UpHealth, Inc. (“UpHealth” or the “Company”) (NYSE: UPH), a global
digital health company delivering technology platforms,
infrastructure, and services to modernize care delivery and health
management, today announced financial results for the third quarter
ended September 30, 2022.
UpHealth Chief Executive Officer Sam Meckey said, “Given
macro-economic uncertainties along with the current state of our
business, we are focused on fully integrating our business units;
rationalizing poorly performing businesses; executing against our
strategic plan; and enhancing our focus on free cash-flow
generation via cash conservation and improved cost structures. We
had strong results from our Virtual Care Infrastructure business
and our Services business, and we continue to drive the
transformation of our Integrated Care business.”
Meckey also said, “We apologize for the delay in filing our
third quarter financial statements. Unprecedented actions by the
Board of Directors of our Glocal subsidiary in India caused the
delay. As a result of the previously disclosed ongoing control
issues and legal proceedings with Glocal, UpHealth deconsolidated
Glocal effective July 2022. Accordingly, the financial results of
Glocal as of September 30, 2022, and for the three months then
ended, are not included in the Company’s unaudited condensed
consolidated financial statements. We continue to pursue legal
action both in India’s jurisdiction as well as before the
International Court of Arbitration (the “ICA”) and will vigorously
defend our interests and ownership of the Glocal asset.”
Third Quarter 2022 Financial Highlights:
- Revenues for the third quarter of 2022 was $38.7 million,
compared to revenues for the third quarter of 2021 of $45.2
million. The reduction is driven by the deconsolidation of the
Glocal financials and lack of new customer growth in the Integrated
Care business. Gross margin expanded to 48%, from 40% in the third
quarter of 2021.
- Revenues and gross margin by segment for the third quarter of
2022 were:
- Integrated Care Management generated $3.8 million of revenues
(10% of total revenues) with a gross margin of 75%.
- Virtual Care Infrastructure generated $15.0 million of revenues
(39% of total revenues) with a gross margin of 55%.
- Services generated $19.9 million of revenues (51% of total
revenues) with a gross margin of 37%.
- Operating loss for the third quarter of 2022 was $120.0
million, a 2460% increase compared to operating loss in the third
quarter of 2021 of $4.7 million. This increase primarily resulted
from goodwill and intangible asset impairment charges taken in the
three months ended September 30, 2022 of $106.1 million due to the
recent change in our market valuation and financial performance
from our Integrated Care Management and Services segments, as well
as the deconsolidation of Glocal during the third quarter of 2022
and higher legal expenses associated with the matter.
- Adjusted EBITDA for the third quarter of 2022 was $(1.2)
million, compared to Adjusted EBITDA for the third quarter of 2021
of $3.1 million.
Please refer to the discussion and tables under “Non-GAAP
Financial Information.”
Year-to-Date Third Quarter 2022 Financial
Highlights:
- GAAP revenues for the nine months ended September 30, 2022, was
$118.3 million, a 32% increase compared to GAAP revenues for the
nine months ended September 30, 2021, of $89.9 million and a 3%
increase compared to pro forma revenues for the nine months ended
September 30, 2021 of $115.0 million. Gross margin for the nine
months ended September 30, 2022, expanded to 48%, compared to GAAP
and pro forma gross margin of 40% in the comparable year ago
period.
- Year-to-date revenues and gross margin by segment for the nine
months ended September 30, 2022, were:
- Integrated Care Management generated $14.2 million of revenues
(12% of total revenues) with a gross margin of 80%.
- Virtual Care Infrastructure generated $47.4 million of revenues
(40% of total revenues) with a gross margin of 50%.
- Services generated $56.7 million of revenues (48% of total
revenues) with a gross margin of 37%.
- Operating loss for the nine months ended September 30, 2022,
was $148.0 million, a (244)% increase compared to year-to-date
operating loss for the comparable year ago period of $43.0 million.
This increase primarily resulted from goodwill and intangible asset
impairment charges taken in the nine months ended September 30,
2022 of $112.3 million due to the recent change in our market
valuation and financial performance from our Integrated Care
Management and Services segments, as well as the deconsolidation of
Glocal during the third quarter of 2022 and higher legal expenses
associated with the matter.
- Adjusted EBITDA for the nine months ended September 30, 2022,
was $1.4 million, compared to year-to-date GAAP and pro forma
Adjusted EBITDA for the nine months ended September 30, 2021 of
$6.0 million and $8.5 million, respectively.
Please refer to the discussion and tables under “Non-GAAP
Financial Information.”
Update on Glocal:
UpHealth has deconsolidated Glocal from the Company’s financial
statements due to ongoing control issues and legal disputes. These
issues and disputes are described in a Current Report on Form 8-K
that the Company filed with the SEC on October 3, 2022, in a second
Current Report on Form 8-K filed by the Company with the SEC on
November 14, 2022, and in the Quarterly Report on Form 10-Q filed
with the SEC on December 29, 2022.
The Company is aggressively pursuing legal action both in India
and before the ICA against the board of directors of Glocal, which
consists of three individuals Dr. Syed Sabahat Azim, Richa Azim,
and Gautam Chowdhury, another shareholder of Glocal, Meleveetil
Damodaran, who is the former Chairman of the Securities and
Exchange Board of India, and Kimberlite Social Infra Private
Limited, an Indian entity of which the Azims are equity owners and
the sole directors. Due to the actions of the Glocal board, a
review of the financial statements for Glocal for the fiscal
quarter ended September 30, 2022, has not yet been conducted.
