UpHealth, Inc. - FORM 8-K/A - EX-99.1

Attached files

file	filename
EX-2.4 - EX-2.4 - UpHealth, Inc.	d190883dex24.htm
EX-4.1 - EX-4.1 - UpHealth, Inc.	d190883dex41.htm
EX-4.2 - EX-4.2 - UpHealth, Inc.	d190883dex42.htm
EX-10.4 - EX-10.4 - UpHealth, Inc.	d190883dex104.htm
EX-10.5 - EX-10.5 - UpHealth, Inc.	d190883dex105.htm
EX-10.6 - EX-10.6 - UpHealth, Inc.	d190883dex106.htm
EX-10.7 - EX-10.7 - UpHealth, Inc.	d190883dex107.htm
EX-10.8 - EX-10.8 - UpHealth, Inc.	d190883dex108.htm
EX-10.9 - EX-10.9 - UpHealth, Inc.	d190883dex109.htm
EX-10.11 - EX-10.11 - UpHealth, Inc.	d190883dex1011.htm
EX-16.1 - EX-16.1 - UpHealth, Inc.	d190883dex161.htm
8-K/A - 8-K/A - UpHealth, Inc.	d190883d8ka.htm
EX-10.10 - EX-10.10 - UpHealth, Inc.	d190883dex1010.htm

Exhibit 99.1

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

On November 23, 2020, GigCapital2 announced the pending merger of a series of integrated merger transactions.

On November 23, 2020, GigCapital2, announced that it executed the UpHealth Business Combination Agreement.

Also, on November 23, 2020, GigCapital2 announced that it executed the Cloudbreak Business Combination Agreement.

UpHealth has previously or contemporaneously entered into separate merger agreements with respect to the acquisitions by UpHealth of Behavioral Health Services, Innovations Group, Thrasys, TTC Healthcare, and a share purchase agreement providing for the purchase of 90% or more of the equity interests of Glocal. All of these entities have been acquired or are probable of being acquired under US GAAP and are therefore included in the pro forma financial statements contained herein. UpHealth has consummated the mergers of Thrasys, Behavioral Health Services, TTC Healthcare, and Glocal and they are included in the UpHealth consolidated financial statements as of March 31, 2021. The unaudited statements of operations for TTC Healthcare presented through January 24, 2021, the TTC Healthcare acquisition date, and the unaudited statements of operations for Glocal presented through March 25, 2021, the Glocal acquisition date, are shown separately, as only the activity after the acquisition date are included in the UpHealth results.

The UpHealth Business Combination Agreement

Pursuant to the terms of the UpHealth Business Combination Agreement, GigCapital2 will acquire UpHealth through the statutory merger of UpHealth Merger Sub with and into UpHealth, with UpHealth surviving the merger as a wholly owned subsidiary of GigCapital2. At the effective time of the UpHealth Business Combination, each share of UpHealth common stock will be canceled and converted into the right to receive a number of shares of GigCapital2 Common Stock equal to the Exchange Ratio. The Exchange Ratio will be equal to the Aggregate Merger Consideration divided by the sum of the aggregate number of shares of UpHealth common stock issued and outstanding immediately prior to the effective time of the UpHealth Merger. The Aggregate Merger Consideration shall not exceed 99,000,000 shares of GigCapital2 Common Stock, subject to certain adjustments, less the Thrasys Incentive Amount. UpHealth has previously entered into a share purchase agreement providing for the purchase of 90% or more of the equity interests of Glocal, with the UpHealth Business Combination Agreement providing for a purchase price adjustment for every 1% less than 90% of the equity interests that is owned by UpHealth upon the Closing. UpHealth as of the date of entry into the UpHealth Business Combination Agreement owned approximately 43% of the equity interests of Glocal. On March 26, 2021, UpHealth acquired an additional 46% of the equity interests of Glocal, and as a result, now owns 89% of the equity interests of Glocal. The Aggregate Merger Consideration may be reduced by certain share thresholds if the Glocal acquisitions at the 90% threshold is not completed. On April 27, 2021, UpHealth consummated the merger of Innovations Group.

The Cloudbreak Business Combination Agreement

Pursuant to the terms of the Cloudbreak Business Combination Agreement (and any terms used in this paragraph that are not otherwise defined are as defined in the Cloudbreak Business Combination Agreement), GigCapital2 will acquire Cloudbreak through the statutory merger of Cloudbreak Merger Sub with and into Cloudbreak, with Cloudbreak surviving the merger as a wholly owned subsidiary of GigCapital2. At the effective time of the Cloudbreak Business Combination: (i) each Cloudbreak Unit (and the membership interests represented thereby) issued and outstanding immediately prior to the Closing shall be converted into the right to receive a number of shares of GigCapital2 Common Stock equal to the Common Unit Exchange Ratio; (ii) each Series A Preferred Unit (and the membership interests represented thereby) issued and outstanding immediately prior to the Closing shall be converted into the right to receive a number of shares of GigCapital2 Common Stock equal to the Preferred Unit Exchange Ratio (in addition to any

Business Combination Share Adjustment to which each Series A Preferred Unit is entitled); and (iii) each option that is outstanding and unexercised immediately prior to the Closing, whether vested or unvested, shall be assumed by GigCapital2 and converted into an option to purchase a number of shares of GigCapital2 Common Stock in an amount set forth on the Allocation Schedule, which amount shall be equal to the product of (a) the number of Cloudbreak Units subject to such option, multiplied by (b) the Common Unit Exchange Ratio. Each holder of Exchanged Options shall also be entitled to any Business Combination Share Adjustment made pursuant to the Cloudbreak Business Combination Agreement. Additionally, immediately prior to the Closing each common warrant shall convert into Common Units in accordance with their terms. The aggregate number of shares of GigCapital2 Common Stock issuable at the Closing, and upon the exercise of all Exchanged Options on a net exercise basis, shall equal 11,500,000 shares of GigCapital2 Common Stock.

Pro Forma Condensed Combined Financial Statements

The unaudited pro forma condensed combined financial statements have been prepared using the acquisition method of accounting in accordance with Accounting Standards Codification (“ASC”) Topic 805, “Business Combinations,” (“ASC 805”) with the Company treated as the legal acquirer. Under ASC 805, UpHealth was determined to be the ultimate accounting acquirer for the UpHealth mergers. The following tables set forth an unaudited pro forma condensed combined balance sheet as of March 31, 2021, and unaudited proforma condensed combined statements of operations for the three months ended March 31, 2021, and the twelve months ended December 31, 2020 (as adjusted for conforming presentation periods for Glocal, a March 31 year-end).

