Executive Summary

Q3 2023 revenue was $32.7M with gross margin expanding to 54% and adjusted EBITDA at $5.4M; GAAP net loss per share was $(1.12), while non-GAAP net income per share was $2.92, driven by the exclusion of impairments and acquisition/integration costs and the deconsolidation accounting effects .
Segment mix shifted toward Virtual Care Infrastructure (VCI) on video-minute growth, while Services declined on pharmacy divestiture and the Missouri behavioral wind-down; Integrated Care Management (ICM) is being wound down and licensed to customers .
Corporate actions are central to the stock narrative: UpHealth Holdings, Thrasys, and BHS filed Chapter 11; UPH deconsolidated Holdings and recorded a $59.1M gain; management announced Cloudbreak’s sale to GTCR for $180M to reduce debt and refocus on TTC Behavioral Health .
Full-year 2023 guidance was raised last quarter: adjusted EBITDA “at least $15M,” and revenue/gross margin expected at the top of the prior ranges; no new quantitative guidance was issued with Q3, but cash balances and deconsolidation effects were disclosed .

What Went Well and What Went Wrong

What Went Well
- VCI revenue grew 23% YoY to $18.5M as video minutes increased across new and existing hospital clients; segment gross margin rose to 58% from 48% YoY, reflecting improved operating leverage .
- Services segment Florida behavioral operations grew 31% YoY on higher in-network volumes; Services gross margin expanded to 51% from 35% YoY as the lower-margin Missouri operation ramped down and pharmacy was divested .
- Adjusted EBITDA improved to $5.4M from $(1.2)M YoY, reflecting corporate overhead cost control; management emphasized a simplified strategy focusing on TTC Behavioral Health post-Cloudbreak sale: “focus on TTC, a growing, cash flow positive, Behavioral Health business” .
What Went Wrong
- Total revenue declined 16% YoY to $32.7M, driven by the IGI pharmacy sale and behavioral wind-down, and ICM revenue fell on customer loss; ICM gross margin compressed steeply to 38% from 75% YoY .
- A New York court granted summary judgment in the Needham Action, leading to $29.8M expense recorded in Q3 and triggering Chapter 11 filings for UpHealth Holdings, Thrasys, and BHS; UPH cautioned equity holders on heightened risk .
- Operating loss was $(72.8)M in Q3, impacted by $41.2M impairments and $33.2M acquisition/integration/transformation costs; GAAP net loss was $20.6M despite the $59.1M gain on deconsolidation .

Financial Results

Metric	Q3 2022	Q1 2023	Q2 2023	Q3 2023
Revenue ($USD Millions)	$38.666	$42.145	$37.823	$32.681
Gross Margin %	44%	54%	53%	54%
GAAP Diluted EPS ($USD)	$(11.17)	$(0.51)	$(1.05)	$(1.12)
Adjusted EBITDA ($USD Millions)	$(1.247)	$6.564	$5.255	$5.418
Non-GAAP EPS ($USD)	—	—	$(0.40)	$2.92
Consensus Revenue (S&P Global)	—	—	—	N/A*
Consensus EPS (S&P Global)	—	—	—	N/A*

*Consensus values unavailable via S&P Global due to missing mapping.

Segment revenue and margin mix

Segment	Q3 2022 Revenue ($M)	Q3 2023 Revenue ($M)	Q3 2022 Gross Margin %	Q3 2023 Gross Margin %
Virtual Care Infrastructure (VCI)	$14.978	$18.506	48%	58%
Services (Behavioral, Pharmacy)	$19.893	$10.908	35%	51%
Integrated Care Management (ICM)	$3.795	$3.267	75%	38%
Total	$38.666	$32.681	44%	54%

Key performance indicators

KPI	Q1 2023	Q2 2023	Q3 2023
Cash & Cash Equivalents ($USD Millions)	$13.333	$46.803	$3.342
Operating Loss ($USD Millions)	$(0.778)	$(10.742)	$(72.789)
Net Loss Attributable to UpHealth ($USD Millions)	$(8.083)	$(19.127)	$(20.605)

Note: Q3 cash excludes $35.6M at UpHealth Holdings (deconsolidated) and $7.0M in India restricted by the Emergency Arbitrator .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue ($USD Millions)	FY 2023	$127–$135M (Q1)	“Top end of” $127–$135M (Q2)	Maintained range; confidence increased
Gross Margin %	FY 2023	43%–45% (Q1)	“Top end of” 43%–45% (Q2)	Maintained range; confidence increased
Adjusted EBITDA ($USD Millions)	FY 2023	$7–$10M (Q1)	At least $15M (Q2)	Raised

Management did not issue incremental quantitative guidance with the Q3 release; they disclosed cash forecasts and strategic actions tied to deconsolidation and the Cloudbreak sale .