Furthermore, Glocal has not yet delivered such financial statements
to the Company, despite being ordered to do so by an Emergency
Arbitrator and an Indian court. These actions clearly reflect a
lack of control that the Company currently has of this business and
caused the Company to deconsolidate Glocal from its financial
statements.
On November 4, 2022, UpHealth filed a Request for Arbitration
before the ICA against Glocal, the Azims, Chowdhury, Damodaran and
Kimberlite for breach of the Share Purchase Agreement by which the
Company’s wholly owned subsidiary, UpHealth Holdings, purchased the
super-majority ownership of Glocal; obstruction of UpHealth
Holdings’ exercise of its statutory rights under the Indian Company
Act; and misrepresentation. The Company is seeking an order for
relief in the arbitration that is detailed in the Form 10-Q filing.
The parties are currently awaiting the constitution of the arbitral
tribunal by the ICA following the orders of the Emergency
Arbitrator issued in UpHealth’s favor in November.
Convertible Debt Financing:
During the month of August, the Company closed its previously
announced private placement of $67.5 million in aggregate principal
amount of a new series of variable rate convertible senior secured
notes due December 15, 2025, raising approximately $22.5 million in
gross cash proceeds after the Company’s repurchase of $45.0 million
in aggregate principal amount of its 6.25% convertible senior notes
due 2026.
Significant Third Quarter Business
Highlights:
- UpHealth made considerable progress on its business
transformation agenda in the third quarter, increasing the number
of transformation initiatives completed year to date to over 60%.
Additionally, UpHealth identified several issues that it put on
hold due to the Company’s ongoing analysis of its business strategy
and its assessment of the organization’s assets.
- During the third quarter, Martti™ supported 279,000 encounters
per month and 42,000 endpoints at over 2,800 medical facilities in
the U.S. Also, during the quarter, the Company closed twenty-one
new Martti™ contracts.
- The Company recorded its largest volume of telehealth use ever
in the U.S. with over 12.4 million minutes of consultations in Q3,
a 17% increase over Q2 2022.
- SyntraNet’s Social Health Information Exchange (SHIE) built in
partnership with Alameda County Health Care Services received a
2022 Solutions Award from CompTIA, a non-profit association
recognizing leaders in the IT industry.
- Transformations Treatment Centers was ranked as #6 of Best
Addiction Treatment Centers for 2022 in Florida by Newsweek.
Subsequent to the quarter’s end, UpHealth:
- Welcomed transformation and technology expert Timothy Wilde as
Chief Technology Officer, healthcare veteran Melissa Frieswick as
Chief Growth Officer, and Dr. Mahesh Inder Veer Singh as Executive
Vice President of UpHealth International.
- Conducted the Annual Meeting of Stockholders on December 5,
2022. At that meeting, stockholders elected Sam Meckey, UpHealth’s
Chief Executive Officer, and two new independent members, Mark
Guinan and Luis Machuca, to the UpHealth Board of Directors. Mr.
Guinan replaced Neil Miotto as the Chairman of the Audit Committee
of the Board.
- Began a comprehensive review of the Company’s strategic
initiatives for 2023, focusing on conserving cash; optimizing
operations to ensure exemplary customer service while managing
costs; strategically investing in high-growth initiatives; aligning
leadership, and driving organic growth in the Company’s most
profitable business units. In addition, the Company is considering
whether all its existing assets fit into its strategic plan going
forward, work that will be completed in Q1 2023.
Balance Sheet and Cash Flow
On September 30, 2022, UpHealth reported $22.6 million of cash,
cash equivalents and restricted cash. This does not include
approximately $7.0 million in cash in India that is held in a bank
account which the Emergency Arbitrator has ordered cannot be
accessed by Glocal and for which the Company’s Chief Financial
Officer currently has sole signing authority.
About UpHealth, Inc.
UpHealth is a global digital health company that
delivers digital-first technology, infrastructure, and services to
dramatically improve how healthcare is delivered and managed. The
UpHealth platform creates digitally enabled “care communities” that
improve access and achieve better patient outcomes at lower cost,
through digital health solutions and interoperability tools that
serve patients wherever they are, in their native language.
UpHealth’s clients include global governments, health plans,
healthcare providers and community-based organizations. For more
information, please visit https://uphealthinc.com and follow us at
@UpHealthInc on Twitter and UpHealth Inc on LinkedIn.
Forward-Looking Statements
This press release contains forward-looking
statements within the meaning of U.S. federal securities laws. Such
forward-looking statements include, but are not limited to, the
financial statements of UpHealth, its product offerings and
developments and reception of its product by customers, the
arbitration and other legal disputes involving Glocal, and its
expectations, hopes, beliefs, intentions, plans, prospects or
strategies regarding the future revenue and the business plans of
UpHealth’s management team. Any statements contained herein that
are not statements of historical fact may be deemed to be
forward-looking statements. In addition, any statements that refer
to projections, forecasts, or other characterizations of future
events or circumstances, including any underlying assumptions, are
forward-looking statements. The words “anticipate,” “believe,”
“continue,” “could,” “estimate,” “expect,” “intends,” “may,”
“might,” “plan,” “possible,” “potential,” “predict,” “project,”
“should,” “would” and similar expressions may identify
forward-looking statements, but the absence of these words does not
mean that a statement is not forward-looking. The forward-looking
statements contained in this press release are based on certain
assumptions and analyses made by the management of UpHealth
considering their respective experience and perception of
historical trends, current conditions, and expected future
developments and their potential effects on UpHealth as well as
other factors they believe are appropriate in the circumstances.
