Marpai, Inc.

Good morning and welcome to the MarPy first quarter 2025 earnings webcast. All participants will be in leisure and only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Steve Johnson, chief financial officer, Steve, please go ahead.

Thank you and good morning and welcome to the MarPy first quarter 2025 earnings release webcast. With me this morning is Damian Lamandola, CEO and director of MarPy. Before we begin, I'd like to draw your

attention to the forward looking statements included in this presentation. And let's get right into it. Moving

to our Q1 2025 highlights, we're seeing continued momentum and an acceleration of our turnaround efforts. Net revenues were 5.4 million for the three months ended March 31st, 2025. 2 million or approximately 27% lower than Q1 in 2024. Some additional color with that is that industry turnover is typically 20 to 30% annually, so we're on the higher end of that. And the company continues to focus on our margin generating clients. So as we move forward, we continue to manage and either raise prices and and do the renewals or the lower margin clients will continue to drop off. Operating expenses were 7.7 million for the three months ended March 31st, 3.8 million or 33% improvement over Q1 of 2024. Our operating loss was 2.3 million for the first quarter, 1.8 million or 45% improvement over Q1 of 2024. Our net loss was 3.1 million for the three months ended in March, which was 1.3 million or a 29% improvement over Q1 of 2024. Basic and diluted earnings per share were a loss of 21.5 million or 21 cents for the three months ended March 31st, 2025, which was an improvement of 25 cents per share over the first quarter in 2024. Next, I'll turn it over to Ding Yin to highlight the role of third party administrators. Sorry, I'm going to turn it over to myself to talk about the

role

of

third party administrators. So third party administrators, what are they? As

healthcare inflation continues to rise, a growing number of employers are adopting self-funded health insurance. Third party administrators or TPAs play a vital role in this landscape by managing claims, processing and reporting. While TPAs manage the administrative aspects of the insurance program, they typically offer several value added solutions that drive both revenue for the TPA and savings for the employer. MarPay is positioned to effectively partner with these employers to navigate the complexities

of self-funded plans. The value proposition of a TPA is significant.

Employers typically see savings up to 10% by simply moving to a self-funded model managed by a TPA. This is driven by several key benefits. First, cost efficiency through reduced administrative expenses. Second, flexibility in designing customized benefit plans to meet the specific needs of their employees. And third, compliance support, helping employers navigate complex regulatory landscapes and mitigate risks. And finally, and somewhat more importantly, is transparency. Through detailed reporting and data insights, we empower employers to make informed decisions about their health care spending. Whereas in typical fully funded arrangements, the employer does not receive detailed claim data or analytics of their

member population. The TPA market in the United States

is 150 billion, with forecasted annual growth of .1% through 2031. MarPay has a national footprint allowing us to service employers with multi-state locations, which many of our regional competitors can't do. MarPay also offers significant cost savings programs, and our relaunch of the MarPay RX program will be game changing. More details regarding MarPay RX will be shared later in the quarter. As a leading national independent TPA, our clients come first, and we can aggressively negotiate with providers, optimize pharmacy benefit management, enhance utilization management, offer an emphasis on wellness and prevention, and implement alternative payment models like reference based

pricing and bundled payments. Thanks, Steve. At MarPay,

our core mission is to deliver affordable and intelligent health care solutions, and our deliverables remain consistent. Revenue growth, we have a strong pipeline of business for the second half of 2025, and we'll communicate further updates when we hold our third quarter earnings to call in November. On the customer experience, we are executing our rollout of the EMPIRE member portal, which is on track to be completed by the end of the second quarter. And on profitability, we are relentless in driving efficiencies and cost reductions. In a short span, MarPay's team engineered an exceptional turnaround, dramatically reducing losses. As MarPay's largest shareholder, hitting profitability this year is my absolute top priority, and I won't be satisfied until we reach that milestone. To further our goal of profitability and drive growth, we strengthened our leadership team. I'm particularly pleased to highlight the recent appointment of Dallas Scripp as our chief operating officer and president of MarPay RX. Dallas brings a wealth of experience in the TPA industry with a strong track record from his previous roles and is a recognized leader in the field. Dallas' appointment is a crucial part of our strategy to build a stronger bench across the organization. We have assembled a high-performing team that will propel our growth initiatives and drive us towards sustainable

profitability.

