Executive Summary

Reported Q4 2023 GAAP revenue of $17.3M, gross margin of 54%, and GAAP diluted EPS of $(0.54); Adjusted EBITDA of $2.3M. Results reflect deconsolidation of Holdings, Thrasys, and BHS, meaning Q4 GAAP only includes UpHealth, Inc. and Cloudbreak; TTC is discussed separately and pro forma.
Closed the sale of Cloudbreak on March 15, 2024 for $180M cash; $139M placed in Notes escrow to fully repay 2026 notes and repurchase ~$20M of 2025 notes (leaving ~$37M of 2025 notes outstanding). Deleveraging is a key potential stock catalyst.
TTC Behavioral Health posted strong growth: Q4 revenue $12.1M (+53% y/y), gross margin 60% (from 43%), and Adjusted EBITDA $4.6M before corporate allocation; management expects TTC gross margins to normalize to ~50% over 2024.
Arbitration ruling in Glocal dispute awarded up to $110.2M damages to the company’s subsidiary, representing a potential recovery option; timing and realization remain uncertain.

What Went Well and What Went Wrong

What Went Well

TTC operating momentum: “strong volumes and a significantly improved payor mix” drove Q4 TTC revenue $12.1M, GM 60%, and Adjusted EBITDA $4.6M before corporate allocation; management sees sustained volumes with gross margin normalizing to ~50% in 2024.
Strategic simplification and deleveraging: Closed Cloudbreak sale for $180M cash; plan to use $139M in escrow to extinguish 2026 notes and repurchase ~$20M of 2025 notes, materially reducing leverage.
Legal progress: ICC tribunal found Respondents in Glocal arbitration liable, awarding up to $110.2M and costs, potentially increasing financial flexibility if collected.

What Went Wrong

Top-line contraction on deconsolidation and wind-downs: Q4 GAAP revenue fell to $17.3M from $40.5M in Q4 2022 as Holdings and its subsidiaries (including Thrasys and BHS) were deconsolidated and operations largely ceased.
Continued GAAP losses and interest burden: Q4 net loss attributable to UpHealth was $(10.0)M; interest expense was $(7.5)M in the quarter, underscoring the importance of executing the debt paydown plan.
Listing status risk: NYSE commenced delisting in December 2023; shares trade OTC (UPHL) pending an April 17, 2024 hearing—an overhang until resolved.

Financial Results

Consolidated P&L vs prior periods and (lack of) estimates

Metric	Q4 2022	Q3 2023	Q4 2023
Revenue ($USD Millions)	$40.5	$32.7	$17.3
Gross Margin (%)	45%	54%	54%
GAAP Diluted EPS	$(1.82)	$(1.12)	$(0.54)
Adjusted EBITDA ($USD Millions)	$1.85	$5.42	$2.32

Note: Wall Street consensus (S&P Global) for Q4 2023 could not be retrieved; estimate comparison is unavailable.

Segment breakdown (reported)

Segment	Q4 2022 Revenue ($M)	Q4 2023 Revenue ($M)	Q4 2022 Gross Margin %	Q4 2023 Gross Margin %
Virtual Care Infrastructure	$17.6	$17.3	51%	54%
Services	$19.1	n/a (deconsolidated)	36%	n/a
Integrated Care Management	$3.8	n/a (deconsolidated)	61%	n/a

Deconsolidation note: As of Q4 2023, Holdings and its subsidiaries (including Thrasys and BHS) were deconsolidated; Q4 GAAP includes only UpHealth, Inc. and Cloudbreak.

TTC Behavioral Health KPIs (before corporate allocation)

Metric	Q4 2022	Q4 2023
Revenue ($USD Millions)	$7.9	$12.1
Gross Margin (%)	43%	60%
Adjusted EBITDA ($USD Millions)	$1.3	$4.6

Full-year TTC (for context): FY23 revenue $44.1M, GM 57%, Adj. EBITDA $15.9M (before corporate allocation) vs FY22 revenue $31.0M, GM 45%, Adj. EBITDA $4.9M.

