
Remaining 2022 | $ 58 | |
2022 and 2023 | 217 | $ 231 |
2023 | 217 | |
Total | $ 275 | $ 448 |
Operating Leases - Additional I
Operating Leases - Additional Information (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | |
Leases [Abstract] | ||||||
Rent expense | $ 194 | $ 178 | $ 579 | $ 582 | $ 800 | $ 1,500 |
Lease expiration period | November 2023 | November 2023 |
Variable Interest Entities - Ad
Variable Interest Entities - Additional Information (Detail) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 | Sep. 30, 2021 | Dec. 31, 2020 |
Variable Interest Entity [Line Items] | ||||
Assets | $ 6,574,675 | $ 104,006 | $ 17,843 | |
Liabilities | 1,181,066 | 255,414 | 133,690 | |
Variable Interest Entity, Primary Beneficiary [Member] | ||||
Variable Interest Entity [Line Items] | ||||
Assets | 9,700 | 9,700 | ||
Liabilities | 122,700 | 95,100 | ||
Variable Interest Entity, Not Primary Beneficiary [Member] | ||||
Variable Interest Entity [Line Items] | ||||
Assets | 3,800 | 5,400 | $ 5,400 | 7,400 |
Liabilities | $ 300 | $ 300 | $ 300 | $ 300 |
Claims Financing Obligations _2
Claims Financing Obligations and Notes Payable - Additional Information (Detail) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Claims Financing Obligations and Notes Payable [Line Items] | ||||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 0.0001 | $ 0.0001 | ||
Gain (Loss) on Extinguishment of Debt | $ 63,400,000 | $ 63,367,000 | ||
Warrant [Member] | ||||
Claims Financing Obligations and Notes Payable [Line Items] | ||||
Liability Related To Remaining Amounts Due | $ 80,000,000 | 80,000,000 | ||
Option To Repurchase Of Warrants | $ 80,000,000 | |||
Common Class A [Member] | ||||
Claims Financing Obligations and Notes Payable [Line Items] | ||||
Common stock, shares authorized | 5,500,000,000 | 5,500,000,000 | ||
Common stock | $ 7,000 | $ 7,000 | ||
Common stock par or stated value per share | $ 0.0001 | $ 0.0001 | ||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 11.5 | $ 11.5 | ||
Claims Proceeds Investment Agreement [Member] | ||||
Claims Financing Obligations and Notes Payable [Line Items] | ||||
Shares Pledged Under Agreement | 50,000,000 | 50,000,000 | ||
Claims Proceeds Investment Agreement [Member] | Warrant [Member] | ||||
Claims Financing Obligations and Notes Payable [Line Items] | ||||
Percentage Of Shares Obtained Through Warrant | 15% | 15% | ||
Warrants and Rights Outstanding | $ 80,000,000 | $ 80,000,000 | ||
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ 1.2 | $ 1.2 | ||
Interest On Principal Amount Of Agreement | 10% | 10% | ||
Claims Proceeds Investment Agreement [Member] | Common Class A [Member] | ||||
Claims Financing Obligations and Notes Payable [Line Items] | ||||
Common stock, shares authorized | 66,666,666 | 66,666,666 | ||
Common stock | $ 6,666.67 | $ 6,666.67 | ||
Common stock par or stated value per share | $ 0.0001 | $ 0.0001 | ||
PPP Loan [Member] | ||||
Claims Financing Obligations and Notes Payable [Line Items] | ||||
Debt instrument, Face amount | $ 1,086,000 | $ 1,086,000 | $ 1,086,000 | |
Debt instrument, Interest rate, Stated percentage | 1% | |||
Debt instrument, Term | 2025 years | 2022 years | ||
Long-term debt, Gross | $ 1,043,000 | |||
Financing Obligations and Notes Payable Agreements [Member] | ||||
Claims Financing Obligations and Notes Payable [Line Items] | ||||
Line of credit facility, Maximum borrowing capacity | $ 172,300,000 | 172,300,000 | $ 201,400,000 | 90,500,000 |
Interest expense, Debt | $ 1,500,000 | $ 94,500,000 | $ 67,500,000 | |
Weighted average interest rate | 5.80% | 5.80% | 22% | |
Line of credit facility, Current borrowing capacity | $ 172,300,000 | $ 172,300,000 | $ 201,400,000 | |
Financing Obligations and Notes Payable Agreements [Member] | Minimum [Member] | ||||
Claims Financing Obligations and Notes Payable [Line Items] | ||||
Line of credit facility, Interest rate during period | 2% | 2% | ||
Financing Obligations and Notes Payable Agreements [Member] | Maximum [Member] | ||||
Claims Financing Obligations and Notes Payable [Line Items] | ||||
Line of credit facility, Interest rate during period | 11% | |||