The unaudited pro forma condensed combined balance sheet as of March 31, 2021 gives effect to the Acquisition as if it had occurred on that date. The pro forma balance sheet data is derived from the unaudited historical financial statements of GigCapital2 and the unaudited historical financial statements of the Merger entities as of March 31, 2021. The unaudited pro forma condensed combined statements of operations for the three months ended March 31, 2021, and the twelve months ended December 31, 2020, have been prepared to illustrate the effects of the Acquisition, as if it had occurred on January 1, 2020. The pro forma condensed combined statements of operations are derived from the unaudited financial statements of GigCapital2 for the three months ended March 31, 2021, the audited financial statements (as restated) of GigCapital2 for the year ended December 31, 2020, the unaudited financial statements of each of the UpHealth and Cloudbreak merger entities for the three months ended March 31, 2021, and the audited financial statements of each of the UpHealth and Cloudbreak merger entities for the year ended December 31, 2020.

The historical financial statements have been adjusted in the unaudited pro forma condensed combined financial statements to give effect to events that are (i) directly attributable to the Acquisition, (ii) factually supportable, and (iii) with respect to the statements of operations, expected to have a continuing impact on the combined company. The unaudited pro forma condensed combined statements of operations reflect non- recurring transaction charges directly related to the Acquisition that the combined company has incurred in furtherance of consummation of the Acquisition, as well as transaction costs incurred, but not yet recorded, subsequent to March 31, 2021. Further, the tax rate used for these unaudited pro forma condensed combined financial statements is an estimated effective tax rate, which will likely vary from the actual effective rate in periods subsequent to the completion of the Acquisition.

The unaudited pro forma condensed combined financial statements have been prepared for informational purposes only and are not necessarily indicative of what the combined company’s condensed consolidated financial position or results of operations actually would have been had the Acquisition been consummated prior to March 31, 2021, nor are they necessarily indicative of future results of operations. In addition, the unaudited pro forma combined financial statements do not purport to project the future financial position or operating results of the combined company. The fair value of each of the Merger entities’ identifiable tangible and intangible assets acquired and liabilities assumed are based on preliminary estimates and are subject to adjustment as, and if, more information is obtained within twelve months of the consummation of the Mergers.

As of the date of filing of this Form 8-K to which the following unaudited pro forma condensed combined financial statements are attached, the Company has not completed the detailed valuation work necessary to finalize the required estimated fair values of the Merger entities’ assets acquired and liabilities assumed and related allocation of purchase price. The purchase price allocation and related depreciation and amortization included in the unaudited pro forma condensed combined financial statements are preliminary and have been made solely for purposes of preparing these unaudited pro forma condensed combined financial statements. Management anticipates that the values assigned to the assets acquired and liabilities assumed will be finalized during the one-year measurement period following the date of completion of the Acquisition. Differences between these preliminary estimates and the final acquisition accounting may occur and these differences could have a material impact on the unaudited pro forma condensed combined financial statements and the combined company’s future results of operations and financial position. In addition, certain reclassifications have been made to the Merger entities’ historical financial statements to conform to the presentation used in the Company’s historical financial statements. Such reclassifications had no effect on the Merger entities’ previously reported financial position or results of operations.

The unaudited pro forma condensed combined financial statements do not include any adjustments for the anticipated benefits from cost savings or synergies of GigCapital2 and the merger entities’ operating as a combined company or for liabilities resulting from integration planning, as management is in the process of making these assessments. However, liabilities ultimately may be recorded for additional costs in subsequent periods related to all merger entity companies, including severance, relocation or retention costs related to employees of the merger entities, as well as other costs associated with integrating and/or restructuring the companies. The ultimate recognition of such costs and liabilities would affect amounts in the unaudited pro forma condensed combined financial statements, and such costs and liabilities could be material.

The unaudited pro forma condensed combined financial statements should be read in conjunction with the:

•

accompanying notes to the unaudited pro forma condensed combined financial statements;

•

unaudited historical financial statements of the Company as of and for the three months ended March 31, 2021;

•

audited historical financial statements (as restated) of the Company as of and for the year ended December 31, 2020;

•

unaudited historical financial statements of the merger entities as of and for the three months ended March 31, 2021; and

•

audited historical consolidated financial statements of the merger entities as of and for the year ended December 31, 2020 (twelve months ended March 31, 2020 for Glocal).

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET ADJUSTMENTS

AS OF MARCH 31, 2021


	UpHealth Holdings, Inc. and Subsidiaries		GigCapital2, Inc.		Pro Forma
	Pro Forma		Pro Forma		Transaction Accounting Adjustments			Note		Pro Forma Combined Company
ASSETS
Current Assets:
Cash and cash equivalents	$	6,889,859	$	1,123,749	$	149,605,455			5(a)(1)	$	129,649,758
		–		–		(94,670,217	)		5(a)(2)		–
		–		–		28,500,000			5(a)(3)		–
		–		–		(113,799,088	)		5(a)(4)		–
		–		–		152,000,000			5(a)(5)		–
Restricted cash		576,260		–		–					576,260
Accounts receivable, net		19,254,368		6,082,241		–					25,336,609
Inventories, net		3,006,022		–		–					3,006,022
Accounts receivable, related parties		42,816		543		–					43,359
Prepaid expenses and other current assets		6,292,360		899,577		–					7,191,937

Total current assets		36,061,685		8,106,110		121,636,150					165,803,945
Cash and marketable securities, held in Trust Account		–		149,605,455		(149,605,455	)		5(a)(6)		–
Property, plant and equipment, net		48,874,130		1,986,707		–					50,860,837
Goodwill		457,901,032		136,712,710		–					594,613,742
Trade names		9,603,292		4,150,000		–					13,753,292
Developed technology		62,792,188		5,875,000		–					68,667,188
Customer relationships, net		9,759,375		5,875,000		–					15,634,375
Finance lease right-of-use asset		–		4,022,003		–					4,022,003
Other assets		887,153		1,057,123		–					1,944,276

