8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

April 7, 2023

Date of Report (date of earliest event reported)

UpHealth, Inc.

(Exact name of registrant as specified in its charter)

Delaware	001-38924	83-3838045
(State or other jurisdiction of incorporation or organization)	(Commission File Number)	(I.R.S. Employer Identification Number)

14000 S. Military Trail, Suite 203

Delray Beach, FL 33484

(Address of principal executive offices, including zip code)

(888) 424-3646

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e 4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbols	Name of each exchange on which registered
Common Stock, par value $0.0001 per share	UPH	New York Stock Exchange
Redeemable Warrants, exercisable for one share of Common Stock at an exercise price of $115.00 per share	UPH.WS	New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Item 8.01 Other Events.

UpHealth, Inc. (the “Company”) is filing this Current Report on Form 8-K (this “Current Report”) to provide certain pro forma financial information giving effect to the Transaction (as defined below), as set forth in Item 9.01 below.

As previously reported in the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission (the “SEC”) on February 27, 2023 (the “February 27 Current Report”), on February 26, 2023, UpHealth Holdings, Inc., a Delaware corporation (“UpHealth Holdings”) and a wholly-owned subsidiary of the Company, agreed to sell 100% of the outstanding capital stock of UpHealth Holdings’ wholly-owned subsidiary, Innovations Group, Inc., a Utah corporation (“IGI” and, together with each of IGI’s wholly-owned subsidiaries, the “Group Companies”), to Belmar MidCo, Inc., a Delaware corporation (“Buyer”) and a wholly-owned subsidiary of Belmar Holdings, Inc., a Delaware corporation, a portfolio company of Webster Capital IV, L.P., a Delaware limited partnership, pursuant to a stock purchase agreement (the “Stock Purchase Agreement”), dated February 26, 2023, by and among the Company, UpHealth Holdings, IGI and Buyer (the sale of the capital stock of IGI contemplated by the Stock Purchase Agreement, the “Transaction”). The Transaction is expected to close in the second quarter of 2023, subject to the completion of required regulatory filings as described in the February 27 Current Report.

Included as Exhibit 99.1 to this Current Report is the unaudited pro forma condensed balance sheet of the Company as of December 31, 2022, the unaudited pro forma condensed statement of operations for the year ended December 31, 2022, and the notes related thereto (the “Unaudited Pro Forma Condensed Financial Information”), all giving pro forma effect to the Transaction, with the unaudited pro forma condensed balance sheet giving effect to the Transaction as if it had occurred on December 31, 2022, and the unaudited pro forma condensed statement of operations giving effect to the Transaction as if it had occurred on January 1, 2022.

The Unaudited Pro Forma Condensed Financial Information included in this Current Report has been presented for informational purposes only. It does not purport to represent the actual balance sheet that the Company would have achieved had the Transaction occurred on December 31, 2022, nor does it purport to represent the actual results of operations that the Company would have achieved had the Transaction occurred on January 1, 2022, and is not intended to project the future balance sheet or results of operations that the Company may achieve as a result of the Transaction.

Forward-Looking Statements

This Current Report contains forward-looking statements within the meaning of U.S. federal securities laws. Such forward-looking statements include, but are not limited to, statements regarding the closing, including its timing, of the Transaction, the use of proceeds of the Transaction, and UpHealth’s expectations, hopes, beliefs, intentions, plans, prospects or strategies regarding its future business plans. 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 Current Report are based on certain assumptions and analyses made by the management of UpHealth in light of 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 closing conditions for the Transaction not being satisfied, the ability of the parties to close the Transaction on the expected closing date or at all, the ability of UpHealth to service or otherwise pay its debt obligations, 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, 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. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as may be required under applicable securities laws.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

Exhibit No.	Description
99.1	Unaudited Pro Forma Condensed Financial Information of UpHealth, Inc. for the year ended December 31, 2022.
104	Cover Page Interactive Data File (embedded within the Inline XBRL document).

