John Ruiz’s company LifeWallet says it faces removal from NASDAQ exchange

Miami lawyer John Ruiz’s publicly-traded company, LifeWallet, told federal regulators Friday that it faces delisting from the NASDAQ stock exchange, a fate the health insurance claims firm has been working to avoid since first announcing financial troubles earlier this year.

The Coral Gables-based company said it would appeal the decision made earlier this week and that it would remain listed until the appeal is heard, which typically comes 30 to 45 days after it is filed with NASDAQ.

In a separate filing with the SEC earlier this week, LifeWallet said that it would do a reverse stock split, consolidating shares of the company in the hopes of boosting its share price above the $1 minimum threshold to remain listed on the NASDAQ exchange. The company’s shareholders approved the reverse stock split plan the same day it was notified of the delisting determination.

In response to a request for comment, the company emphasized that it is not being delisted and pointed the Herald to Friday’s notice to the SEC in which it said that it expects the reverse stock split to cause the stock’s price to “trade at a level sufficient to regain compliance.”

The potential delisting is the latest blow for LifeWallet, which went public last year as MSP Recovery Inc., and its CEO, Ruiz, one of the University of Miami’s best-known athletic boosters.

The company acknowledged last month that it had been subpoenaed by the U.S. Securities and Exchange Commission and a grand jury convened in the U.S. Southern District of Florida, after the Miami Herald reported in late July that federal authorities were investigating LifeWallet and Ruiz.

Earlier, the company had been late in filing its required financial statements with the SEC and acknowledged accounting errors in the filings it made last year.

The developments mark a stunning reversal for a company that had been valued at $32 billion when it first went public in May 2022.

LifeWallet had risked delisting on the NASDAQ because of delinquent financial reports and a stock that was consistently trading below $1, the minimum required to remain listed on the exchange.

While the company is now up-to-date on its financial filings with the SEC, its stock is currently trading for roughly 7 cents per share and hasn’t traded for above $1 since mid-April, according to NASDAQ data.

The NASDAQ’s delisting, if upheld after appeal, is expected to have a direct impact on LifeWallet’s financial health.

It can cost more to trade stocks that are not listed on NASDAQ or the New York Stock Exchange, said Jay Ritter, a business professor at the University of Florida. Delisting can also affect investor confidence.

“There’s that lack of certification, ‘Why isn’t that company good enough to be listed on an exchange?,’ ” Ritter said.

He added that stocks traded on the NASDAQ and NYSE must meet requirements to remain listed, which adds a layer of investor protection.

LifeWallet seeks to recover insurance claims that were paid by the wrong party, typically on behalf of Medicare-affiliated health insurance companies. For example, if a health insurance company paid the bills for a hospital stay after a patient was injured in a car crash, it would seek to recover payment from the car insurance company, which should have paid the bills in the first place.

In its most recent financial filing, the company said that it took in a little more than $6.5 million in claims recoveries in the first six months of 2023. The company had a net loss of nearly $385 million in the same period.In the first six months of 2022, the company took in $13.5 million in total claims recoveries and reported a net loss of nearly $120 million.

Ruiz and LifeWallet have attracted attention not only for their business venture, but also for the millions that the company has spent on newly legal endorsement deals for University of Miami athletes, which are known as name, image, likeness, or NIL, deals. Ruiz was even dubbed Miami’s NIL King by ESPN. The company has said in the past that its financial troubles wouldn’t affect its endorsement deals with athletes.

Ruiz’s involvement with the athletics program has already led to repercussions for the University of Miami, as the women’s basketball team was sanctioned by the NCAA after it found that Ruiz had given an impermissible meal to two recruits of the team. Ruiz and the student athletes were not penalized.