UPH - Earnings call transcript Q2 2022

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Operator

Greetings, and welcome to the UpHealth Second Quarter 2022 Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal question-and-answer session [Operator Instructions].

As a reminder this conference is being recorded. I would now like to turn the conference over to your host, Shannon Devine, Investor Relations. ahead. go Please

Shannon Devine

operator. Thank you,

Form call, statements. risks, cautions refer provide Throughout required call reconciliations to EBITDA. in financial forma of are and refer revenues, and to The statements materially to revise management company's investors metrics to therefore, forma forward-looking today's could forward-looking new report we'll accordance are does can pro be non-GAAP today, report a to actual filed summary the of adjusted calculations gross and these and in will not calculations. the determined company's other differ Please from the on Definitions, Executive on that those events information any margin GAAP, These by pro measures the statements. obligation quarterly reliance results to and except or and law. circumstances the and with and I in varying Sam? Form forward-looking to the not the statements. tables to the undertake SEC as results UpHealth company release. susceptible certain Officer. be on place Chief not the reflect for the Sam any During press statements specifically undue cause forward-looking believe XX-K regarding unanticipated will making non-GAAP results call occur, and of XX-Q found statements uncertainties disclaim turn to measures filings, annual that or our UpHealth business UpHealth now including financial update our trends factors these financial of to Meckey, be We included useful operations. over

Sam Meckey

and disparities company's our will evolve that facet XX we shared XX personally. but across a over been and one. serving we acceleration, XX drawn businesses veteran as technology, enable I'm has forward have gone health product, year the that companies, there's and every The high is next to here. bumpy providers the broader in Chief to proud a transformation has commercial has institution. as everyone. revenue Executive are and have empower value. to and important relentless in in six and first UpHealth, today mission, call joining for with opportunity the speak focus today community me of this as those remarkable last talent. integrate solidly the perspective, record transformation I'm growth healthcare healthcare overcome affordable begin Officer to healthcare, for business earnings to is months, my started and businesses my the honored vision shareholder its executing and Shannon founding within also Over a execute enable who building strong led to the access all. my I I'm and over why combined am into as fund business has value of through I of companies good to challenges road global strategic be to moment Thank you The company. From of a it healthcare, This experience and to to happy I pivotal future for you, you recognize mission, with Thank the with deeply quality, here large the UpHealth's transformations. to path journey our attempted one earnings successfully first an bright the our morning, of was want in me, the on institution, services against with a and because leading to acquisitions UpHealth and consistent integrating growing to inspires institutions deep has track healthcare year, that a goals deliver us. and on career

the of to Balakrishnan. moment thank second a take Dr. to to details I'd getting like quarter, our Before

margin had know, million, I Officer. first XX% Ramesh over Ramesh so partnership new role smooth XXXX you of Strategy This up have growth second and XXth. I a last and to over transition quarter incredibly QX and The As Chief second look contributions the working million the assumed President the his an quarter. QX am was represents months. negative $X.X of XX% on XXXX. grateful Officer in for XX%, Executive quarter from as the $XX the EBITDA in and up was UpHealth's his and gross forward million. I I role $X and Chief revenue collaboration for into was the few of with from for adjusted July his

our far. contributed our over direct-to-consumer There nationwide, investors. leverage to positive branding, Our to our Purpose] operating continue our our I we so for And revenue contract second California $X.X celebrate in for expands leadership broaden on meeting lot of run driven we With We across things work of rate spent was by mind, appropriate the quarter extension importance This our many program which We the Mental UpHealth. with label system Health the work Authority including and team, and implementations We performance increases contract populations. it products and launched to by to new new my revenue educational an another telehealth to this our a culturally Martti a of becoming our and and linguistically XX growth with their months [Nutrish wins for contracts the contract with US Services of very since are Amazon XX the and million XX design provide about healthcare kind first LA and hospital month strong refreshed County executed performance basis. our first finalized with closed business. the a Department on facilities care CEO customers its for offerings. Health. major people, Mental expansion with staff UpHealth's underserved

we our can done virtual of management, we that each grow remarkable execute businesses are confident these being the potential much have business strategy strengthen and optimize growth to far these care businesses. integrated for infrastructure segments, so to we there's and opportunities care developed services. The and are First, work

was technology and a in potential interest there digital integrated HelloLyf, core hospitals growing our platform and underlying platform our the scale grow. Second, SyntraNet, the for and to clinics

infrastructure deliver higher more an quality care. HelloLyf, access opportunity the new SyntraNet digital to we limited to and incredible to have With We leverage with make better integrated. deploy healthcare generation of to a and affordable, more and capabilities help communities hospitals accessible, can clinics care systems healthcare to