There can be no assurance that future developments affecting
UpHealth will be those anticipated. These forward-looking
statements involve a number of risks, uncertainties (some of which
are beyond the control of the parties), or other assumptions that
may cause actual results or performance to be materially different
from those expressed or implied by these forward-looking
statements, including the mix of services utilized by UpHealth’s
customers and such customers’ needs for these services, market
acceptance of new service offerings, the ability of UpHealth to
expand what it does for existing customers as well as to add new
customers, uncertainty with respect to how the ICA or the Indian
courts shall decide various matters that are before them or that
the Glocal Board will act in compliance with their fiduciary duties
to their shareholders, that UpHealth will have sufficient capital
to operate as anticipated, and the impact that the novel
coronavirus and the illness, COVID-19, that it causes, as well as
government responses to deal with the spread of this illness and
the reopening of economies that have been closed as part of these
responses, may have on UpHealth’s operations, the demand for
UpHealth’s products, global supply chains and economic activity in
general. Should one or more of these risks or uncertainties
materialize or should any of the assumptions being made prove
incorrect, actual results may vary in material respects from those
projected in these forward-looking statements. UpHealth undertakes
no obligation to update or revise any forward-looking statements,
whether because of new information, future events, or otherwise,
except as may be required under applicable securities laws.
Investors Relations:Shannon Devine
(MZ North America) Managing Director
203-741-8811UPH@mzgroup.us
Media Inquiries:Edna JohnsonChief
Communications Officer mediarelations@uphealthinc.com
UPHEALTH, INC.CONDENSED
CONSOLIDATED BALANCE SHEETS(In thousands, except
per share amounts, unaudited)
|
September 30, 2022 |
|
December 31, 2021 |
ASSETS |
Current
Assets: |
|
|
|
Cash and cash equivalents |
$ |
22,608 |
|
|
$ |
58,192 |
|
Restricted cash |
|
— |
|
|
|
18,609 |
|
Accounts receivable, net |
|
22,626 |
|
|
|
22,761 |
|
Inventories |
|
2,762 |
|
|
|
2,928 |
|
Due from related parties |
|
21 |
|
|
|
40 |
|
Prepaid expenses and other
current assets |
|
4,077 |
|
|
|
4,217 |
|
Total current assets |
|
52,094 |
|
|
|
106,747 |
|
Property and equipment,
net |
|
20,075 |
|
|
|
56,072 |
|
Intangible assets, net |
|
56,474 |
|
|
|
115,313 |
|
Goodwill |
|
195,028 |
|
|
|
284,268 |
|
Deferred
tax assets |
|
83 |
|
|
|
— |
|
Equity
investment |
|
21,200 |
|
|
|
— |
|
Other
assets |
|
454 |
|
|
|
6,907 |
|
Total assets |
$ |
345,408 |
|
|
$ |
569,307 |
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
Current Liabilities: |
|
|
|
Accounts payable |
$ |
16,393 |
|
|
$ |
13,604 |
|
Accrued expenses |
|
41,238 |
|
|
|
36,084 |
|
Deferred revenues |
|
4,407 |
|
|
|
2,649 |
|
Due to related party |
|
209 |
|
|
|
47 |
|
Income taxes payable |
|
229 |
|
|
|
739 |
|
Related-party debt, current |
|
403 |
|
|
|
657 |
|
Debt, current |
|
10 |
|
|
|
22,093 |
|
Forward share purchase liability |
|
— |
|
|
|
18,051 |
|
Other liabilities, current |
|
3,758 |
|
|
|
2,780 |
|
Total current liabilities |
|
66,647 |
|
|
|
96,704 |
|
Related-party debt, noncurrent |
|
343 |
|
|
|
331 |
|
Debt,
noncurrent |
|
143,303 |
|
|
|
98,417 |
|
Deferred
tax liabilities |
|
— |
|
|
|
28,281 |
|
Warrant
liabilities, noncurrent |
|
61 |
|
|
|
252 |
|
Derivative liability, noncurrent |
|
692 |
|
|
|
7,977 |
|
Other
liabilities, noncurrent |
|
2,880 |
|
|
|
3,502 |
|
Total liabilities |
|
213,926 |
|
|
|
235,464 |
|
|
|
|
|
Stockholders’ Equity: |
|
|
|
Common
stock |
|
2 |
|
|
|
1 |
|
Additional paid-in
capital |
|
686,518 |
|
|
|
665,474 |
|
Treasury stock, at cost |
|
(17,000 |
) |
|
|
— |
|
Accumulated deficit |
|
(538,854 |
) |
|
|
(343,209 |
) |
Accumulated other comprehensive loss |