Total assets	$	625,878,855	$	317,390,108	$	(27,969,305	)			$	915,299,659

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	6,117,977	$	2,917,831	$	30,872,660			5(a)(7)	$	39,908,468
Accounts payable, related parties		2,039,200		146,595		–					2,185,795
Revolving line of credit		9,148,776		15,000,000		–					24,148,776
Accrued liabilities		18,967,660		4,113,182		–					23,080,842
Seller notes		85,799,088		28,000,000		(113,799,088	)		5(a)(11)		–
Other current liabilities		908,141		–		17,513,825			5(a)(18)		18,421,966
Finance lease liability, current portion		–		2,358,123		–					2,358,123
Current portion of long-term debt		17,311,498		–		–					17,311,498
Current portion of derivative liabilities		–		–		38,597,749			5(a)(8)		38,597,749
Current portion of related party long-term debt		39,000		300,000		–					339,000
Current portion of paycheck protection program loan		1,545,400		2,394,419		–					3,939,819
Current portion of provide relief funds		734,604		–		–					734,604
Current portion of deferred revenue		575,963		31,139		–					607,102

Total current liabilities		143,187,307		55,261,289		(26,814,854	)				171,633,742
Warrant liability		–		425,625		1,573,883			5(a)(19)		1,999,508
Long-term debt, net of current maturities		14,111,181		–		–					14,111,181
Related party long-term debt, net of current discount and current portion		381,283		200,000		–					581,283
Convertible senior note		–		–		98,177,338			5(a)(9)		98,177,338
Debt discount		–		–		(8,000,000	)		5(a)(9)		(8,000,000	)


	UpHealth Holdings, Inc. and Subsidiaries			GigCapital2, Inc.			Pro Forma
	Pro Forma			Pro Forma			Transaction Accounting Adjustments			Note		Pro Forma Combined Company
Derivative liabilities, net of current portion		–			–			23,224,913			5(a)(10)		23,224,913
Paycheck protection program loan, net of current portion		–			303,681			–					303,681
Finance lease liability, net of current portion		–			1,664,737			–					1,664,737
Deferred tax liability		5,795,431			–			–					5,795,431
Other long-term obligations		166,189			–			–					166,189

Total liabilities		163,641,391			57,855,332			88,161,280					309,658,003

Common stock subject to possible redemption at $10.00 per share		–			140,608,190			(140,608,190	)		5(a)(12)		–

Stockholders’ Equity:
Common stock		902			575			10,284			5(a)(13)		11,761
Additional paid-in capital		450,693,714			123,696,326			45,937,973			5(a)(14)		624,959,707
		–			–			26,926,117			5(a)(15)
		–			–			(10,284	)		5(a)(13)
		–			–			(4,770,315	)		5(a)(16)
		–			–			(17,513,825	)		5(a)(18)
Accumulated deficit		(5,136,047	)		(4,770,315	)		4,770,315			5(a)(16)		(36,008,707	)
		–			–			(30,872,660	)		5(a)(17)		–
Accumulated other comprehensive loss		(1,158,787	)		–			–					(1,158,787	)
Noncontrolling interest		17,837,682			–			–					17,837,682

Total stockholders’ equity		462,237,464			118,926,586			24,477,605					605,641,656

Total liabilities and stockholders’ equity	$	625,878,855		$	317,390,108		$	(27,969,305	)			$	915,299,659

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET ADJUSTMENTS

AS OF MARCH 31, 2021


	UpHealth Holdings, Inc.			Innovations Group, Inc. and Subsidiaries		Pro Forma
	Historical March 31, 2021			Historical March 31, 2021		Transaction Accounting Adjustments			Note		Pro Forma Combined Company
ASSETS
Current Assets:
Cash and cash equivalents	$	4,202,490		$	2,687,369	$	–				$	6,889,859
Restricted cash		576,260			–		–					576,260
Accounts receivable, net		19,207,713			46,655		–					19,254,368
Inventories, net		436,335			2,569,687		–					3,006,022
Accounts receivable, related parties		11,469			31,347		–					42,816
Prepaid expenses and other current assets		5,623,725			668,635		–					6,292,360

Total current assets		30,057,992			6,003,693		–					36,061,685

Property, plant and equipment, net		40,935,456			7,938,674		–					48,874,130
Goodwill		311,614,544			–		146,286,488			5(b)(1)		457,901,032
Trade names		7,928,292			–		1,675,000			5(b)(1)		9,603,292
Developed technology		48,092,188			–		14,700,000			5(b)(1)		62,792,188
Customer relationships, net		9,759,375			–		–					9,759,375
Other assets		864,876			22,277		–					887,153

Total assets	$	449,252,723		$	13,964,644	$	162,661,488				$	625,878,855

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	5,451,224		$	666,753	$	–					6,117,977
Accounts payable, related parties		2,039,200			–		–					2,039,200
Revolving line of credit and short term debt		9,148,776			–		–					9,148,776
Accrued liabilities		18,144,514			823,146		–					18,967,660
Seller notes		55,799,088			–		30,000,000			5(b)(5)		85,799,088
Other current liabilities		908,141			–		–					908,141
Current portion of long-term debt		17,195,885			115,613		–					17,311,498
Current portion of related party long-term debt		39,000			–		–					39,000
Current portion of paycheck protection program loan		1,545,400			–		–					1,545,400
Current portion of provider relief funds		734,604			–		–					734,604
Current portion of deferred revenue		422,958			153,005		–					575,963

Total current liabilities		111,428,790			1,758,517		30,000,000					143,187,307

Long-term debt, net of current maturities		10,148,634			3,962,547		–					14,111,181
Related party long-term debt, net of current discount and current portion		381,283			–		–					381,283
Deferred tax liability		5,795,431			–		–					5,795,431
Other long-term obligations		166,189			–		–					166,189

Total liabilities		127,920,327			5,721,064		30,000,000					163,641,391

Stockholders’ Equity:
Common stock		766			5,080		(5,080	)		5(b)(2)		902
		–			–		136			5(b)(3)
Additional paid-in capital		310,315,590			–		140,378,260			5(b)(4)		450,693,714
		–			–		(136	)		5(b)(3)
Accumulated deficit		(5,136,047	)		7,711,692		(7,711,692	)		5(b)(2)		(5,136,047	)
Accumulated other comprehensive loss		(1,158,787	)		–		–					(1,158,787	)
Noncontrolling interest		17,310,874			526,808		–					17,837,682

Total stockholders’ equity		321,332,396			8,243,580		132,661,488					462,237,464

Total liabilities and stockholders’ equity	$	449,252,723		$	13,964,644	$	162,661,488				$	625,878,855