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance/Result	Change
Revenue	FY 2023	$127–$135M (top end expected)	Actual $130.0M	Achieved within range
Gross Margin	FY 2023	43%–45% (top end expected)	Actual 54%	Above prior guidance
Adjusted EBITDA	FY 2023	≥$15M	Actual $19.6M	Above prior guidance
TTC Gross Margin	2024	—	Expect ~50% (normalize)	New qualitative guidance
Debt Reduction	2024 (post-close)	—	Use $139M escrow to repay 2026 notes fully and repurchase ~$20M of 2025 notes; ~$37M 2025 notes remain outstanding	New capital structure action

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2 2023)	Previous Mentions (Q3 2023)	Current Period (Q4 2023)	Trend
Strategy simplification	Recalibration; IGI sale completed; focus on scalable growth (Telehealth, Behavioral, ICM)	Deconsolidation of Holdings; plan to sell Cloudbreak; wind-down ICM	Closed Cloudbreak sale; focus on profitable TTC expansion	Intensifying focus on TTC
Regulatory/legal	—	Needham judgment; Chapter 11 for Holdings/Thrasys/BHS; wind-down ICM	ICC tribunal Glocal award up to $110.2M; Holdings expected to emerge H2’24	Legal pathway improving but timing uncertain
Segment performance	VCI & Services margins improved; segment GM expansion	VCI growth; Services mix shift; GM to 54% consolidated	TTC KPIs strong; Q4 GAAP reflects deconsolidation; VCI GM 54%	Mix shift to TTC; VCI steady
Balance sheet deleveraging	Repurchased $10.3M of 2025 notes	$180M Cloudbreak sale announced to repay notes	Cloudbreak closed; escrowed funds earmarked to repay/repurchase notes	Deleveraging executing
Listing status	—	—	NYSE delisting proceedings; trading OTC (UPHL); hearing set Apr 17, 2024	Listing overhang persists
Outlook/guidance	Raised FY23 outlook to top end; EBITDA ≥$15M	—	TTC GM expected to normalize to ~50% in 2024	Shift from consolidated to TTC-specific outlook

Management Commentary

“2023 was a challenging, yet transformative, year… We have recently closed the sale of our Cloudbreak Health… and will use the proceeds to significantly de-lever our balance sheet… focus on our growing, cash flow positive, behavioral health business, TTC Healthcare.” — CEO Martin Beck.
“TTC Healthcare’s performance in 2023… was driven by strong volumes and a significantly improved payor mix. We expect future volumes to remain robust and for gross margins to revert over the course of 2024 to historical norms in the range of 50%.”
On Glocal arbitration: Tribunal “found the Respondents liable for breach of contract and directed them to pay… up to $110.2 million in damages,” with costs.

Q&A Highlights

No management Q&A transcript was provided in the company’s Q4 2023 materials; management communications emphasized: (i) use of Cloudbreak proceeds and escrow timing for debt reduction, (ii) TTC growth drivers and margin normalization, and (iii) scope of deconsolidation/bankruptcy not including UpHealth or TTC.

Estimates Context

Wall Street consensus from S&P Global for Q4 2023 EPS, revenue, and EBITDA was unavailable for UPH; therefore, estimate comparisons and beat/miss analysis cannot be provided.

Key Takeaways for Investors

TTC Behavioral Health is now the core growth/profit engine, with strong Q4 KPIs and a 2024 gross margin normalization target of ~50%, supporting durability of cash generation.
Balance sheet improvement is a near-term catalyst: Cloudbreak proceeds earmarked to fully retire 2026 notes and shrink 2025 notes to ~$37M outstanding, reducing interest burden materially.
Consolidated Q4 declines are mechanical from deconsolidation of Holdings/Thrasys/BHS; focus on TTC and post-Cloudbreak footprint is the relevant forward lens.
Legal optionality exists via the ICC tribunal award in the Glocal matter (up to $110.2M), though timing and enforceability remain uncertainties.
NYSE listing status remains an overhang (OTC trading; hearing April 17, 2024); a positive resolution could expand investor access and liquidity.
FY23 results outperformed the upgraded Q2 guidance on gross margin and Adjusted EBITDA, suggesting execution momentum that can carry into the TTC-focused plan.

Supporting detail and disclosures:

Q4 and FY23 results, segment information, and non-GAAP reconciliations are from the March 21, 2024 8-K and Exhibit 99.1.
Prior quarter trends are from the November 20, 2023 (Q3 2023) and August 10, 2023 (Q2 2023) 8-Ks and press releases.

UpHealth, Inc. (UPH)·Q4 2023 Earnings Summary