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated: April 7, 2023

By:	/s/ Samuel J. Meckey
Name:	Samuel J. Meckey
Title:	Chief Executive Officer

EX-99.1

EXHIBIT 99.1

UNAUDITED PRO FORMA FINANCIAL INFORMATION

Introduction

On February 26, 2023, UpHealth Holdings, Inc., a Delaware corporation (“UpHealth Holdings”) and a wholly-owned subsidiary of UpHealth, Inc. (“UpHealth” or the “Company”), agreed to sell 100% of the outstanding capital stock of UpHealth Holdings’ wholly-owned subsidiary, Innovations Group, Inc., a Utah corporation (“IGI” and, together with each of IGI’s wholly-owned subsidiaries, the “Group Companies”), to Belmar MidCo, Inc., a Delaware corporation (“Buyer”) and a wholly-owned subsidiary of Belmar Holdings, Inc., a Delaware corporation (“Buyer Parent”), a portfolio company of Webster Capital IV, L.P., a Delaware limited partnership (“Webster Capital IV”), pursuant to a stock purchase agreement (the “Stock Purchase Agreement”), dated February 26, 2023, by and among the Company, UpHealth Holdings, IGI and Buyer (the sale of the capital stock of IGI contemplated by the Stock Purchase Agreement, the “Transaction”). The Transaction is expected to close in the second quarter of 2023 (the “Closing” and such date, the “Closing Date”)

The following unaudited pro forma condensed financial information as of and for the year ended December 31, 2022 is based on the audited historical consolidated financial statements of UpHealth as of and for the year ended December 31, 2022 and the unaudited historical financial information of IGI as of and for the year ended December 31, 2022.

The unaudited pro forma condensed statement of operations for the year ended December 31, 2022 gives effect to the Transaction as if it had occurred on January 1, 2022.

The unaudited pro forma condensed financial information does not necessarily reflect what the Company’s financial condition or results of operations would have been had the divestiture occurred on the dates indicated. It also may not be useful in predicting the future financial condition and results of operations of the Company. The actual financial condition and results of operations of the Company may differ significantly from the pro forma amounts reflected herein due to a variety of factors.

UNAUDITED PRO FORMA CONDENSED BALANCE SHEET

AS OF DECEMBER 31, 2022

In thousands, unaudited	UpHealth, Inc.			Transaction Accounting Adjustments			Notes		Pro Forma
ASSETS
Current assets:
Cash and cash equivalents	$	15,557		$	43,577			(a),(c)	$	59,134
Accounts receivable, net		21,851			—					21,851
Inventories		161			—					161
Due from related parties		14			—					14
Prepaid expenses and other current assets		2,991			—					2,991
Assets held for sale, current		2,748			(2,748	)		(b)		—
Total current assets		43,322			40,829					84,151
Property, plant and equipment, net		14,069			—					14,069
Operating lease right-of-use assets		7,213			—					7,213
Intangible assets, net		31,362			—					31,362
Goodwill		159,675			—					159,675
Equity investment		21,200			—					21,200
Other assets		438			—					438
Assets held for sale, noncurrent		62,525			(62,525	)		(b)		—
Total assets	$	339,804		$	(21,696	)			$	318,108
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		17,983		$	—				$	17,983
Accrued expenses		38,763			—					38,763
Deferred revenue		2,738			—					2,738
Due to related parties		229			—					229
Income taxes payable		388			—					388
Lease liabilities, current		5,475			—					5,475
Other liabilities, current		74			—					74
Liabilities held for sale, current		3,319			(3,319	)		(b)		—
Total current liabilities		68,969			(3,319	)				65,650
Related party debt, noncurrent		281			—					281
Debt, noncurrent		145,962			(10,590	)		(c)		135,372
Deferred tax liabilities		1,200			—					1,200
Warrant liabilities, noncurrent		9			—					9
Derivative liabilities, noncurrent		56			—					56
Lease liabilities, noncurrent		8,741			—					8,741
Other liabilities, noncurrent		662			—					662
Liabilities held for sale, noncurrent		7,787			(7,787	)		(b)		—
Total liabilities		233,667			(21,696	)				211,971
Stockholders’ equity:
Common stock		2			—					2
Additional paid-in capital		688,355			—					688,355
Treasury stock, at cost		(17,000	)		—					(17,000	)
Accumulated deficit		(566,209	)		—					(566,209	)
Total UpHealth, Inc., stockholders’ equity		105,148			—					105,148
Noncontrolling interest		989			—					989
Total stockholders’ equity		106,137			—					106,137
Total liabilities and stockholders’ equity	$	339,804		$	(21,696	)			$	318,108

UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 2022

In thousands, except per share amounts, unaudited	UpHealth, Inc.			Transaction Accounting Adjustments			Notes	Pro Forma
Revenues	$	158,803		$	(32,308	)	(d)	$	126,495
Cost of revenues		88,648			(20,349	)	(d)		68,299
Gross profit		70,155			(11,959	)			58,196
Operating expenses:
Sales and marketing		15,951			(2,458	)	(e)		13,493
Research and development		7,888			(49	)	(e)		7,839
General and administrative		48,755			(4,129	)	(e)		44,626
Depreciation and amortization		16,140			(202	)	(e)		15,938
Stock-based compensation		6,464			(3,650	)	(e)		2,814
Lease abandonment expenses		75			—		(e)		75
Goodwill and intangible asset impairment		114,061			(1,791	)	(e)		112,270
Acquisition, integration, and transformation costs		22,214			(520	)	(e)		21,694
Total operating expenses		231,548			(12,799	)			218,749
Loss from operations		(161,393	)		840				(160,553	)
Other income (expense):
Interest expense		(26,500	)		—				(26,500	)
Loss on deconsolidation of subsidiary		(37,708	)		—				(37,708	)
Gain on fair value of derivative liability		7,529			—				7,529
Gain on fair value of warrant liabilities		242			—				242
Loss on extinguishment of debt		(14,610	)		—				(14,610	)
Other income, net, including interest income		121			36		(f)		157
Total other income (expense)		(70,926	)		36				(70,890	)
Net loss before income tax benefit		(232,319	)		876				(231,443	)
Income tax benefit		9,384			(1,100	)	(g)		8,284
Net loss		(222,935	)		(224	)			(223,159	)
Less: net loss attributable to noncontrolling interest		65			—				65
Net loss attributable to UpHealth, Inc.	$	(223,000	)	$	(224	)		$	(223,224	)
Loss per share attributable to UpHealth, Inc.:
Basic	$	(15.17	)	$	(0.02	)		$	(15.19	)
Diluted	$	(15.17	)	$	(0.02	)		$	(15.19	)
Weighted average shares outstanding:
Basic		14,699			14,699				14,699
Diluted		14,699			14,699				14,699

NOTES TO UNAUDITED PRO FORMA CONDENSED FINANCIAL INFORMATION

(In thousands, unaudited)

1. Basis of Presentation

See “Introduction” for more information regarding the basis of presentation for the unaudited pro forma condensed financial information.

2. Transaction Accounting Adjustments

The unaudited pro forma condensed financial information reflects the impact of the following pro forma transaction accounting adjustments to the:

1) UpHealth condensed balance sheet, primarily consisting of:

a) the receipt of cash consideration at the closing of the transaction and

b) the elimination of assets and liabilities attributable to the IGI business.

c) the required offering to repurchase a portion of the 2025 convertible notes with 20% of the net proceeds from the sale of the IGI business. This adjustment assumes that the 2025 convertible noteholders accept the full offer to repurchase.

2) UpHealth condensed statement of operations, primarily consisting of:

d) the elimination of revenues and cost of revenues of the IGI business;

e) the elimination of operating expenses at the IGI business;

f) the elimination of other expenses at the IGI business; and

g) the elimination of income tax benefit at the IGI business.

XML

Document and Entity Information	Apr. 07, 2023
Document And Entity Information [Line Items]
Amendment Flag	false
Entity Central Index Key	0001770141
Document Type	8-K
Document Period End Date	Apr. 07, 2023
Entity Registrant Name	UpHealth, Inc.
Entity Incorporation State Country Code	DE
Entity File Number	001-38924
Entity Tax Identification Number	83-3838045
Entity Address, Address Line One	14000 S. Military Trail
Entity Address, Address Line Two	Suite 203
Entity Address, City or Town	Delray Beach
Entity Address, State or Province	FL
Entity Address, Postal Zip Code	33484
City Area Code	(888)
Local Phone Number	424-3646
Written Communications	false
Soliciting Material	false
Pre Commencement Tender Offer	false
Pre Commencement Issuer Tender Offer	false
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Common Stock Par Value 0.0001 Per Share [Member]
Document And Entity Information [Line Items]
Security 12b Title	Common Stock, par value $0.0001 per share
Trading Symbol	UPH
Security Exchange Name	NYSE
Redeemable Warrants Exercisable For One Share Of Common Stock At An Exercise Price Of 115.00 Per Share [Member]
Document And Entity Information [Line Items]
Security 12b Title	Redeemable Warrants, exercisable for one share of Common Stock at an exercise price of $115.00 per share
Trading Symbol	UPH.WS
Security Exchange Name	NYSE