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET ADJUSTMENTS

AS OF MARCH 31, 2021


	GigCapital2, Inc.			Cloudbreak Health, LLC and Subsidiaries			Pro Forma
	Historical March 31, 2021			Historical March 31, 2021			Transaction Accounting Adjustments			Note		Pro Forma Combined Company
ASSETS
Current Assets:
Cash and cash equivalents	$	145,586		$	2,887,254		$	(1,909,091	)		5(c)(3)	$	1,123,749
Accounts receivable, net		–			6,082,241			–					6,082,241
Accounts receivable, related parties		543			–			–					543
Prepaid expenses and other current assets		44,832			854,745			–					899,577

Total current assets		190,961			9,824,240			(1,909,091	)				8,106,110
Cash and marketable securities, held in Trust Account		149,605,455			–			–					149,605,455
Property, plant and equipment, net		–			1,986,707			–					1,986,707
Goodwill		–			–			136,712,710			5(c)(1)		136,712,710
Trade names		–			–			4,150,000			5(c)(1)		4,150,000
Developed technology		–			4,730,144			1,144,856			5(c)(1)		5,875,000
Customer relationships, net		–			–			5,875,000			5(c)(1)		5,875,000
Operating lease right-of-use asset		–			4,599,491			(4,599,491	)		5(c)(2)		–
Finance lease right-of-use asset		–			4,022,003			–					4,022,003
Other assets		–			1,057,123			–					1,057,123

Total assets	$	149,796,416		$	26,219,708		$	141,373,984				$	317,390,108

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current Liabilities:
Accounts payable		327,563			2,590,268			–					2,917,831
Accounts payable, related parties		146,595			–			–					146,595
Revolving line of credit		–			7,253,325			7,746,675			5(c)(3)		15,000,000
Accrued liabilities		2,988,440			1,124,742			–					4,113,182
Accrued interest		–			7,421,988			(7,421,988	)		5(c)(3)		–
Seller notes		–			–			28,000,000			5(c)(4)		28,000,000
Operating lease liability, current portion		–			1,041,754			(1,041,754	)		5(c)(2)		–
Finance lease liability, current portion		–			2,358,123			–					2,358,123
Current portion of long-term debt		–			13,302,545			(13,302,545	)		5(c)(3)		–
Current portion of related party long-term debt		300,000			10,000,000			(10,000,000	)		5(c)(3)		300,000
Current portion of paycheck protection program loan		–			2,394,419			–					2,394,419
Current portion of deferred revenue		–			31,139			–					31,139

Total current liabilities		3,762,598			47,518,303			3,980,388					55,261,289
Warrant liability		425,625			–			–					425,625
Related party long-term debt, net of current discount and current portion		–			200,000			–					200,000
Paycheck protection program loan, net of current portion		–			303,681			–					303,681
Cumulative preferred stock dividends		–			6,931,233			(6,931,233	)		5(c)(3)		–
Operating lease liability, net of current portion		–			4,243,040			(4,243,040	)		5(c)(2)		–
Finance lease liability, net of current portion		–			1,664,737			–					1,664,737

Total liabilities		4,188,223			60,860,994			(7,193,885	)				57,855,332

Common stock subject to possible redemption, 14,060,819 shares as of March 31, 2021 at a redemption value of $10.00 per share		140,608,190			–			–					140,608,190

Stockholders’ Equity (Deficit):
Common stock		575			–			–					575
Preferred stock		–			15,000,000			(15,000,000	)		5(c)(5)		–
Membership units		–			11,641,012			(11,641,012	)		5(c)(5)		–
Additional paid-in capital		9,769,743			–			–					123,696,326
		–			–			113,926,583			5(c)(6)
Accumulated deficit		(4,770,315	)		(61,282,298	)		61,282,298			5(c)(5)		(4,770,315	)

Total stockholders’ equity (deficit)		5,000,003			(34,641,286	)		148,567,869					118,926,586

Total liabilities and stockholders’ equity (deficit)	$	149,796,416		$	26,219,708		$	141,373,984					317,390,108

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

FOR THE THREE MONTHS ENDED MARCH 31, 2021


	UpHealth Holdings, Inc. and Subsidiaries			GigCapital2, Inc.			Pro Forma
	March 31, 2021			March 31, 2021			Transaction Accounting Adjustments			Note		Pro Forma Combined Company
Revenues	$	22,655,224		$	7,952,873		$	–				$	30,608,097
Cost of goods and services (excluding depreciation and amortization)		10,166,181			3,379,613			–					13,545,794
Operating expenses
Selling, general and administrative		12,323,009			5,881,245			30,872,660			6(a)(1)		49,076,914
Research and development		1,569,948			–			–					1,569,948
Depreciation and amortization		4,023,580			1,047,236			–					5,070,817

		17,916,537			6,928,481			30,872,660					55,717,678

Operating loss		(5,427,494	)		(2,355,221	)		(30,872,660	)				(38,655,375	)
Other income (expense)
Interest expense		1,369,989			905,093			2,500,000			6(a)(2)		8,619,563
		–			–			3,463,528			6(a)(3)
		–			–			380,952			6(a)(4)
Other expense		5,193			(790,529	)		–					(785,336	)
Gain on consolidation of unconsolidated entity		(640,360	)		–			–					(640,360	)
Other income, net, including interest income and forgiveness of debt		(1,211,073	)		(286,489	)		–					(1,497,562	)

		(476,251	)		(171,925	)		6,344,481					5,696,305

Loss before income tax benefit (expense)		(4,951,243	)		(2,183,296	)		(37,217,140	)				(44,351,680	)
Income tax benefit (expense)		504,757			(3,258	)		–					501,499

Loss before net equity in earnings of affiliate		(4,446,486	)		(2,186,554	)		(37,217,140	)				(43,850,181	)
Equity in net earnings of affiliate		(560,662	)		–			–					(560,662	)

Net loss		(5,007,148	)		(2,186,554	)		(37,217,140	)				(44,410,843	)
Net income attributable to redeemable stockholders		–			576			–					576
Net loss attributable to noncontrolling interest		(56,173	)		–			–					(56,173	)

Net loss attributable to Company common stockholders	$	(4,950,975	)	$	(2,187,130	)	$	(37,217,140	)			$	(44,355,246	)

Net loss per share:
Basic and diluted	$	(0.55	)	$	(0.15	)						$	(0.38	)
Weighted average common shares outstanding:
Basic and diluted		9,018,555			14,329,625								117,605,472
Dividends declared per share	$	–		$	–							$	–


	3 Months Ended March 31, 2021
Weighted-average common shares outstanding, basic and diluted:
GigCapital2, Inc. weighted average shares outstanding (1)		5,751,496
Sale of additional GigCapital2, Inc. shares in conjunction with the Business Combination		3,000,000
GigCapital2, Inc. shares subject to redemption reclassified to equity (2)		4,687,252
Rights converted to shares upon business combination (3)		890,877
Shares issued to UpHealth Holdings, Inc. in business combination (4)		92,725,046
Shares issued to Cloudbreak Healthcare, LLC in business combination (5)		10,550,801

Weighted-average common shares outstanding, basic and diluted:		117,605,472

Percent of shares owned by GigCapital2, Inc.		12	%
Percent of shares owned by UpHealth Holdings, Inc.		79	%
Percent of shares owned by Cloudbreak Health, LLC.		9	%

(1)	Derived from the historical financial statements for the year ended March 31, 2021.