|
— |
|
|
|
(3,802 |
) |
Total UpHealth, Inc., stockholders’ equity |
|
130,666 |
|
|
|
318,464 |
|
Noncontrolling interests |
|
816 |
|
|
|
15,379 |
|
Total stockholders’ equity |
|
131,482 |
|
|
|
333,843 |
|
Total liabilities and stockholders’ equity |
$ |
345,408 |
|
|
$ |
569,307 |
|
UPHEALTH, INC.CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS(In
thousands, except per share amounts, unaudited)
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Revenues: |
|
|
|
|
|
|
|
Services |
$ |
27,600 |
|
|
$ |
21,977 |
|
|
$ |
81,382 |
|
|
$ |
45,563 |
|
Licenses and subscriptions |
|
2,019 |
|
|
|
10,956 |
|
|
|
10,612 |
|
|
|
23,759 |
|
Products |
|
9,047 |
|
|
|
12,259 |
|
|
|
26,312 |
|
|
|
20,568 |
|
Total revenues |
|
38,666 |
|
|
|
45,192 |
|
|
|
118,306 |
|
|
|
89,890 |
|
Costs of
revenues: |
|
|
|
|
|
|
|
Services |
|
13,440 |
|
|
|
12,434 |
|
|
|
42,647 |
|
|
|
26,497 |
|
License and subscriptions |
|
463 |
|
|
|
6,350 |
|
|
|
913 |
|
|
|
13,020 |
|
Products |
|
6,264 |
|
|
|
8,461 |
|
|
|
18,550 |
|
|
|
14,104 |
|
Total costs of revenues |
|
20,167 |
|
|
|
27,245 |
|
|
|
62,110 |
|
|
|
53,621 |
|
Gross profit |
|
18,499 |
|
|
|
17,947 |
|
|
|
56,196 |
|
|
|
36,269 |
|
Operating expenses: |
|
|
|
|
|
|
|
Sales and marketing |
|
4,771 |
|
|
|
3,090 |
|
|
|
10,983 |
|
|
|
5,670 |
|
Research and development |
|
2,231 |
|
|
|
1,916 |
|
|
|
5,600 |
|
|
|
5,759 |
|
General and administrative |
|
13,922 |
|
|
|
11,452 |
|
|
|
42,213 |
|
|
|
22,481 |
|
Depreciation and amortization |
|
3,336 |
|
|
|
3,626 |
|
|
|
13,272 |
|
|
|
7,496 |
|
Stock-based compensation |
|
2,126 |
|
|
|
410 |
|
|
|
4,588 |
|
|
|
410 |
|
Lease abandonment expenses |
|
— |
|
|
|
915 |
|
|
|
75 |
|
|
|
915 |
|
Goodwill and intangible asset impairment |
|
106,096 |
|
|
|
— |
|
|
|
112,270 |
|
|
|
— |
|
Acquisition, integration, and transformation costs |
|
6,049 |
|
|
|
1,227 |
|
|
|
15,182 |
|
|
|
36,566 |
|
Total operating expenses |
|
138,531 |
|
|
|
22,636 |
|
|
|
204,183 |
|
|
|
79,297 |
|
Loss from operations |
|
(120,032 |
) |
|
|
(4,689 |
) |
|
|
(147,987 |
) |
|
|
(43,028 |
) |
Other
income (expense): |
|
|
|
|
|
|
|
Interest expense |
|
(6,708 |
) |
|
|
(8,145 |
) |
|
|
(20,306 |
) |
|
|
(13,760 |
) |
Gain on consolidation of equity investment |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
640 |
|
Loss on deconsolidation of subsidiary |
|
(37,708 |
) |
|
|
— |
|
|
|
(37,708 |
) |
|
|
— |
|
Gain on fair value of derivative liability |
|
223 |
|
|
|
49,885 |
|
|
|
6,893 |
|
|
|
49,885 |
|
Gain on fair value of warrant liabilities |
|
— |
|
|
|
373 |
|
|
|
190 |
|
|
|
1,447 |
|
Gain (loss) on extinguishment of debt |
|
(14,610 |
) |
|
|
— |
|
|
|
(14,610 |
) |
|
|
151 |
|
Other income, net, including interest income |
|
32 |
|
|
|
259 |
|
|
|
30 |
|
|
|
40 |
|
Total other income (expense) |
|
(58,771 |
) |
|
|
42,372 |
|
|
|
(65,511 |
) |
|
|
38,403 |
|
Income
(loss) before income tax benefit (expense) |
|
(178,803 |
) |
|
|
37,683 |
|
|
|
(213,498 |
) |
|
|
(4,625 |
) |
Income
tax benefit (expense) |
|
13,219 |
|
|
|
(6,695 |
) |
|
|
17,744 |
|
|
|
357 |
|
Net
income (loss) before loss from equity investment |
|
(165,584 |
) |
|
|
30,988 |
|
|
|
(195,754 |
) |
|
|
(4,268 |
) |
Loss
from equity investment |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(561 |
) |
Net
income (loss) |
|
(165,584 |
) |
|
|
30,988 |
|
|
|
(195,754 |
) |
|
|
(4,829 |
) |
Less:
net income (loss) attributable to noncontrolling interests |
|
178 |
|
|
|
231 |
|
|
|
(109 |
) |
|
|
147 |
|
Net
income (loss) attributable to UpHealth, Inc. |
$ |
(165,762 |
) |
|
$ |
30,757 |
|
|
$ |
(195,645 |
) |
|
$ |
(4,976 |
) |
Net
income (loss) per share attributable to UpHealth, Inc.: |
|
|
|
|
|
|
|
Basic |
$ |
(11.17 |
) |
|
$ |
2.61 |
|
|
$ |
(13.41 |
) |
|
$ |
(0.52 |
) |
Diluted |
$ |
(11.17 |
) |
|
$ |
2.60 |
|
|
$ |
(13.41 |
) |
|
$ |
(0.52 |
) |
Weighted
average shares outstanding: |
|
|
|
|
|
|
|
Basic |
|
14,842 |
|
|
|
11,763 |
|
|
|
14,588 |
|
|
|
9,519 |