to and teleconsole systems. provider leading ability language to for Martti become a Third, there health is great optimism around our leverage

have that customers continue NPS to we We build score with very excellent satisfied an of upon. XX can

solutions become care player sell entities, US Finally, there's UpHealth value for capabilities a and and potential in based our behavioral use medicine governmental and package payers to to care. leading personalized services real to health to and management and

challenges that beyond. build is the consistent, year While that as XXXX we be our public growth many elements with for in positive hampered a addressed. that revenue headwinds we need have position care Namely, work in and company upon, volatility to will our to and the news still our first The business. good integrated business in our profitable delivering us performance hard are doing international with more predictable

Executive We President Vice continue business. quarter team, Mandoli, for our leadership our expanding Daniel last as services joined

release, in with press and As is in executive operational mergers Daniel announced our a experience we seasoned excellence.

for understanding my their Raluca visiting continue business. the we In transformation attract We with two we present, Agnes investors in already get customers want to talking us will outstanding globally our the At Dr. XXXX, an and strategy of execute to We XX% the meeting for have our additional support to a and continue important milestones business. pivot transformation with leaders over built immerse of upon of coming to of completed to to the recognize the months, our and XX% quarter. in visiting transformation journey. and plan XXX join I'll to Rey-Giraud the and Dinu on execute to business our weeks planned their third help for we set board to deepen the upon and us feedback inspire initiatives. members, this our our leadership, up launching critically our to office with quickly and approximately teams, businesses, myself I

of that support initiatives management a to opportunities growth on we and the allocation to team, continue all and invested evaluate our highest return ensure As capital growth the of efficient capital.

to We our will exceptional respective hire grow businesses. continue to talent

We are most will businesses. ensure review that to our of mix of out our getting we assets the

execute to ensure structure capital we successfully our our that manage strategy. carefully upon also will We

earnings deliver cash Our that stage appropriately are the predictable revenue goal and flow. for those consistent, high growing converting than faster repeatable which to is free UpHealth earnings quality growing set to is producing to revenue,

at initial my areas upon results. I be the During full our will our UpHealth the for expand earnings next and call, of company what focus will year impressions

detail much I'll it plans of Over our the the With financials next more they XXXX will over about through that, Martin? beginning will for our quarter. year, transformation Martin and beyond. to we results go turn into and in drive to how talk

Martin Beck

joining Thanks us We Sam. today. very much, appreciate everyone

second I Recall on the it comparison on my pertains as the XXXX. results Before begin I to presentation in transactions to quarter review June that of merger completed periods. the results, we our want comment first X,

year basis. all consolidated only Xth increase of quarter. the that negative first report was June from was This up first the financial the in businesses represents combined the $X second it we Gross million. margin transactions. XX%, adjusted so have will QX was the quarter XX% GAAP XXXX that include the over that we a EBITDA This was and $XX a up that the results forward date can And full revenue statements from UpHealth for on for XXXX. $X.X XX% is UpHealth's million in second quarter QX million, in from

$XX had Care quarter of XX% we The pharmacy higher second margin management the care revenues. Looking of continues total segment last course quarter QX to contribution increase or over integrated virtual that return toward of and XXXX those which and we management care health integrated the margin and what and million largest the XXXX. care in infrastructure with next higher XX% XX% second revenues million States the total will up account quarter’s from XX% ramps management from of revenues. QX we is quarter shift QX XX% XXXX, or GAAP second was Virtual XXXX total. on for revenue GAAP that revenue that quarter, Services, said expected was which on and On from revenue second includes forward. reported revenue This again The revenues our Integrated revenues of an $X care of with care basis. by mix to segments, increased margin gross businesses, or total. India. the company's XX% contributor on behavioral the and increasing in million consistent a the infrastructure expect QX when with percentage the of geographic $XX United from at to came Management businesses of from total first integrated revenue of of was revenues came of breakdown XX% the we company's we virtual infrastructure quarter’s levels care going basis approximately noted gross of call X% the Together, as second revenue basis, GAAP to XX%. of a and margin up a XX%