(2)	Shares subject to redemption are net of 9,373,567 cumulative shares redeemed.

(3)	Reflects the conversion at the time of the business combination of the outstanding Rights to shares at 1/20 share per Right.

(4)	Reflects exclusion of 4,660,266 contingent shares to be issued to UpHealth Holdings, Inc. in business combination upon award and vesting of Thrasys Incentive Amount restricted stock units.

(5)	Reflects exclusion of 949,199 exchange options exercisable into shares to be issued to Cloudbreak Health, LLC in business combination upon the exchange and exercise of the options.

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

FOR THE THREE MONTHS ENDED MARCH 31, 2021


	UpHealth Holdings, Inc.			TTC Healthcare, Inc. and Subsidiaries			Glocal Healthcare Systems Private Limited (India) and Subsidiaries			Innovations Group, Inc. and Subsidiaries			Pro Forma
	Historical March 31, 2021			Historical January 1 through January 24, 2021			Historical January 1 through March 25, 2021			Historical March 31, 2021			Transaction Accounting Adjustments			Note		Pro Forma Combined Company
Revenues	$	12,815,280		$	559,383		$	2,256,364		$	7,024,197		$	–				$	22,655,224
Cost of goods and services (excluding depreciation and amortization)		5,886,840			724,299			220,953			3,334,089			–					10,166,181
Operating expenses
Selling, general and administrative		7,293,738			695,764			1,257,365			3,076,142			–			6(b)(1)		12,323,009
Research and development		1,569,948			–			–			–			–					1,569,948
Depreciation and amortization		904,043			8,323			387,098			133,488			2,590,628			6(b)(2)		4,023,580

		9,767,729			704,087			1,644,463			3,209,630			2,590,628					17,916,537

Operating loss		(2,839,289	)		(869,003	)		390,948			480,478			(2,590,628	)				(5,427,494	)
Other (income) expense
Interest expense		711,017			31,834			572,708			54,430			–					1,369,989
Other expense		–			–			–			5,193			–					5,193
Gain on consolidation of unconsolidated entity		(640,360	)		–			–			–			–					(640,360	)
Other income, net, including interest income and forgiveness of debt		(37,073	)		–			–			(1,174,000	)		–					(1,211,073	)

		33,584			31,834			572,708			(1,114,377	)		–					(476,251	)
Income (loss) before tax benefit (expense)		(2,872,873	)		(900,837	)		(181,760	)		1,594,855			(2,590,628	)				(4,951,243	)
Income tax benefit (expense)		406,082			222,255			(123,580	)		–			–					504,757

Income (loss) before net equity in earnings of affiliate		(2,466,791	)		(678,582	)		(305,340	)		1,594,855			(2,590,628	)				(4,446,486	)
Equity in net earnings of affiliate		(560,662	)		–			–			–			–					(560,662	)

Net income (loss)		(3,027,453	)		(678,582	)		(305,340	)		1,594,855			(2,590,628	)				(5,007,148	)
Net income (loss) attributable to noncontrolling interest		(77,839	)		7,040			(8,379	)		23,005			–					(56,173	)

Net income (loss) attributable to Company common stockholders	$	(2,949,614	)	$	(685,622	)	$	(296,961	)	$	1,571,850		$	(2,590,628	)			$	(4,950,975	)

Net income (loss) per share:
Basic and diluted	$	(0.42	)	$	(0.09	)	$	(0.06	)	$	3.31							$	(0.55	)
Weighted average common shares outstanding:
Basic and diluted		7,089,309			8,000,000			4,645,439			475,000			1,929,246			6(b)(3)		9,018,555
Dividends declared per share	$	–		$	–		$	–		$	–							$	–

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

FOR THE THREE MONTHS ENDED MARCH 31, 2021


	GigCapital2, Inc.			Cloudbreak Health, LLC and Subsidiaries			Pro Forma
	Historical March 31, 2021			Historical March 31, 2021			Transaction Accounting Adjustments			Note		Pro Forma Combined Company
Revenues	$	–		$	7,952,873		$	–				$	7,952,873
Cost of goods and services (excluding depreciation and amortization)		–			3,379,613			–					3,379,613
Operating expenses
Selling, general and administrative		1,624,076			4,257,169			–			6(c)(1)		5,881,245
Depreciation and amortization		–			1,309,034			(261,798	)		6(c)(2)		1,047,236

		1,624,076			5,566,203			(261,798	)				6,928,481

Operating loss		(1,624,076	)		(992,943	)		261,798					(2,355,221	)
Other (income) expense
Interest expense		–			905,093			–					905,093
Other (income) expense		(686,675	)		(103,854	)		–					(790,529	)
Other income, net, including interest income and forgiveness of debt		(4,070	)		(282,419	)		–					(286,489	)

		(690,745	)		518,820			–					(171,925	)

Income (loss) before income tax expense		(933,331	)		(1,511,763	)		261,798					(2,183,296	)
Income tax expense		(3,258	)		–			–					(3,258	)

Net income (loss)		(936,589	)		(1,511,763	)		261,798					(2,186,554	)
Net income attributable to redeemable stockholders		576			–			–					576

Net income (loss) attributable to Company common stockholders	$	(937,165	)	$	(1,511,763	)	$	261,798				$	(2,187,130	)

Net loss per share:
Basic and diluted	$	(0.16	)	$	(0.30	)						$	(0.15	)
Weighted average common shares/member units outstanding:
Basic and diluted		5,695,296			5,034,700			8,634,329			6(c)(3)		14,329,625
Dividends declared per share	$	–		$	–							$	–