|
Diluted |
|
14,842 |
|
|
|
11,807 |
|
|
|
14,588 |
|
|
|
9,519 |
|
UPHEALTH, INC.CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS(In
thousands, unaudited)
|
Nine Months Ended September 30, |
|
|
2022 |
|
|
|
2021 |
|
Operating activities: |
|
|
|
Net loss |
$ |
(195,754 |
) |
|
$ |
(4,829 |
) |
Adjustments to reconcile net loss to net cash used in operating
activities: |
|
|
|
Depreciation and amortization |
|
17,274 |
|
|
|
9,701 |
|
Amortization of debt issuance costs and discount on convertible
debt |
|
10,130 |
|
|
|
5,398 |
|
Stock-based compensation |
|
4,588 |
|
|
|
410 |
|
Provision for bad debt expense |
|
1 |
|
|
|
— |
|
Impairment of property, plant and equipment, intangible assets and
goodwill |
|
112,270 |
|
|
|
— |
|
Loss (gain) on extinguishment of debt |
|
14,610 |
|
|
|
(151 |
) |
Loss from equity investment |
|
— |
|
|
|
561 |
|
Gain on consolidation of equity investment |
|
— |
|
|
|
(640 |
) |
Loss on deconsolidation of subsidiary |
|
37,708 |
|
|
|
— |
|
Gain on fair value of warrant liabilities |
|
(190 |
) |
|
|
(1,447 |
) |
Gain on fair value of derivative liability |
|
(6,893 |
) |
|
|
(49,885 |
) |
Loss on disposal of property and equipment |
|
— |
|
|
|
80 |
|
Deferred income taxes |
|
(17,485 |
) |
|
|
(1,274 |
) |
Other |
|
— |
|
|
|
350 |
|
Changes in operating assets and liabilities, net of effects of
acquisitions: |
|
|
|
Accounts receivable |
|
(5,201 |
) |
|
|
(27,550 |
) |
Inventories |
|
(126 |
) |
|
|
(326 |
) |
Prepaid expenses and other current assets |
|
(592 |
) |
|
|
(1,050 |
) |
Accounts payable and accrued expenses |
|
10,475 |
|
|
|
16,467 |
|
Income taxes payable |
|
(758 |
) |
|
|
886 |
|
Deferred revenue |
|
2,382 |
|
|
|
4,643 |
|
Due to related parties |
|
(39 |
) |
|
|
17 |
|
Other liabilities |
|
49 |
|
|
|
230 |
|
Net cash used in operating activities |
|
(17,551 |
) |
|
|
(48,409 |
) |
Investing activities: |
|
|
|
Purchases of property and equipment |
|
(5,238 |
) |
|
|
(1,879 |
) |
Due to (from) related parties |
|
(14 |
) |
|
|
253 |
|
Net cash acquired in acquisition of businesses |
|
— |
|
|
|
4,263 |
|
Net cash (used in) provided by investing activities |
|
(13,995 |
) |
|
|
2,637 |
|
Financing activities: |
|
|
|
Proceeds from merger and recapitalization transaction |
|
— |
|
|
|
83,435 |
|
Proceeds from debt |
|
67,500 |
|
|
|
164,500 |
|
Repayments of debt |
|
(48,234 |
) |
|
|
(23,307 |
) |
Proceeds from Provider Relief Funds |
|
— |
|
|
|
506 |
|
Payment of debt issuance costs |
|
(1,475 |
) |
|
|
(8,100 |
) |
Repayment of forward share purchase |
|
(18,521 |
) |
|
|
— |
|
Repayments of seller notes |
|
(18,680 |
) |
|
|
(99,207 |
) |
Payments of capital lease obligations |
|
(2,544 |
) |
|
|
(1,253 |
) |
Proceeds from stock option exercises |
|
— |
|
|
|
319,000 |
|
Payments for taxes related to net settlement of equity awards |
|
(95 |
) |
|
|
— |
|
Distribution to noncontrolling interest |
|
(139 |
) |
|
|
(100 |
) |
Payments of amount due to member |
|
— |
|
|
|
(4,271 |
) |
Net cash (used in) provided by financing activities |
|
(22,188 |
) |
|
|
112,522 |
|
Effect
of exchange rate changes on cash, cash equivalents, and restricted
cash |
|
(459 |
) |
|
|
(807 |
) |
Net (decrease) increase in cash, cash equivalents, and
restricted cash |
|
(54,193 |
) |
|
|
65,943 |
|
Cash, cash equivalents, and restricted cash, beginning of
period |
|
76,801 |
|
|
|
2,369 |
|
Cash, cash equivalents, and restricted cash, end of
period |
$ |
22,608 |
|
|
$ |
68,312 |
|
UPHEALTH, INC.NON-GAAP
FINANCIAL INFORMATION
Non-GAAP Financial Information
This press release includes financial measures that are not
calculated in accordance with accounting principles generally
accepted in the United States of America (GAAP). To supplement
UpHealth’s condensed consolidated financial statements presented in
accordance with GAAP, UpHealth presents investors with non-GAAP
financial measures, including pro forma revenues, pro forma gross
profit, pro forma gross margin, and adjusted EBITDA.
