UPHEALTH ANNOUNCES FOURTH QUARTER AND FULL YEAR 2021 FINANCIAL RESULTS

Please refer to the commentary and tables below under "Non-GAAP Financial Information."

Fiscal Year 2021 Financial Highlights:

• On a pro forma basis, fiscal 2021 revenues of $148.9 million, an increase of 28% versus the comparable year-ago period, with a pro forma gross margin for fiscal 2021 of 35%
• On a GAAP basis, revenue for fiscal 2021 of $123.8 million, with a gross margin of 35%
• Segment results:
• Integrated Care Management generated $31.9 million of pro forma revenue (21% of pro forma total revenue) with a gross margin of 32% and $31.9 million of GAAP revenue (26% of total revenue) with a gross margin of 32%
• Virtual Care Infrastructure generated $52.2 million of pro forma revenue (35% of pro forma total revenue) with a gross margin of 39% and $36.6 million of GAAP revenue (30% of total revenue) with a gross margin of 39%
• Services generated $64.8 million of pro forma revenue (44% of pro forma total revenue) with a gross margin of 34% and $55.4 million of GAAP revenue (45% of total revenue) with a gross margin of 35%
• Goodwill impairment of $297.9 million
• Fiscal 2021 adjusted EBITDA of negative $6.5 million and pro forma adjusted EBITDA of negative $4.0 million

As stated above, during the fourth quarter 2021, the Company's Integrated Care Management segment provided services to a customer but did not recognize revenue associated with those services due to concerns that arose regarding the customer's creditworthiness and reserved $15.6 million of outstanding receivables from the customer from the second and third quarter 2021. In addition, during the fourth quarter 2021, the Company recorded a $6 million contingent liability in cost of goods and services related to services provided by a vendor to the Integrated Care Management segment, which is payable as proceeds are collected from the customer.  As a result, fiscal year 2021 gross margin for both the Company and its Integrated Care Management segment were significantly impacted by recognizing the cost of goods and services without recognizing the related revenue.  If the Company had not recorded the $6 million contingent liability, the Company's gross margin for 2021 would have been 40% on a non-GAAP basis and 39% on a pro forma basis, and the Integrated Care Management segment's gross margin would have been 51% on both a non-GAAP and pro forma basis. The Company added back the total contingent liability to the vendor of $17.8 million to adjusted EBITDA since the Company is not required to pay these expenses unless and until payment is received from the customer.

Please refer to the commentary and tables below under "Non-GAAP Financial Information."

Fourth Quarter and Full-Year Business Highlights:

• The Company closed pricing of $43.0 million public offering, net of underwriting discounts and commissions and estimated offering expenses of $3.3 million, to further strengthen balance sheet and secure capital for continued growth.
• Martti™, the virtual care infrastructure platform in the US, continued to expand its reach across U.S. health systems with recent large wins at Yale New Haven Health, RWJ Barnabas and Ascension Health, resulting in approximately $10 million in annualized bookings.  Martti™ currently supports 168,000 encounters per month and over 26,000 video endpoints at over 2,100 healthcare locations in the US.
• The Company recorded its largest volume of telehealth use in the US with over 7.4 million minutes of consultations in Q4, compared to 6.1 million minutes in Q2 and 4.6 million minutes in Q3 2020. 
• The Company opened its first digitally enabled hospital in the Indian state of Nagaland. The hospital, HelloLyf HX, is the first facility of its kind and a revolutionary re-thinking of traditional hospitals with a state-of-the-art climate resilient design vetted and approved by the acclaimed Indian Institute Technology, Roorkee.
• After successful implementation of projects in the Indian states of Rajasthan, Odisha, and West Bengal, UpHealth won a contract to set up 550+ Hellolyf CX digital dispensaries in the Indian State of Madhya Pradesh, resulting in a total of 750+ government-placed facilities across India.

Balance Sheet and Cash Flow

In October, UpHealth raised $43.0 million, net of underwriting discounts and commissions and estimated offering expenses of $3.3 million, from the issuance of approximately 26.5 million shares of common stock, substantially increasing the Company's free float and increasing the total number of outstanding shares to approximately 144 million. Proceeds of the equity offering are enabling UpHealth to satisfy its short-term liabilities and fund ongoing working capital and capital expenditure requirements associated with the Company's continued growth.

Fiscal 2022 Financial Outlook

For the year-ended December 31^st, 2022, the Company is projecting:

• Revenue between $205 and $233 million, a 38-56% growth rate,
• Gross margins of 42% to 43%, and
• Adjusted EBITDA of $14 to $19 million.   

"As we successfully complete our first yearly financial reporting as a public company, UpHealth is positioned to continue to leverage its scale and differentiation in the US and globally and is focused on solid and sustained profitability. The demand for our products and services in our target markets is unprecedented, enabling us to expand systematically on a global scale. UpHealth will grow revenue substantially in the integrated care management and virtual care management business lines, while continuing the fundamental transformation process started a few quarters ago to continue building an industry leading, global healthcare enterprise", said Dr. Ramesh Balakrishnan.

CEO transition

The Company announced on April 12, 2022, that a search is underway for a new CEO. The company expects to announce the new appointment in the coming weeks. Until that time, the current CEO, Dr. Ramesh Balakrishnan, will remain in place. Thereafter, he will transition to a different role in the company.

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, its expectations, hopes, beliefs, intentions, plans, prospects or strategies regarding the future revenue and the business plans of UpHealth's management team, and the expected timeframe for conclusion of the search for a new CEO. 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 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 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, 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, and whether a candidate selected by the Board for the CEO role accepts an offer. 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.

UPHEALTH, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts, unaudited)
	December 31, 2021		December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents	$                      58,192		$                        1,839
Restricted cash	18,609		530
Accounts receivable, net	22,761		6,703
Inventories	2,928		117
Due from related parties	40		—
Prepaid expenses and other current assets	4,217		3,501
Total current assets	106,747		12,690
Property, plant and equipment, net of accumulated depreciation of $4,741 and $3 at December 31, 2021 and 2020, respectively.	56,072		151
Intangible assets, net of accumulated amortization of $12,350 and $318 at December 31, 2021 and 2020, respectively.	115,313		27,782
Goodwill	284,268		164,194
Deferred tax asset	—		335
Equity method investments	—		57,214
Other assets	6,907		24
Total assets	$                    569,307		$                    262,390
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$                      13,604		$                        2,680
Accrued expenses	36,084		8,482
Deferred revenue	2,649		397
Due to related party	47		70
Income tax payable	739		673
Related-party long-term debt, current	657		39
Long-term debt, current	22,093		22,531
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