Financing Obligations and Notes Payable Agreements [Member] | Maximum [Member] | Previously Reported [Member] | ||||
Claims Financing Obligations and Notes Payable [Line Items] | ||||
Line of credit facility, Interest rate during period | 30% | |||
Nonrecourse Required Payments [Member] | ||||
Claims Financing Obligations and Notes Payable [Line Items] | ||||
Repayments of lines of credit | $ 117,500,000 | |||
Minimum Required Payment [Member] | ||||
Claims Financing Obligations and Notes Payable [Line Items] | ||||
Repayments of lines of credit | $ 330,500,000 | $ 368,000,000 |
Noncontrolling Interest - Summa
Noncontrolling Interest - Summarizes the ownership of Units (Details) - UP-C Units [Member] | Sep. 30, 2022 shares |
Noncontrolling Interest [Line Items] | |
Common units issued | 3,221,629,821 |
Ownership percentage | 100% |
Class A Common Units [Member] | |
Noncontrolling Interest [Line Items] | |
Common units issued | 72,909,609 |
Ownership percentage | 2.30% |
Class V Common Units [Member] | |
Noncontrolling Interest [Line Items] | |
Common units issued | 3,148,720,212 |
Ownership percentage | 97.70% |
Noncontrolling Interest - Addit
Noncontrolling Interest - Additional Information (Detail) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Noncontrolling Interest [Line Items] | |||
Non-controlling interest | $ 5,213,812 | $ 4,348 | $ 4,332 |
UP-C Units [Member] | |||
Noncontrolling Interest [Line Items] | |||
Common unit exchange value | 5,800 | ||
MAOMSO Recovery LLC Series FHCP [Member] | MSP Recovery LLC [Member] | |||
Noncontrolling Interest [Line Items] | |||
Non-controlling interest | $ 4,300 | $ 4,300 | |
Percentage of entitled preferred return by non-controlling member | 20% | ||
Entitled claims recover percentage by non-controlling member | 80% | ||
Percentage of non-controlling member allocated cost | 100% |
Members' Equity and Non-contr_2
Members' Equity and Non-controlling Interest - Additional Information (Detail) - MAOMSO Recovery LLC Series FHCP [Member] - MSP Recovery LLC [Member] | Dec. 31, 2021 |
Members Equity and Noncontrolling Interest [Line Items] | |
Non-controlling interest, Ownership percentage by non-controlling owners | 100% |
Minimum [Member] | |
Members Equity and Noncontrolling Interest [Line Items] | |
Non-controlling interest, Ownership percentage by non-controlling owners | 20% |
Maximum [Member] | |
Members Equity and Noncontrolling Interest [Line Items] | |
Non-controlling interest, Ownership percentage by non-controlling owners | 80% |
Commitments And Contingency - A
Commitments And Contingency - Additional Information (Details) | 9 Months Ended |
Sep. 30, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Percentage of expected recoveries arise from claims under Medicare Secondary Payer Act | 88% |
Related Party - Additional Info
Related Party - Additional Information (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||||||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | |||||||
Related Party Transaction [Line Items] | ||||||||||||
Claims recovery service income | $ 5,748 | [1] | $ 2,439 | [1] | $ 17,795 | [1] | $ 9,213 | [1] | $ 14,500 | [2] | $ 13,632 | [2] |
Prepaid expenses and other current assets | 32,660 | [3] | 32,660 | [3] | 13,304 | [3] | 54 | |||||
General and Administrative Expense [Member] | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Related party expenses | 150 | 20 | 400 | 39 | 111 | 773 | ||||||
Unsecured Promissory Notes [Member] | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Interest expense | 1,300 | 1,500 | ||||||||||
Funds Held For Other Entities [Member] | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Note payable related party | 500 | |||||||||||
Funds Held For Other Entities [Member] | Affiliate Payable [Member] | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Due to related party current | 19,800 | 19,800 | 39,700 | 38,800 | ||||||||
MSP Recovery Law Firm [Member] | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Prepaid expenses and other current assets | 31,900 | 31,900 | ||||||||||
Related party expenses | 0 | 271 | ||||||||||
