Leases

3 Months Ended

Mar. 31, 2024

As discussed in Note 1, Organization and Business, we deconsolidated UpHealth Holdings and its subsidiaries as of September 30, 2023; accordingly, the financial results of UpHealth Holdings and its subsidiaries for the three month ended March 31, 2023 are included in our unaudited condensed consolidated financial statements and the financial position of UpHealth Holdings as of March 31, 2024 and December 31, 2023 and the financial results of UpHealth Holdings and its subsidiaries for the three months ended March 31, 2024 are not included in our unaudited condensed consolidated financial statements.

Also, as discussed in Note 3 Discontinued Operations, on November 16, 2023 we agreed to sell 100% of the equity interest in Cloudbreak to Forest Buyer, LLC. The Sale closed on March 15, 2024. Accordingly, we have presented the financial position of Cloudbreak as of December 31, 2023 as held for sale and the results of operations of Cloudbreak for the period from January 1, 2024 to March 15, 2024 and for the three months ended March 31, 2023 as discontinued operations in the accompanying unaudited condensed consolidated financial statements.

We lease real estate for our offices as well as certain equipment under operating leases with varying expiration dates through 2027. Leases are categorized at their commencement date, which is the date we take possession or control of the underlying asset. Generally, the term of real estate leases ranges from 1 to 5 years at inception of the contract and the term for equipment leases ranges from 1 to 3 years at the inception of the contract.

The components of lease expense consisted of the following for the three months ended March 31, 2024 and 2023:


	March 31, 2024						March 31, 2023
In thousands	Third Party		Related Party		Total		Third Party		Related Party		Total
Operating lease cost	42		—		42		520		98		$	618
Short-term lease cost	—		—		—		17		67		$	84
Variable lease cost	—		—		—		15		—		$	15
Sublease income	—		—		—		(2)		—		$	(2)
Total lease cost	$	42	$	—	$	42	$	550	$	165	$	715

Lease-related assets and liabilities recorded on the unaudited condensed consolidated balance sheets are as follows:


	March 31, 2024		December 31, 2023
In thousands	Third Party		Third Party
Assets
Operating lease right-of-use assets	344		370
Total leased assets	$	344	$	370

Liabilities
Operating lease liabilities:
Lease liabilities, current	188		183
Lease liabilities, noncurrent	560		610
Total leased liabilities	$	748	$	793

Other information consisted of the following:


	March 31, 2024						March 31, 2023
In thousands	Third Party		Related Party		Total		Third Party		Related Party		Total
Cash paid for amounts included in measurement of liabilities:
Operating cash flows from operating leases	$	45	$	—	$	45	$	317	$	95	$	412

The following table summarizes our lease term and discount rate assumptions as of March 31, 2024:

March 31, 2024

Third Party

Related Party

Total

Weighted-average remaining lease term (years):

Operating leases

3.42

N/A

3.42

Weighted-average discount rate:

Operating leases

9.1

N/A

9.1

Undiscounted future minimum lease payments (displayed by year and in the aggregate) under noncancelable operating leases with terms of more than one year, as of March 31, 2024, have been reconciled to the total operating lease liabilities recognized on the unaudited condensed consolidated balance sheet as of March 31, 2024 as follows:


	March 31, 2024
	Operating Leases
In thousands	Third Party
Remaining 2024	$	182
2025	250
2026	257
2027	175
Total lease payments	864
Less: interest	116
Present value of lease liabilities	$	748