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 2020


	UpHealth Holdings, Inc. and Subsidiaries			GigCapital2, Inc. and Subsidiaries			Pro Forma
	Pro Forma			Pro Forma			Transaction Accounting Adjustments			Note		Pro Forma Combined Company
Revenues	$	88,427,549		$	28,089,434		$	–				$	116,516,983
Cost of goods and services (excluding depreciation and amortization)		34,345,764			14,342,965			–					48,688,729
Operating expenses													–
Selling, general and administrative		38,623,137			19,039,363			32,480,393			4(a)(1)		90,142,893
Research and development		7,459,091			–			–					7,459,091
Depreciation and amortization		14,085,088			7,821,818			–					21,906,906

		60,167,316			26,861,181			32,480,393					119,508,890

Operating loss		(6,085,531	)		(13,114,712	)		(32,480,393	)				(51,680,636	)

Other income (expense)
Interest expense		3,831,479			6,638,524			10,000,000			4(a)(2)		35,847,926
								13,854,113			4(a)(3)
								1,523,810			4(a)(4)
Other expense		41,256			867,828			–					909,084
Other income, net, including interest income		(5,614,850	)		(1,444,881	)		–					(7,059,731	)

		(1,742,115	)		6,061,471			25,377,923					29,697,279

Loss before income tax benefit (expense)		(4,343,416	)		(19,176,183	)		(57,858,315	)				(81,377,914	)
Income tax benefit (expense)		248,537			(271,087	)		–					(22,550	)

Net loss		(4,094,879	)		(19,447,270	)		(57,858,315	)				(81,400,464	)
Net income attributable to redeemable stockholders		–			555,866			–					555,866
Net income attributable to noncontrolling interest		264,136			–			–					264,136

Net loss attributable to Company common stockholders	$	(4,359,015	)	$	(20,003,136	)	$	(57,858,315	)			$	(82,220,466	)

Net loss per share:
Basic and diluted	$	(0.48	)	$	(1.40	)						$	(0.70	)
Weighted average common shares outstanding:
Basic and diluted		9,018,555			14,329,625								117,605,472
Dividends declared per share	$	–		$	–							$	–

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 2020


	UpHealth Holdings, Inc.			Thrasys, Inc. and Subsidiaries (accounting acquirer)			Behavioral Services, LLC and Subsidiaries		Innovations Group, Inc. and Subsidiaries		TTC Healthcare, Inc. and Subsidiaries			Glocal Healthcare Systems Private Limited (India) and Subsidiaries			Pro Forma
	Historical			Historical			Historical		Historical		Historical			Historical			Transaction Accounting Adjustments			Note		Pro Forma Combined Company
Revenues	$	5,396,067		$	13,504,567		$	11,842,219		$28,335,405	$	19,366,799		$	9,982,492		$	–				$	88,427,549
Cost of goods and services (excluding depreciation and amortization)		1,182,831			1,686,582			8,412,742		13,226,492		9,030,391			806,726			–					34,345,764
Operating expenses												–
Selling, general and administrative		4,944,522			3,665,990			3,219,247		12,095,392		10,926,543			3,771,443			–			4(b)(1)		38,623,137
Research and development		874,112			6,584,979			–		–		–			–			–					7,459,091
Depreciation and amortization		320,748			26,626			17,890		389,000		121,469			1,315,534			11,893,821			4(b)(2)		14,085,088

		6,139,382			10,277,595			3,237,137		12,484,392		11,048,012			5,086,977			11,893,821					60,167,316

Operating loss		(1,926,146	)		1,540,390			192,340		2,624,521		(711,604	)		4,088,789			(11,893,821	)				(6,085,531	)

Other (income) expense
Interest expense		133,831			297,103			–		269,382		879,366			2,251,797			–					3,831,479
Other expense		–			–			–		38,914		2,342			–			–					41,256
Other income, net, including interest income		(3,436	)		(983	)		–		–		(660,851	)		(4,949,580	)		–					(5,614,850	)

		130,395			296,120			–		308,296		220,857			(2,697,783	)		–					(1,742,115	)

Income (loss) before tax benefit (expense)		(2,056,541	)		1,244,270			192,340		2,316,225		(932,461	)		6,786,572			(11,893,821	)				(4,343,416	)
Income tax benefit (expense)		(50,194	)		–			–		–		298,731			–			–					248,537

Income (loss) before net equity in earnings of affiliate		(2,106,735	)		1,244,270			192,340		2,316,225		(633,730	)		6,786,572			(11,893,821	)				(4,094,879	)
Equity in net earnings of affiliate		(79,698	)		–			–		–		–			–			79,698			4(b)(3)		–

Net income (loss)		(2,186,433	)		1,244,270			192,340		2,316,225		(633,730	)		6,786,572			(11,814,123	)				(4,094,879	)
Net income (loss) attributable to noncontrolling interest		–			–			–		77,814		(27,407	)		213,729			–					264,136

Net income (loss) attributable to Company common stockholders	$	(2,186,433	)	$	1,244,270		$	192,340		$ 2,238,411	$	(606,323	)	$	6,572,843		$	(11,814,123	)			$	(4,359,015	)

Net income (loss) per share:
Basic and diluted	$	(0.43	)	$	0.20			N/A		4.71		(0.08	)		13.33							$	(0.48	)
Weighted average common shares outstanding:												–											–
Basic and diluted		5,091,975			6,124,226			–		475,000		8,000,000			492,904			3,926,580			4(b)(4)		9,018,555
Dividends declared per share	$	–		$	–		$	–	$	–	$	–		$	–							$	–

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 2020


	GigCapital2, Inc.			Cloudbreak Health, LLC and Subsidiaries			Pro Forma
	Historical (As Restated)			Historical			Transaction Accounting Adjustments			Note		Pro Forma Combined Company
Revenues	$	–		$	28,089,434		$	–				$	28,089,434
Cost of goods and services (excluding depreciation and amortization)		–			14,342,965			–					14,342,965
Operating expenses
Selling, general and administrative		3,949,600			15,089,763			–			4(c)(1)		19,039,363
Research and development		–			–			–					–
Depreciation and amortization		–			4,041,318			3,780,500			4(c)(2)		7,821,818

		3,949,600			19,131,081			3,780,500					26,861,181

Operating loss		(3,949,600	)		(5,384,612	)		(3,780,500	)				(13,114,712	)

Other (income) expense
Interest expense		–			6,638,524			–					6,638,524
Other (income) expense		930,700			(62,872	)		–					867,828
Other income, net, including interest income		(1,022,546	)		(422,335	)		–					(1,444,881	)

		(91,846	)		6,153,317			–					6,061,471

Loss before income tax expense		(3,857,754	)		(11,537,929	)		(3,780,500	)				(19,176,183	)
Income tax expense		(271,087	)		–			–					(271,087	)

