MARPAI INC. ANNOUNCES SALE OF $11.83 MILLION CONVERTIBLE NOTES

Rhea-AI Summary

Marpai Inc. announces the sale of $11.83 million convertible notes to JGB Management Inc., strengthening its growth trajectory in the TPA market. The loan proceeds will be used for debt repayment, growth initiatives, and working capital, with the notes convertible into Marpai common stock at a premium price of $3.00 per share.

Positive

• Sale of $11.83 million convertible notes to JGB Management Inc.
• Loan proceeds to be used for debt repayment, growth initiatives, and working capital
• Convertible notes can be converted into Marpai common stock at $3.00 per share
• Financial flexibility to accelerate growth strategy and solidify position in the market
• Significant growth driven by innovative technology platform and commitment to cost-effective healthcare solutions
• New financing to capitalize on increasing demand for self-funded health plans

Negative

• None.

Financial Analyst

The issuance of $11.83 million in convertible notes by Marpai Inc. is a strategic move to bolster its capital structure and fuel corporate initiatives. Funds from this debt instrument are earmarked for repaying existing debts and supporting growth-oriented efforts, which is a common practice for companies seeking to optimize their capital allocation. Examining the convertible note structure, the conversion price of $3.00 per share reflects a vote of confidence in the company's future from investors, as it's set above the current market price. This can potentially lead to dilution of current shareholders' equity upon conversion, but it also indicates that investors are willing to bet on the company's performance. The price protection feature with a floor of $2.23 per share can be seen as a safeguard for investors against excessively dilutive equity issuances in the future. For retail investors, understanding the balance between immediate capital inflow and future equity dilution is key. The unregistered nature of the securities suggests a limitation in liquidity and potential discounting on secondary markets.

Market Research Analyst

Marpai's positioning in the $22 billion TPA market is strengthened by this financial move. The company's intent to accelerate its technology platform and provide cost-effective healthcare solutions aligns with broader industry trends towards efficiency and affordability in healthcare administration. With the market for self-funded employer health plans growing, Marpai's growth initiatives funded by this convertible note offering could give them a competitive edge. However, investors should be aware of the inherent risks of investing in a company that is still in the growth phase, where profitability and cash flow consistency are not yet established. Additionally, Marpai's future growth is contingent upon executing its business strategy effectively in a highly competitive and regulated market.

Financing Strengthens Marpai's Growth Trajectory

TAMPA, Fla., April 16, 2024 /PRNewswire/ -- Marpai, Inc. ("Marpai" or the "Company") (Nasdaq: MRAI), an independent national Third-Party Administration company transforming the $22 billion TPA market supporting self-funded employer health plans with affordable, intelligent, healthcare, today announced the sale of new three-year, $11.83 million convertible notes to funds managed by JGB Management Inc.

The loan proceeds will be used to repay Marpai's existing debt with Libertas Funding, fuel Marpai's ongoing growth initiatives and bolster working capital.

Key Highlights of the Loan Agreement:

• Total Loan Amount: $11.83 million
• Term: Three years
• Use of Proceeds: Debt repayment, growth initiatives and working capital
• Convertible Note Provision: The notes are convertible into Marpai common stock at a price of $3.00 per share. This represents a premium to the current market price of Marpai's common stock. The convertible note also provides for price protection in the event Marpai issues shares below the applicable conversion price subject to the floor of $2.23 per share.

"The proceeds from the sale of the convertible notes provides us with the financial flexibility to accelerate our growth strategy and further solidify our position as a leader in the self-funded employer health plan market," said Damien Lamendola, CEO of Marpai.

Financing Strengthens Marpai's Growth Trajectory

Marpai has experienced significant growth in recent years, driven by its innovative technology platform and commitment to delivering cost-effective, high-quality healthcare solutions to self-funded employers. The Company is well positioned to capitalize on the increasing demand for self-funded health plans, and this new financing will provide Marpai with the resources needed to continue its upward trajectory.

The securities described herein have not been registered under the Securities Act of 1933, as amended, and may not be sold in the United States absent registration or an applicable exemption from the registration requirements.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any state or other jurisdiction in which such an offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of any such state or other jurisdiction.

ThinkEquity served as advisor to the company on the financing.

About Marpai, Inc.

Marpai, Inc. (Nasdaq: MRAI) is a leading, national TPA company bringing value-oriented health plan services to employers that directly pay for employee health benefits. Primarily competing in the $22 billion TPA sector serving self-funded employer health plans representing over $1 trillion in annual claims. Marpai works to deliver the healthiest member population for the health plan budget. Operating nationwide, Marpai offers access to leading provider networks including Aetna and Cigna and all TPA services. For more information, visit www.marpaihealth.com, the content of which is not incorporated by reference into this press release.

Forward-Looking Statement Disclaimer

This press release contains forward-looking statements, as that term is defined in the Private Litigation Reform Act of 1995, that involve significant risks and uncertainties. Forward-looking statements can be identified through the use of words such as "anticipates," "expects," "intends," "plans," "believes," "seeks," "estimates," "guidance," "may," "can," "could", "will", "potential", "should," "goal" and variations of these words or similar expressions. For example, the Company is using forward looking statements when it discusses the potential for ongoing growth initiatives, the expected use of proceeds and the belief that this strategic financing demonstrates JGB Management's confidence in its innovative approach to the TPA market and its future potential. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect Marpai's current expectations and speak only as of the date of this release. Actual results may differ materially from Marpai's current expectations depending upon a number of factors. These factors include, among others, adverse changes in general economic and market conditions, competitive factors including but not limited to pricing pressures and new product introductions, uncertainty of customer acceptance of new product offerings and market changes, risks associated with managing the growth of the business. Except as required by law, Marpai does not undertake any responsibility to revise or update any forward-looking statements whether as a result of new information, future events or otherwise.

More detailed information about Marpai and the risk factors that may affect the realization of forward-looking statements is set forth in Marpai's filings with the Securities and Exchange Commission. Investors and security holders are urged to read these documents free of charge on the SEC's web site at http://www.sec.gov.

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SOURCE Marpai

What is the total amount of the convertible notes sold by Marpai Inc.?

Marpai Inc. announced the sale of $11.83 million convertible notes.

Who are the funds managed by that purchased the convertible notes?

The convertible notes were purchased by funds managed by JGB Management Inc.

At what price can the convertible notes be converted into Marpai common stock?

The notes are convertible into Marpai common stock at a price of $3.00 per share.

What will the loan proceeds be used for?

The loan proceeds will be used for debt repayment, growth initiatives, and working capital.

What does the convertible note provision include?

The convertible note provision includes price protection and a conversion price floor of $2.23 per share.