XX% Accordingly, to our by a gross context Second virtual from some gross QX, is services UpHealth from margins results our revenue framing in of in revenues. a as leverage business, in health increasing to high at higher to telehealth being in because in XXXX infrastructure as and as comparing care XX%, me margins XX% gross to return a were on to higher peers. trend this XX% QX QX in the This Gross US We margins norms. of XX% expect care useful for We quarter XX%. stems Gross would QX margin Integrated management perspective, in range, XXXX as strong margins segment model. integrated for them result in the very color virtual business operating our management increased increased QX continues in infrastructure within XX% XX% margins in view the additional from in XX% of mix to of historical XX% to QX and well volumes mid as XXXX follows: financial trend post services in segment an from growth. the also segment XX% businesses. overall increase XXXX. care metric Gross to in XXXX QX provide from margins key our licensing returns the margin let as largely to margins behavioral more which care increased to

liability, This of net with in the as with consolidated included for the of UpHealth a our Adjustments price changes company's were the revenue the statements was change reduction component during with expenses. company's along of value in on of value mentioned as $X in previously the other stock result liability Second basis reduction liability $X expectations. adjusted is of expenses, restructuring a made income million EBITDA including legal liability and derivative convertible fair second the of value in fair income The notes. derivative quarter quarter was million, quarter. second derivative a derivative GAAP the line gain associated for which a revaluation recorded was a on consulting, in in and nonrecurring the the certain operations.

suit decline continue as litigation been settled. the substantially, to to costs legal quarter and then consulting for expenses the and shareholder through particularly third has the expect We

a included EBITDA I a we of operating is measure minutes adjusted adjusted in release. few position. As EBITDA GAAP have a spend reminder, liquidity to the discussing want and press to non-GAAP the reconciliation company's loss a

As and cash payments business declined balance and of revenue that share X, show had over legal unrestricted EBITDA payments used growth. to restricted and its the balance result the company cash an consulting XX, cash of to company segments of purchase the on continue expenses. as But largely professional according to The terms for forward of contract agreement The our April XXXX. repay good June a including various million. interest $XX fees, company's quarter, XXXX,

company of As the predominantly million of had XXth, is of of which made notes debt, to $XX current shareholders. up portion June

coupon, a lower notes holders convertible the new repay transaction the company exchange to a debt our this of outstanding years of convertible and debt As leverage not conversion any of of price carry notes approximately December to in the morning, mature the total this before to new September used offering proceeds and a significant higher of old we us transaction the of on notes. increase Xst, $XX.X million transaction with and so three cash announced securities $XX.X a new XXXX. all does The until earlier the and maturity company's million entered convertible [for] will into million convertible a maturity will more be of XX, provides seller borrowings. date substantially that $XX existing raise convertible The with than costs notes number

effort an debt continuing We that to secured and to work quarter. financing sometime from customer receivable is finance written as for accounts Indian on rupee that in by in our growth QX. were there PP&E customer off securing denominated are raising collect market The is in process European financing complete is the update expect to of to ongoing. That a expense next expectation and an debt that bad

execute position Our liquidity plans. operating to our business, on to continue cash performance sufficient year, financial will the become growth current provide and expect to of cash the positive which this later flow us we current

of discussed, functions business. previously in our substantial progress integration across we've we've the corporate made As

take our we're transformation questions. enhance cost we're that remarks. identify with concludes for the Ramesh ready in Q&A and Operator, reduction is cash over upon to we section Please flow here Balakrishnan that us will with now Now of underway continue business our call. note That to work, the free time. well further opportunities prepared the that execute

Operator

At [Operator this question-and-answer time, session we will Instructions]. be conducting a

with Northland Markets. Our Capital first comes from question Michael Latimore

Michael Latimore

Congratulations, Sam on the new role.

in here. overall quarter like in But second my as that wanted is just the are it bookings quarter. level second -- relatively was to the So confirm expected sounds that bookings sense healthy the

Sam Meckey

second were to as able QX. we in good several So expected opportunities there the as we about, And talked close that were bookings quarter. were in

that very last So pleased progress the we with had quarter. we're

Michael Latimore

when about as you basically And XXX? completing the outlined XXX the then initiatives, McKinsey in XXX talk of transformation does that that report,

Sam Meckey

Mike. Yes,

[work] with we business for the in our strategy company [Technical here we're for our going in that work partners which So help areas hard forward us drive to office very to forward. this consulting to business buy implementing transformation Difficulty] our our drive

you're to on XXX We in execution identified of those going and we QX, have we're we made the for that and excellent the [transformations]. we great rest drive this really to with initiatives to to continue work on But QX year we correct, continue add that in progress as planned milestones approximately that well.