MSP Recovery Law Firm [Member] | Professional Fees Legal [Member] | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Related party expenses | 4,600 | 0 | 5,000 | 8 | ||||||||
MSP Recovery Law Firm [Member] | Professional Fees Legal [Member] | Common Class A [Member] | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Related party expenses | 20,100 | |||||||||||
MSP Recovery Law Firm [Member] | Unsecured Promissory Notes [Member] | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Proceeds from promissory notes | 36,500 | |||||||||||
Prepaid expenses and other current assets | 31,900 | $ 31,900 | ||||||||||
MSP Recovery Law Firm [Member] | Existing Legal Services Agreements [Member] | Common Class A [Member] | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Common stock shares issued | 8,022,000 | |||||||||||
MSP Recovery Law Firm [Member] | Existing Legal Services Agreements [Member] | Professional Fees Legal [Member] | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Related party expenses | 4,600 | $ 24,700 | ||||||||||
MSP Recovery Law Firm [Member] | Existing Legal Services Agreements [Member] | Cost Of Claims Recoveries [Member] | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Related party expenses | 0 | 271 | ||||||||||
MSP Recovery Law Firm [Member] | Existing Legal Services Agreements [Member] | Affiliate Payable [Member] | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Due to related party current | 0 | 0 | 5,500 | 200 | ||||||||
MSP Recovery Law Firm [Member] | Existing Legal Services Agreements [Member] | Affiliate Receivable [Member] | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Due from related party current | 1,500 | 1,500 | 3,400 | 4,300 | ||||||||
MSP Recovery Aviation, LLC [Member] | General and Administrative Expense [Member] | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Related party expenses | 150 | 400 | ||||||||||
MSP Recovery Aviation, LLC [Member] | Affiliate Receivable [Member] | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Due from related party current | 153 | 153 | 153 | 153 | ||||||||
Series MRCS LLC [Member] | Claims Financing Obligation and Notes Payable [Member] | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Note payable related party | 500 | 500 | 500 | |||||||||
Other Affiliates [Member] | Additional Receivables From Other Affiliates [Member] | Affiliate Receivable [Member] | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Due from related party current | 146 | 146 | 92 | 17 | ||||||||
VRM [Member] | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Claims recovery service income | 0 | $ 1,700 | 10,600 | $ 7,000 | 11,500 | 13,100 | ||||||
MSP National LLC [Member] | Affiliate Receivable [Member] | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Due to related party current | $ 400 | $ 400 | ||||||||||
Msp Principals [Member] | Unsecured Promissory Notes [Member] | ||||||||||||
Related Party Transaction [Line Items] | ||||||||||||
Aggregate principal amount | $ 112,800 | $ 112,800 | ||||||||||
Debt instrument, Term | 4 years | |||||||||||
Interest rate, payable in kind | 4% | 4% | ||||||||||
[1]For the three and nine months ended September 30, 2022 and 2021, claims recovery service income included $0 million and $10.6 million, respectively, and $1.7 million and $7.0 million, respectively, of claims recovery service income from VRM MSP Recovery Partners LLC (“VRM MSP”). See Note 13, Related Party, for further details.[2]For the years ended December 31, 2021 and 2020, claims recovery service income included $11.5 million and $13.1 million, respectively, of claims recovery service income from VRM MSP Recovery Partners LLC (“VRM”). See Note 11, Related Party, for further details.[3]As of September 30, 2022 and December 31, 2021, the total affiliate receivable, indemnification asset, affiliate payable, guaranty obligation and loan from related parties balances are with related parties. In addition, the prepaid expenses and other current assets and claims financings obligation and notes payable includes balances with related parties. See Note 13, Related Party, for further details. |