A few final thoughts. In conclusion, MarPay is making significant strides in our turnaround. We're leveraging the growing demand for TPAs. At MarPay, we cut costs, we expect profits, we are growing, and we will be cashflow positive this year. Thank you for your time. We'll now open the floor for any questions you may have.

Thank you. We will now begin the question and answer session. To ask a question, you may press the start button, the number one on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press the start button, the number two. At this time, we will pause momentarily to assemble our roster.

The

first question comes from Niyaka Taldi from Blueprint Capital Management. Please go ahead. Hey, guys.

Thanks for taking my questions today. I got a few if you don't mind. First, it looks like you didn't sign up as much new business in the first quarter compared to maybe what we would have expected. You know, in 2024, I was wondering if you could give us some color into the sales strategy today and what you're changing so you can grow quicker.

Yeah, good. Great question. We really focused on the turnaround in 2024, improving our operations, our efficiencies. We didn't hire our two key salespeople until May of last year. So, kind of joined early enough to get some new business, but not early enough to get the larger clients out there. Now, we've got the full team on for the full year. The nice thing is the team's been doing a great job of picking up lives, what I would call off cycle, with about 80% typically, either renew or change TPAs on January 1st. That's when you usually get your big bump there, and obviously we didn't get it this year. And part of that was also managing, as I mentioned in my comments, managing some of the lower margin clients to other TPAs to let them handle those less profitable clients.

Okay, great. So, we should expect you guys to kind of win lives off cycle this year, and then in the gen cycle next year could be much different.

Exactly. Exactly. And we've got the second half of 2025, we've got a very strong pipeline. Our predecessor company kind of all benefits had a strong relationship with the teachers retirement system of Texas. And we've recently signed a couple of school districts with them, and they start September 1st from there. So, those would be some good wins that we've got coming on. And then as I mentioned, we'll also give a full update for the January 1st sales pipeline after our third quarter call in mid-November. It's typically a 90-day cycle, and we'll have very good clarity on the numbers for 2026 by mid-November.

Okay, great. Switching gears, you burned, I think, 3 million in the first quarter. That's a pretty big hole to fill given the commentary around getting to cash flow positive. Can you talk about potential for further cost reduction initiatives and what gives you confidence you can really get to break even by your end?

Yeah, great question. Great question. We still have a few more duplicative vendors to rationalize, and we have a few legacy contracts that are coming to an end, which will provide additional savings. And the real bang for the buck is we're working on driving our operational efficiencies and some of the redundancies that we have, one, to reduce costs, and two, provide better customer service and member service from there, which, again, it's a virtuous cycle. When you offer great service, the ability to reference existing clients and to gain additional clients runs very positive. In addition, we've really reduced our cash burn rate. You'll see a significant reduction in the second quarter from there, and so we look solid for the second half of the year.

Okay, great. And then my last question is just you mentioned the Empara portal. I was wondering if you could provide a little more color on that and the benefits that the solution offers to MarPy.

Yeah, this one is really a fantastic solution for us. Right now, between the acquisition of Maestro and MarPy, we had a few different portals and apps out there for our clients to utilize, and what we're doing is rationalizing those multiple portals into the Empara solution, which is really a world-class application, utilizing AI. And what's really neat about there is we've loaded each of our clients' summary plan documents, which is the core of our clients' benefit plans, and it allows our members to go on the app, get their ID cards, and ask questions like, hey, is knee surgery approved for my benefit plan? And it goes and searches and answers automatically, which also reduces the number of calls that we require in our call center. In addition, if there's further clarification needed, there's a button right on the app that says make a call, and that gets transferred to our call center, and it feeds all the prior information in the discussion and answers that were done in the app to the customer service agent, so they're right up to speed and can get to the solution that the member's looking for. So we see a big opportunity to, again, improve our efficiencies, reduce the number of heads that are required in our call center, and also provide information right at their fingertips.

Yeah, that's great, Steve. Thank you. Looking forward to watching the progress, and I'll talk to you guys soon.

All right. Thank you. Thank you

so much for the question, Neil. And again, if you have a question, please press the star button, then

the number one. If

there are no further questions at this time, this concludes our question and answer session. I would like to turn the conference back over to Steve Johnson for our closing remarks.

Thank you very much, and I appreciate you joining us this morning. I just want to reiterate, a replay of the webcast will be available later today for the next week if you wanted to delve into more details or catch something on

the slides. Thank you again. Conference is now concluded. Thank you for attending today's presentation. You may now disconnect.