Michael Latimore

one, last fairly actually the just What's well grew then services general year-over-year. And on view business here? your services

Sam Meckey

business come business, services the with services mentioned Mike, his Dan around great organization and our growing very, and progress able increase seeing [Technical on to progress our very The take progress own has well been We effect we've joining very quickly been our price as very and that have we're in we've a gotten has pleased going and in made. look our he's we're positive Mandoli making push Difficulty] to some levels business, at When in business, to nice pharmacy results well. utilization QX. in great start QX, you through should that's impact the there

So of services the QX the and through business into QX. pleased performance we're very with

Operator

from comes Markets. Frank Lake Street with Takkinen question next Our Capital

Frank Takkinen

us run integrated what the and expect margin of just I care on the really commentary. were better long went skewed It wanted -- little the profile solid a for quarter? you directly, bit the in little some there looks to gross with more maybe a those in there the could that they on should items business, there some in like But were to management end follow-up what margin just happened feel we expectations. through quarter Martin, high term give obviously, the and to just of maybe

Martin Beck

on XX%, basis. will maybe sort the had in mentioned business, remarks, to low strong gross of gross XX% we integrated in margin high perspective a a from mid a business I margin very, run my basis very normalized quarter, in that As care the

upfront in had that up. a drove payments win we some licensing California involved This that the significant margin quarter,

So those in said, as to would basis more we, margins range XX% forward. going I the on mid a expect be high to normalized

demonstrated see, services increased margin The you'll gross uptick operating And attribute had as those in other largely strong those both would I and an leverage also to businesses, segments. the performance. virtual businesses. care We infrastructure increases in

Frank Takkinen

then more And a Sam, bit maybe just nature. one broad based little for

been businesses month the probably potential under for learn maybe the point still understanding much at you and comment it the this business your feet getting integration or call that But you. just so, of if on joining a seeing since company? the about to Now you've on board could that you're there's

Sam Meckey

integration companies has opportunity for I [Technical six And in to of for really the Difficulty] So we're really, see into the tremendous trying gone where well. compete us marketplace.

good. I As care, virtual of you we're have to healthcare wrap enabled when ability [tech] potential think those the that segments integrated products business look in infrastructure, marketplace. about infrastructure, I then is at multiple And quite the different care, with leading think, products, services technology our technology segments high around the

So of that expand customers system when [Technical Difficulty] at at and or Difficulty] our what [optimistic] if take look you take with our translation provincial And clinician patients to into I'm we introduce or [Technical services health to Martti, [telehealth] governments and our deliver around Difficulty] Difficulty] look to our ability Managed I health Martti place. what SyntraNet behavioral about [Technical Care India, to population to teams. population ability [Technical the in the grow done, I think health as [Technical put year our Difficulty] in was the systems, we've in rest

that that All very, segments us are growing with create our a I quickly potential exceptional market very for for clients. think, [roles] in high of those, strong to give value us

the growing I marketplace. after like I and part that the creating I of a strategy going in assets, way that's value So and the I think like the big like really why we're

Frank Takkinen

for And redeployment guys the on then update last the HelloLyf any India? can to you me, just maybe of one the provide

Sam Meckey

HelloLyf successful India is ongoing The and to so been it's well. redeployment

the know Ramesh, we like on would comment to You phone. have Ramesh you on that?

Ramesh Balakrishnan

to Sure, and can it I add well. Martin think as

cost allows are the that be to want HelloLyf good to deployment add deployed effectively started to do two actually you. digital Frank, as do wouldn't do wouldn't us We've clinics. things, do being the the in or patient. target of with anything clinics, we services They and These So additional the got services quarterly XX and of which as hospitals, outpatient bed they just these standard to rollouts of to underway the as line we've they’re clinics. started, feeders well add a of you want just Martin, hospitals deployments act to to that? have of sticking

Martin Beck

We're dispensaries digital redeployed we've referencing that the India. XXX into

generate their have, of they utilization we in their and opening cash three first those right And we're the Ramesh there. feeders will said, as and The increased this are on to hospitals August. to seeing also in as month serve that will own flow serve own,

than So elsewhere. had in had cash flow or we're confident of India that the been redeployment deployed the the them assets provide superior long outcome these of case, term we will have we prospects would redeployed them

Operator

end Ladies Sam we the would to over like back Meckey the to And I reached and gentlemen, session. the question-and-answer remarks. have turn of now call for closing

Sam Meckey

Difficulty] And a just we call us. how Thank team but front to operator. am [Technical be fantastic And we're do, we to There's start. thank and the work that joining you, everybody in of off here a [Technical I of to lot today. the I [Technical have good Difficulty] excited for to want Difficulty]

quarterly great you [Technical day. earnings So forward time look your call. next And Difficulty] today. during to a our for thank continuing Have I again

Operator

today's concludes conference. This

You this may for your you disconnect your participation. Thank lines time. at

UpHealth (UPHL) 15 Aug 222022 Q2 Earnings call transcript