Investments in Equity Securit_2
Investments in Equity Securities and Obligations to Deliver Securities - Additional Information (Detail) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | |
Investments in Equity Securities and Obligations to Deliver Securities [Line Items] | ||||
Number of equity shares acquired to cover the short position | 100,000 | 100,000 | ||
Purchase of securities to cover short position | $ 1,800 | $ 1,800 | ||
Number of additional equity shares purchased | 200,000 | |||
Purchase of equity securities | $ 4,100 | |||
Proceeds from disposed of equity securities | $ 4,450 | 4,450 | $ 1,273 | |
Realized gain on equity securities | $ 201 | 201 | $ 18 | |
Investment in equity securities | 0 | 0 | ||
Other Income [Member] | ||||
Investments in Equity Securities and Obligations to Deliver Securities [Line Items] | ||||
Realized loss on investments to cover short position | $ 193 | (193) | ||
Realized gain on equity securities | $ 394 |
Net Loss Per Common Share - Sch
Net Loss Per Common Share - Schedule of Computation of Basic and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | ||||
Numerator - basic and diluted: | |||||||||
Net income(loss) | $ (27,060) | $ (10,259) | $ (118,075) | [1] | $ (23,411) | [1] | $ (33,077) | $ (24,266) | |
Less: Net (income) loss attributable to MSP Recovery, LLC pre Business Combination | 0 | 28,639 | |||||||
Less: Net (income) loss attributable to the noncontrolling interest post Business Combination | 26,597 | 87,685 | |||||||
Net loss attributable to controlling members | $ (463) | $ (10,275) | $ (1,751) | $ (23,427) | $ (33,093) | $ (24,248) | |||
Denominator - basic and diluted: | |||||||||
Weighed-average shares of common stock outstanding - diluted | [2] | 69,036,899 | 53,138,474 | ||||||
Common Class A [Member] | |||||||||
Denominator - basic and diluted: | |||||||||
Weighed-average shares of common stock outstanding - diluted | 69,036,899 | 53,138,474 | |||||||
Weighed-average shares of common stock outstanding - basic | [2] | 69,036,899 | 53,138,474 | ||||||
Earnings per share of common stock - diluted | [2] | $ (0.01) | $ (0.03) | ||||||
Earnings per share of common stock - basic | [2] | $ (0.01) | $ (0.03) | ||||||
[1]Balances include related party transactions. See Note 13, Related Party, for further details.[2]Earnings per share information has not been presented for periods prior to the Business Combination (as defined in Note 1, Description of Business), as it resulted in values that would not be meaningful to the users of these unaudited condensed consolidated financial statements. Refer to Note 15, Net Loss Per Common Share for further information. |
Net Loss Per Common Share - Add
Net Loss Per Common Share - Additional Information (Detail) | 9 Months Ended |
Sep. 30, 2022 shares | |
Public Warrants Outstanding [Member] | |
Antidilutive securities excluded from computation of earnings per share amount | 3,916,725 |
Warrant [Member] | |
Antidilutive securities excluded from computation of earnings per share amount | 1,028,046,326 |
Class V Common Stock [Member] | |
Antidilutive securities excluded from computation of earnings per share amount | 3,148,720,212 |
Derivative Liability - Addition
Derivative Liability - Additional Information (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2022 USD ($) shares | |
Derivative Instruments, Gain (Loss) [Line Items] | |
Restricted cash | $ 11,420 |
Fair value of shares | 1,356 |
Derivative Liability | $ 10,065 |
FEF Shares [Member] | |
Derivative Instruments, Gain (Loss) [Line Items] | |
Aggregate number of shares transferred to escrow account | shares | 1,100,000 |
Restricted cash | $ 11,400 |
Derivative Liability | 10,000 |
FEF Shares [Member] | Common Class A [Member] | |
Derivative Instruments, Gain (Loss) [Line Items] | |
Fair value of shares | $ 1,400 |
Subsequent Events - Additional
Subsequent Events - Additional Information (Detail) $ in Millions | Dec. 31, 2022 USD ($) |
Subsequent Event [Member] | Advertising Costs Commitement [Member] | Life Wallet LLC [Member] | |
Subsequent Event [Line Items] | |
Other commitments remainder of fiscal year | $ 1.5 |