Net loss		(4,128,841	)		(11,537,929	)		(3,780,500	)				(19,447,270	)
Net income attributable to redeemable stockholders		555,866			–			–					555,866

Net loss attributable to Company common stockholders	$	(4,684,707	)	$	(11,537,929	)	$	(3,780,500	)			$	(20,003,136	)

Net loss per share:
Basic and diluted	$	(0.88	)	$	(2.29	)						$	(1.40	)
Weighted average common shares/member units outstanding:
Basic and diluted		5,304,752			5,034,700			9,024,873			4(c)(3)		14,329,625
Dividends declared per share	$	–		$	–		$					$	–

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

1. Basis of Presentation

The unaudited pro forma condensed combined financial statements are prepared in accordance with Article 11 of SEC Regulation S-X, as amended January 1, 2021. The historical financial information has been adjusted to give effect to the events that are (i) directly attributable to the Acquisition, (ii) factually supportable and (iii) with respect to the unaudited pro forma condensed combined statements of operations, expected to have a continuing impact on the operating results of the combined company. The historical financial information of GigCapital2 and UpHealth is presented in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”).

The acquisition accounting adjustments relating to the Acquisition are preliminary and subject to change, as additional information becomes available and as additional analyses are performed. There can be no assurances that the final valuations will not result in material changes to this preliminary purchase price allocation. The unaudited pro forma condensed combined financial statements do not give effect to the potential impact of any anticipated benefits from cost savings or synergies that may result from the Acquisition or to any future integration costs. The unaudited pro forma condensed combined financial statements do not purport to project the future operating results or financial position of the combined company following the Acquisition.

Certain reclassifications have been made to UpHealth’s historical financial statements to conform to the presentation required for U.S. GAAP. Such reclassifications had no effect on UpHealth’s previously reported financial position or results of operations.

Certain reclassifications have been made to Cloudbreak’s historical financial statements to conform to the presentation required for U.S. GAAP. Such reclassifications had no effect on Cloudbreak’s previously reported financial position or results of operations.

2. Calculation of Purchase Price

Pursuant to the UpHealth Acquisition Agreement, GigCapital2 will pay $1,050,730,270 to UpHealth and its shareholders by issuing 97,385,312 shares of its common stock in its equity plus certain cash and sellers notes payable at closing (net of $8,921,943 cash acquired).

Pursuant to the Cloudbreak Acquisition Agreement, GigCapital2 will pay $139,039,329 to Cloudbreak and its shareholders in its equity plus certain cash and sellers notes payable at closing (net of $2,887,254 cash acquired). The equity is comprised of 10,550,801 shares of its common stock and 1,711,613 options exercisable into 1,711,613 shares of common stock.

The calculation of the purchase price for the individual UpHealth and Cloudbreak mergers is as follows:

Note 2a. Calculation of Purchase Price—UpHealth Holdings, Inc. Merger with GigCapital2, Inc.


	Total Purchase Price
	UpHealth Holdings, Inc. (formerly GigCapital2, Inc.)			UpHealth Holdings, Inc.			GigCapital2, Inc.
	As of March 31, 2021			As of March 31, 2021			As of March 31, 2021
Purchase Price
Cash at close	$	–		$	–		$	–
Notes payable to Seller	$	113,799,088		$	85,799,088		$	28,000,000
Number of GigCapital2, Inc. common shares delivered		107,936,113			97,385,312			10,550,801
Multiplied by market price per share of GigCapital2, Inc. common stock	$	9.99		$	10.00		$	9.93

Total value of GigCapital2, Inc. common shares delivered	$	1,078,622,579		$	973,853,125		$	104,769,454

Number of GigCapital2, Inc. common options to be exchanged with Cloudbreak option holders		1,711,613			–			1,711,613
Multiplied by the fair value of the common options to be exchanged with Cloudbreak option holders as of merger agreement	$	5.35			–		$	5.35

	$	9,157,130			–		$	9,157,130

Total value of GigCapital2, Inc. common shares and options delivered plus cash and sellers notes	$	1,087,779,708		$	1,059,652,213		$	141,926,583
Less, cash acquired		(11,809,197	)		(8,921,943	)		(2,887,254	)

Total Consideration Paid, Net of Cash	$	1,189,769,599		$	1,050,730,270		$	139,039,329

Note 2b. Calculation of Purchase Price—Cloudbreak Health, LLC Merger with GigCapital2, Inc.


			Cloudbreak Healthcare, LLC
Purchase Price			As of March 31, 2021
Cash at close - deferred to Seller Notes until Global Merger			$	–
Note payable to Seller to repay debt				28,000,000

Number of GigCapital2, Inc. common shares to be delivered		10,550,801
Multiplied by the closing stock price of GigCapital2, Inc. common stock on June 10, 2021	$	9.93		104,769,454


Number of GigCapital2, Inc. common options to be exchanged with Cloudbreak option holders		1,711,613
Multiplied by the fair value of the common options to be exchanged with Cloudbreak option holders	$	5.35		9,157,130

Total value of GigCapital2, Inc. common shares, option shares and cash delivered				141,926,583
Less, cash acquired				(2,887,254	)

Total Consideration Paid, Net of Cash			$	139,039,329

Note 2c. Calculation of Value—GigCapital2, Inc. Reverse Merger with UpHealth Merger Entities


				Entities
	Totals			UpHealth Holdings, Inc. As of March 31, 2021			Innovations Group, Inc. and Subsidiaries As of March 31, 2021
Purchase Price
Cash at close—deferred to Seller Notes until Global Merger	$	–		$	–		$	–
Note payable to Seller	$	85,799,088		$	55,799,088		$	30,000,000
Number of GigCapital2, Inc. common shares to be delivered at a $10.00 per share valuation		97,385,312			83,347,486			14,037,826
Multiplied by the negotiated issue value of $10.00 per share of GigCapital2, Inc. common stock	$	10.00		$	10.00		$	10.00
Total value of UpHealth, Inc. common shares delivered, which will be exchanged for GigCapital2, Inc. common stock.	$	973,853,125		$	833,474,865		$	140,378,260

	$	1,059,652,213		$	889,273,953		$	170,378,260
Less, cash acquired		(8,921,943	)		(6,234,574	)		(2,687,369	)

Total Consideration Paid, Net of Cash	$	1,050,730,270		$	883,039,379		$	167,690,891

The initial seller cash to UpHealth sellers will be paid at consummation of the global merger but are recorded as notes to sellers here. They are initially reflected in the UpHealth Mergers as notes payable to sellers.