- Pro forma revenues consist of GAAP revenues and revenues from
UpHealth’s subsidiaries prior to their acquisition.
- Pro forma gross profit and gross margin consist of GAAP gross
profit and gross margin, and gross profit and gross margin from
UpHealth’s subsidiaries prior to their acquisition.
- Adjusted EBITDA consists of net income (loss) attributable to
UpHealth, Inc., excluding depreciation and amortization;
stock-based compensation; lease abandonment expenses; goodwill and
intangible asset impairments; acquisition, integration, and
transformation costs; other income (expense); income tax benefit
(expense); income (loss) from equity investment; net income (loss)
attributable to noncontrolling interests; and other non-recurring
charges to GAAP net income (loss) attributable to UpHealth, Inc.
Other non-recurring charges to GAAP net income (loss) attributable
to UpHealth, Inc. may include transaction expenses in connection
with capital raising transactions (whether debt, equity or
equity-linked) and acquisitions, whether or not consummated,
purchase price adjustments, the cumulative effect of a change in
accounting principles, or other expenses determined to be
non-recurring.
UpHealth believes that the presentation of these non-GAAP
financial measures provides important supplemental information to
management and investors regarding financial and business trends
relating to UpHealth’s financial condition and results of
operations. Management believes that the items described above
provide an additional measure of UpHealth’s operating results and
facilitates comparisons of UpHealth’s core operating performance
against prior periods and business model objectives. This
information is provided to investors in order to facilitate
additional analyses of past, present, and future operating
performance and as a supplemental means to evaluate UpHealth’s
ongoing operations. UpHealth believes that these non-GAAP financial
measures are useful to investors in their assessment of UpHealth’s
operating performance.
Pro forma revenues, pro forma gross profit, pro forma gross
margin, and adjusted EBITDA are not calculated in accordance with
GAAP, and should be considered supplemental to, and not as a
substitute for, or superior to, financial measures calculated in
accordance with GAAP. You should not consider these measures in
isolation or as a substitute for analysis of UpHealth’s results as
reported under GAAP. UpHealth compensates for these limitations by
prominently disclosing GAAP financial measures and providing
investors with reconciliations from UpHealth’s GAAP operating
results to the non-GAAP financial measures for the relevant
periods.
The accompanying tables provide more details on the GAAP
financial measures that are most directly comparable to the
non-GAAP financial measures described above and the related
reconciliations between these financial measures.
UPHEALTH,
INC.RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL
MEASURES (1)(In thousands)
|
Three Months Ended September 30, 2022 |
|
GAAP |
Revenues |
$ |
38,666 |
|
|
|
Gross
margin |
|
48 |
% |
|
|
Net loss
attributable to UpHealth, Inc. |
$ |
(165,762 |
) |
Net loss attributable to noncontrolling interests |
|
178 |
|
Net
loss |
|
(165,584 |
) |
Other expense |
|
58,771 |
|
Income tax benefit |
|
(13,219 |
) |
Loss
from operations |
|
(120,032 |
) |
Depreciation and amortization |
|
4,514 |
|
Stock-based compensation |
|
2,126 |
|
Acquisition, integration and transformation costs, and
non-recurring expenses (2) |
|
112,145 |
|
Adjusted
EBITDA |
$ |
(1,247 |
) |
(1) See Non-GAAP Financial Information section for definitions
of the Company’s non-GAAP financial measures.(2) Amounts reflect
acquisition, integration and transformation costs from the
condensed consolidated statements of operations, as well as other
operating expenses considered to be non-recurring during the
period.
|
Three Months Ended September 30, 2021 |
|
GAAP |
Revenues |
$ |
45,192 |
|
|
|
Gross
margin |
|
40 |
% |
|
|
Net loss
attributable to UpHealth, Inc. |
$ |
30,757 |
|
Net loss attributable to noncontrolling interests |
|
231 |
|
Net
loss |
|
30,988 |
|
Other expense |
|
(42,372 |
) |
Income tax benefit |
|
6,695 |
|
Loss
from operations |
|
(4,689 |
) |
Depreciation and amortization |
|
5,260 |
|
Stock-based compensation |
|
410 |
|
Acquisition, integration and transformation costs, and
non-recurring expenses (2) |
|
2,142 |
|
Adjusted
EBITDA |
$ |
3,123 |
|
(1) See Non-GAAP Financial Information section for definitions
of the Company’s non-GAAP financial measures.(2) Amounts reflect
acquisition, integration and transformation costs from the
condensed consolidated statements of operations, as well as other
operating expenses considered to be non-recurring during the
period.