Earnings Call Themes & Trends

Note: A Q3 2023 earnings call transcript does not appear to be published on the investor site; Q1 and Q2 transcripts are available, but Q3 is absent .

Topic	Previous Mentions (Q-2 = Q1 2023)	Previous Mentions (Q-1 = Q2 2023)	Current Period (Q3 2023)	Trend
Capital structure actions	Raised liquidity via $4.5M PIPE; announced IGI sale to add $56M gross proceeds	Completed IGI sale; repurchased $10.3M of 2025 notes	Announced Cloudbreak sale to GTCR for $180M; proceeds to repay unsecured and ~45% secured debt	Accelerating de-leveraging
Segment focus & strategy	Recalibration, cost alignment, early margin expansion; VCI 58% GM, Services 48% GM	Strength in VCI/Services margins; FY23 guide raised	Post-Cloudbreak, focus on TTC Behavioral Health; wind-down of ICM	Sharpened focus on profitable TTC
Legal/regulatory overhang	Ongoing Glocal arbitration; general risk disclosures	—	Needham summary judgment; Holdings/Thrasys/BHS Chapter 11; deconsolidation	Risk escalated; restructuring in process
Operational efficiency	Cost controls and headcount reduction begun (12% since Aug ‘22)	Ongoing efficiency; adj EBITDA improvement	Additional 20 corporate roles eliminated; CFO→CEO transition	Continued opex rationalization
Product/Customer trends	VCI video minutes growth; behavioral volumes improving	VCI U.S. telehealth revenue +$3.6M YoY; behavioral margin uplift	VCI revenue +23% YoY; Florida behavioral +31% YoY; ICM customer loss	Mixed: VCI strength, Services mix, ICM decline

Management Commentary

“Our Telehealth and Behavioral Health businesses [show] continued strength… VCI revenues were $18.5 million… driven by strong video minute growth and the addition of numerous new hospital clients.”
“Our adjusted EBITDA was $5.4 million… driven by a continued focus on cost control efforts, especially as it relates to corporate overhead.”
On Needham judgment: “We are extremely disappointed… and plan to aggressively appeal. [We] recorded additional expense of $29.8 million…”
On deconsolidation: “We deconsolidated UpHealth Holdings and recorded a $59.1 million gain… measured as the difference between the fair value of UpHealth Holdings of $75.6 million and the carrying amount… as of September 30, 2023.”
On strategy: “Upon the divestiture of Cloudbreak, UpHealth will focus exclusively on expanding our high quality, profitable Behavioral Health business… TTC.”

Q&A Highlights

A Q3 2023 earnings call transcript does not appear to be available/published on the investor relations site; therefore, no Q&A themes could be extracted .

Estimates Context

S&P Global consensus estimates for Q3 2023 could not be retrieved due to a missing CIQ mapping for UPH; as such, comparisons to Wall Street consensus are unavailable. Values would be retrieved from S&P Global but are unavailable in this case.
Given Q2’s raised full-year guidance (revenue/gross margin top end of ranges; adjusted EBITDA at least $15M), models may need to incorporate the Cloudbreak sale timing, debt paydown, and the deconsolidation effects when projecting post-transaction run-rate for TTC Behavioral Health .

Key Takeaways for Investors

Margin and EBITDA execution: Despite revenue headwinds from divestitures and wind-downs, gross margin held at 54% and adjusted EBITDA was positive ($5.4M), underscoring cost control and mix improvements in VCI and Services .
Legal/restructuring overhang: The Needham judgment and the Chapter 11 filings for Holdings/Thrasys/BHS introduce near-term uncertainty, but deconsolidation reduces direct control/financial consolidation, and management intends to appeal .
Debt reduction catalyst: The definitive agreement to sell Cloudbreak for $180M provides a clear path to repay unsecured and a substantial portion of secured notes, potentially resetting the capital structure and refocusing UPH on TTC Behavioral Health .
Strategy simplification: Exiting ICM and concentrating on TTC (cash-flow positive) should simplify operations and may support margin stability; VCI strengths transition to a divested asset while UPH narrows to behavioral health .
Segment trends: VCI showed strong YoY growth and margin expansion, while Services benefited from Florida behavioral volume/mix; ICM revenue/margins declined on customer loss, with wind-down expected to breakeven cash through Q4 .
Modeling implications: Absent Q3 consensus data from S&P Global, anchor projections to reported results and Q2 guidance, while adjusting for timing of Cloudbreak close (H1 2024), debt repayment, and TTC-only profile post-transaction .
Near-term trading: Stock likely reacts to transaction milestones (proxy, approvals, close), bankruptcy court developments, and any resolution progress on Needham; catalysts are largely non-operational in nature near-term .

UpHealth, Inc. (UPH)·Q3 2023 Earnings Summary