Supplemental Financial Statement Information

12 Months Ended

Dec. 31, 2023

Supplemental Financial Statement Information

As discussed in Note 1, Organization and Business, we deconsolidated UpHealth Holdings and its subsidiaries as of September 30, 2023; accordingly, the financial position of UpHealth Holdings as of December 31, 2022 and financial results of UpHealth Holdings and its subsidiaries for the year ended December 31, 2022 and for the nine months ended September 30, 2023 are included in our consolidated financial statements and the financial position of UpHealth Holdings as of December 31, 2023 and the financial results of UpHealth Holdings and its subsidiaries for the three months ended December 31, 2023 are not included in our consolidated financial statements. The filing of a voluntary petition for relief under Chapter 11 of the U.S. Bankruptcy Code, as discussed in Note 1, Organization and Business, occurred on September 19, 2023. Management concluded that it would use the September 30, 2023 date for deconsolidation, as the last 12 days in the month were determined to not be material.

As discussed in Note 1, Organization and Business, we deconsolidated Glocal during the three months ended September 30, 2022; therefore, the financial results of Glocal in the six months ended June 30, 2022 are included in our consolidated financial statements, and the financial position of Glocal as of December 31, 2023 and 2022 and the financial results of Glocal in the six months ended December 31, 2022 and the year ended December 31, 2023 are not included in our consolidated financial statements.

Impairment of goodwill, intangible assets, and other long-lived assets consisted of the following:


	For the year ended December 31,
(In thousands)	2023		2022
Impairment of goodwill	$	42,924	$	94,643
Impairment of intangible assets	4,203		17,627
Impairment of long-lived assets	2,831		3,969
Total impairment of goodwill, intangible assets, and other long-lived assets:	$	49,958	$	116,239

For the year ended December 31, 2023, we recorded a $42.9 million goodwill impairment charge, consisting of a $34.6 million goodwill impairment charge in our Integrated Care Management segment, as discussed above, a $6.4 million goodwill impairment charge in our Services segment and a $1.9 million goodwill impairment charge related to our Pharmacy business, which was classified as held for sale as of December 21, 2022 and was sold in the second quarter of 2023.

An impairment charge of $4.2 million was recognized for the year ended December 31, 2023 in the Integrated Care Management segment. For the year ended December 31, 2022, we recorded impairment charges of $17.6 million, consisting of $16.8 million in our Integrated Care Management segment and $0.8 million in our Services segment. For the year ended December 31, 2022, we recorded a $94.6 million goodwill impairment charge, consisting of a $87.5 million goodwill impairment charge in our Integrated Care Management segment, as discussed above, a $5.5 million increase in goodwill resulting from measurement period adjustments in our Virtual Care Infrastructure

segment in the three months ended March 31, 2022, which was immediately impaired, and a $1.6 million goodwill impairment charge in our Services segment.

Property and equipment consisted of the following:


(In thousands)	December 31, 2023		December 31, 2022
Leasehold improvements	—		868
Electrical and other equipment	—		21
Computer equipment, furniture and fixtures	16,738		16,222
Vehicles	9		302
Capitalized software development costs	5,776		4,404
Construction in progress	1,373		2,590
	23,896		24,407
Accumulated depreciation and amortization	(14,369)		(10,338)
Total property and equipment, net	$	9,527	$	14,069

As discussed in Note 4, Assets and Liabilities Held for Sale, $4.6 million of property and equipment are included in assets held for sale, noncurrent, in the consolidated balance sheet as of December 31, 2022.

Depreciation expense was $6.5 million and $7.8 million for the years ended December 31, 2023 and 2022, respectively.

For the year ended December 31, 2023, we recorded an impairment charge on long-lived assets of $2.8 million in the Integrated Care Management segment.

Accrued expenses consisted of the following:


(In thousands)	December 31, 2023		December 31, 2022
Accrued professional fees	$	3,265	$	14,245
Accrued products and licenses	—		17,820
Accrued payroll and bonuses	6,283		5,163
Accrued interest on debt	846		741
Other accruals	196		794
Total accrued expenses	$	10,590	$	38,763

Other liabilities, noncurrent consisted of the following:


(In thousands)	December 31, 2023		December 31, 2022
Derivative liability, noncurrent	$	59	$	56
Warrant liabilities, noncurrent	17		9
Other liabilities, noncurrent	—		662
Total other liabilities, noncurrent	$	76	$	727

Other income, net, including interest income consisted of the following:


	For the year ended December 31,
(In thousands)	2023		2022
Gain (loss) on fair value of derivative liability	$	(3)	$	7,529
Gain (loss) on fair value of warrant liabilities	(8)		242
Other income, net, including interest income	1,079		121
Total other income, net, including interest income	$	1,068	$	7,892