UPHEALTH,
INC.RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL
MEASURES (1)(In thousands)
|
Nine Months Ended September 30, 2022 |
|
GAAP |
Revenues |
$ |
118,306 |
|
|
|
Gross
margin |
|
48 |
% |
|
|
Net loss
attributable to UpHealth, Inc. |
$ |
(195,645 |
) |
Net loss attributable to noncontrolling interests |
|
(109 |
) |
Net
loss |
|
(195,754 |
) |
Other expense |
|
65,511 |
|
Income tax benefit |
|
(17,744 |
) |
Loss
from operations |
|
(147,987 |
) |
Depreciation and amortization |
|
17,274 |
|
Stock-based compensation |
|
4,588 |
|
Acquisition, integration and transformation costs, lease
abandonment expenses, goodwill and intangible asset impairment, and
non-recurring expenses (2) |
|
127,527 |
|
Adjusted
EBITDA |
$ |
1,402 |
|
(1) See Non-GAAP Financial Information section for definitions
of the Company’s non-GAAP financial measures.(2) Amounts reflect
acquisition, integration and transformation costs, lease
abandonment expenses, and goodwill and intangible asset impairment
from the condensed consolidated statements of operations, as well
as other operating expenses considered to be non-recurring during
the period.
|
Nine Months Ended September 30, 2021 |
|
GAAP |
|
Adjustments (2) |
|
Pro Forma (3) |
Revenues |
$ |
89,890 |
|
|
$ |
25,082 |
|
|
$ |
114,972 |
|
|
|
|
|
|
|
Gross
margin |
|
40 |
% |
|
|
37 |
% |
|
|
40 |
% |
|
|
|
|
|
|
Net loss
attributable to UpHealth, Inc. |
$ |
(4,976 |
) |
|
$ |
(4,317 |
) |
|
$ |
(9,293 |
) |
Net loss attributable to noncontrolling interests |
|
147 |
|
|
|
28 |
|
|
|
175 |
|
Net
loss |
|
(4,829 |
) |
|
|
(4,289 |
) |
|
|
(9,118 |
) |
Other expense |
|
(38,403 |
) |
|
|
(1,171 |
) |
|
|
(39,574 |
) |
Income tax benefit |
|
(357 |
) |
|
|
(99 |
) |
|
|
(456 |
) |
Loss from equity investment |
|
561 |
|
|
|
— |
|
|
|
561 |
|
Loss
from operations |
|
(43,028 |
) |
|
|
(5,559 |
) |
|
|
(48,587 |
) |
Depreciation and amortization |
|
9,752 |
|
|
|
2,729 |
|
|
|
12,481 |
|
Stock-based compensation |
|
410 |
|
|
|
— |
|
|
|
410 |
|
Acquisition, integration and transformation costs, and
non-recurring expenses (4) |
|
38,914 |
|
|
|
5,302 |
|
|
|
44,216 |
|
Adjusted
EBITDA |
$ |
6,048 |
|
|
$ |
2,472 |
|
|
$ |
8,520 |
|
(1) See Non-GAAP Financial Information section for definitions
of the Company’s non-GAAP financial measures.(2) Amounts reflect
operating activity of UpHealth and subsidiaries during the period
prior to each subsidiary’s acquisition date, if acquired during the
period.(3) Amounts reflect operating activity of UpHealth and
subsidiaries during the period, as if acquired at the beginning of
the period.(4) Amounts reflect acquisition, integration and
transformation costs from the condensed consolidated statements of
operations, as well as other operating expenses considered to be
non-recurring during the period.
UPHEALTH, INC.SEGMENT
INFORMATION AND RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL
MEASURES (1)(In thousands, unaudited)
|
Three Months Ended September 30, 2022 |
|
GAAP |
Revenues: |
|
Integrated care management (4) |
$ |
3,795 |
|
Virtual care infrastructure (5)(7) |
|
14,978 |
|
Services (6) |
|
19,893 |
|
Total |
$ |
38,666 |
|
|
|
|
Three Months Ended September 30, 2022 |
|
GAAP |
Gross
Profit: |
|
Integrated care management (4) |
$ |
2,854 |
|
Virtual care infrastructure (5)(7) |
|
8,191 |
|
Services (6) |
|
7,454 |
|
Total |
$ |
18,499 |
|
|
|
|
Three Months Ended September 30, 2022 |
|
GAAP |
Gross
Margin %: |
|
Integrated care management (4) |
|
75 |
% |
Virtual care infrastructure (5)(7) |
|
55 |
% |
Services (6) |
|
37 |
% |
Total |
|
48 |
% |
|
Three Months Ended September 30, 2021 |
|
GAAP |
Revenues: |
|
Integrated care management (4) |
$ |
11,858 |
|
Virtual care infrastructure (5) |
|
15,284 |
|
Services (6) |
|
18,050 |
|
Total |
$ |
45,192 |
|
|
|
|
Three Months Ended September 30, 2021 |
|
GAAP |
Gross
Profit: |
|
Integrated care management (4) |
$ |
4,760 |
|
Virtual care infrastructure (5) |
|
5,838 |
|
Services (6) |
|
7,349 |
|
Total |
$ |
17,947 |
|
|
|
|
Three Months Ended September 30, 2021 |
|
GAAP |
Gross
Margin %: |
|
Integrated care management (4) |
|
40 |
% |
Virtual care infrastructure (5) |
|
38 |
% |
Services (6) |
|
41 |
% |
Total |
|
40 |
% |
|
|
UPHEALTH, INC.SEGMENT
INFORMATION AND RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL
MEASURES (1)(In thousands, unaudited)
|
Nine Months Ended September 30, 2022 |
|
GAAP |
Revenues: |
|
Integrated care management (4) |
$ |
14,230 |
|
Virtual care infrastructure (5)(7) |
|
47,423 |
|
Services (6) |
|
56,653 |
|
Total |
$ |
118,306 |
|
|
|
|
Nine Months Ended September 30, 2022 |
|
GAAP |
Gross
Profit: |
|
Integrated care management (4) |
$ |
11,385 |
|
Virtual care infrastructure (5)(7) |
|
23,779 |
|
Services (6) |
|
21,032 |
|
Total |
$ |
56,196 |
|
|
|
|
Nine Months Ended September 30, 2022 |
|
GAAP |
Gross
Margin %: |
|
Integrated care management (4) |
|
80 |
% |
Virtual care infrastructure (5)(7) |
|
50 |
% |
Services (6) |
|
37 |
% |
Total |
|
48 |
% |
|
Nine Months Ended September 30, 2021 |
|
GAAP |
|
Adjustments (2) |
|
Pro Forma (3) |
Revenues: |
|
|
|
|
|
Integrated care management (4) |
$ |
29,427 |
|
|
$ |
— |
|
|
$ |
29,427 |
|
Virtual care infrastructure (5) |
|
22,838 |
|
|
|
15,603 |
|
|
|
38,441 |
|
Services (6) |
|
37,625 |
|
|
|
9,479 |
|
|
|
47,104 |
|
Total |
$ |
89,890 |
|
|
$ |
25,082 |
|
|
$ |
114,972 |
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2021 |
|
GAAP |
|
Adjustments (2) |
|
Pro Forma (3) |
Gross
Profit: |
|
|
|
|
|
Integrated care management (4) |
$ |
14,483 |
|
|
$ |
— |
|
|
$ |
14,483 |
|
Virtual care infrastructure (5) |
|
8,771 |
|
|
|
6,097 |
|
|
|
14,868 |
|
Services (6) |
|
13,015 |
|
|
|
3,157 |
|
|
|
16,172 |
|
Total |
$ |
36,269 |
|
|
$ |
9,254 |
|
|
$ |
45,523 |
|
|
|
|
|
|
|
|
Nine Months Ended September 30, 2021 |
|
GAAP |
|
Adjustments (2) |
|
Pro Forma (3) |
Gross
Margin %: |
|
|
|
|
|
Integrated care management (4) |
|
49 |
% |
|
n/a |
|
|
|
49 |
% |
Virtual care infrastructure (5) |
|
38 |
% |
|
|
39 |
% |
|
|
39 |
% |
Services (6) |
|
35 |
% |
|
|
33 |
% |
|
|
34 |
% |
Total |
|
40 |
% |
|
|
37 |
% |
|
|
40 |
% |
|
|
|
|
|
|
UPHEALTH, INC.SEGMENT
INFORMATION AND RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL
MEASURES (1)(In thousands, unaudited)
(1 |
) |
See Non-GAAP Financial Information section for definitions of the
Company’s non-GAAP financial measures. |
(2 |
) |
Amounts reflect operating
activity of UpHealth and subsidiaries during the period prior to
each subsidiary’s acquisition date, if acquired during the
period. |
(3 |
) |
Amounts reflect operating
activity of UpHealth and subsidiaries during the period, as if
acquired at the beginning of the period.Segment
InformationThe Company’s business is organized into three
operating business segments: Integrated
Care Management—through the Thrasys subsidiary;
Virtual Care Infrastructure—through the Cloudbreak and Glocal
(other than for the three month period of July 1, 2022 through
September 30, 2022) subsidiaries; and
Services—through the Innovations, BHS and TTC
subsidiaries.The reportable segments are consistent with how
management views the Company’s services and products and the
financial information reviewed by the chief operating decision
makers. The Company manages its businesses as components of an
enterprise for which separate information is available and is
evaluated regularly by the chief operating decision makers in
deciding how to allocate resources and assess performance. |
(4 |
) |
In
the Integrated Care Management segment, the Company provides its
customers with an advanced, comprehensive, and extensible
technology platform, marketed under the umbrella “SyntraNet” to
manage health, quality of care, and costs, especially for
individuals with complex medical, behavioral health, and social
needs. |
(5 |
) |
In the Virtual Care
Infrastructure segment, the Company provides technology and
process-based healthcare platforms providing its customers
comprehensive primary care, specialty consultations, and
translation services, through telemedicine, Digital Dispensaries,
and technology-based hospital centers. |
(6 |
) |
In the Services segment, the
Company provide custom compounded medications for the unique needs
of every patient and prescriber. The Company is a full-service
pharmacy filling prescriptions from its inventory of compounded
medications, as well as drugs purchased from manufacturers.
Additionally, the Company provides inpatient and outpatient
substance abuse and mental health treatment services for
individuals with drug and alcohol addiction and other behavioral
health issues. The Company offers a complete continuum of care from
detoxification services, residential care, partial hospitalization
programs, and intensive outpatient and outpatient programs. |
(7 |
) |
As discussed in Note 1,
Organization and Business, to the Company’s unaudited condensed
consolidated financial statements, the Company deconsolidated
Glocal during the three months ended September 30, 2022; therefore,
the financial results of Glocal as of December 31, 2021 and for the
three months ended September 30, 2021, the period from March 26,
2021 to September 30, 2021, and the period from January 1, 2022 to
June 30, 2022 are included in the Company’s unaudited condensed
consolidated financial statements, and the financial results of
Glocal as of September 30, 2022 and for the three months then ended
are not included in the Company’s unaudited condensed consolidated
financial statements. |
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