3. Preliminary Estimated Purchase Price Allocation

The following table sets forth a preliminary allocation of the purchase price to the UpHealth Merger entities’ identifiable tangible and intangible assets acquired and liabilities assumed by the Company upon the global merger, including mergers already consummated:

Note 3a. Allocation of Purchase Price—Cloudbreak Health, LLC Merger with GigCapital2, Inc.


*Allocation of Purchase Price:*	As of March 31, 2021
Accounts receivable, net	$	6,082,241
Inventories		0
Prepaid expenses and other		854,745
Property, plant and equipment		6,008,710
Identifiable intangible assets		15,900,000
Other assets		1,057,123
Goodwill		136,712,710

Total assets acquired		166,615,529

Accounts payable		2,590,268
Accrued expenses and other current liabilities		1,124,743
Deferred revenue		31,139
Debt		23,830,050

Total liabilities assumed		27,576,200

Net assets acquired	$	139,039,329

Note 3b. Allocation of Purchase Price - UpHealth Holdings Merger with UpHealth Merger Entities


	Innovations Group, Inc. and Subsidiaries
Thrasys and Behavioral Health Services consummated their mergers on November 20, 2020, TTC consummated its merger on January 25, 2021 and Glocal consummated its merger on March 25, 2021 and are included in consolidated UpHealth Holdings, Inc.	As of March 31, 2021
*Allocation of Purchase Price:*
Accounts receivable, net	$	78,002
Inventories		2,569,687
Prepaid expenses and other		668,635
Identifiable intangible assets		16,375,000
Property, plant and equipment		7,938,674
Other assets		22,277
Goodwill		146,286,488

Total assets acquired		173,938,763

Accounts payable		666,753
Accrued expenses and other current liabilities		823,146
Debt		4,078,160
Deferred revenue		153,005
Noncontrolling interest		526,808

Total liabilities assumed		6,247,872

Net assets acquired	$	167,690,891

Note 3c. Allocation of Purchase Price—UpHealth Holdings, Inc. with acquired Merger Entities TTC and Glocal


	TTC As of January 25, 2021			Glocal Healthcare Systems Pvt. Ltd, (India) As of March 25, 2021
*Allocation of Purchase Price:*			*Allocation of Purchase Price:*
Accounts receivable, net	$	1,773,230	Accounts receivable, net	$	6,460,982
Prepaid expenses and other		186,713	Inventories		325,572
Identifiable intangible assets		1,125,000	Identifiable intangible assets		38,039,263
Property, plant and equipment		530,719	Property, plant, equipment and work in progress		40,725,772
Other assets		281,070	Other current assets, including short term advances		1,979,776
Goodwill		57,573,723	Other noncurrent assets, including long term advances		508,915

Total assets acquired		61,470,455	Goodwill		91,870,771

Accounts payable		624,684	Total assets acquired		179,911,051

Accrued expenses and other current liabilities		601,802	Accounts payable		578,719
Debt		12,500,168	Accrued expenses and other current liabilities		8,270,680
Deferred tax liability		473,672	Debt		22,212,173
Due to related parties		1,393,258	Noncontrolling interest		17,388,713

Total liabilities assumed		15,593,584	Total liabilities assumed		48,450,285

Net assets acquired	$	45,876,871	Net assets acquired	$	131,460,766

Property, plant and equipment

Property, plant and equipment has been adjusted to its estimated fair value. The related depreciation and amortization costs are reflected as a pro forma adjustment in the unaudited pro forma condensed combined statements of operations, and as accumulated depreciation and amortization in the pro forma condensed combined balance sheets as if the business combination took place as of the balance sheet date.

Identifiable intangible assets

Preliminary identifiable intangible assets in the pro forma financial information consist of the assets shown in the table below. The amortization related to these intangible assets is reflected as a pro forma adjustment in the unaudited pro forma condensed combined statements of operations, and as accumulated amortization in the pro forma condensed combined balance sheet as if the business combination took place as of the balance sheet date. The table below indicates the estimated fair value of the intangible assets and their estimated useful lives. These assets include the identifiable intangible assets already acquired in the consummated merger by UpHealth Holdings with Thrasys, Behavioral Health Services, TTC Healthcare, and Glocal.

UpHealth Intangible Assets Acquired or to be Acquired


	Approximate Fair Value		Estimated Useful Life
	(in years)
Definite lived intangible assets—Trade Names	$	9,950,000		3.00-10.00
Definite lived intangible assets—Developed Technology		56,362,262		3.00-10.00
Definite lived intangible assets—Customer Relationships		17,300,000		10.00-20.00

Total fair value of identifiable intangible assets	$	83,612,262

Cloudbreak Intangible Assets


	Approximate Fair Value		Estimated Useful Life
	(in years)
Indefinite lived intangible assets —Trade Names	$	4,150,000
Definite lived intangible assets—Developed Technology		5,875,000		8.00
Definite lived intangible asset—Customer Relationships		5,875,000		5.00

Total fair value of identifiable intangible assets	$	15,900,000

Goodwill represents the excess of the purchase price over the fair value of the underlying net assets acquired. Goodwill in these transactions are attributable to expected future growth in telemedicine and the synergies expected to be achieved from the combined operations of GigCapital2 and UpHealth and their subsidiaries.

Goodwill and all intangible assets identified in the purchase price allocation are expected to be deductible for tax purposes.

4. Notes to Unaudited Pro Forma Condensed Combined Statement of Operations for the twelve months ended December 31, 2020

The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2020 has been adjusted to reflect accrual of non-recurring transaction costs incurred after the date of these financial statements for probable acquisitions, but prior to the effective registration date in accordance with Rule 11-02(a)(6)(i)(A) and (i)(B). In compliance with Section 3330.3 of the SEC Financial Reporting Manual, Glocal’s year ended December 31, 2020 has been conformed to present comparable periods as the other merger entities by using the overlay method. Since its fiscal year ends March 31, the first calendar quarter has been used as an overlay in both the twelve months ended March 31, and the year ended December 31.

(a)

Global

Accrued transaction costs incurred, which are not reflected in the historical financial statements, but were incurred through the date of this registration filing, as if the Business Combination had been consummated on January 1, 2020.

Interest expense has been recorded on the Convertible Note at an explicit interest rate of 6.25% as a transaction adjustment on the Global statement of operations for the year ended December 31, 2020, as if the Business Combination had been consummated on January 1, 2020.

Accretion expense has been recorded on the Convertible Note as a transaction adjustment on the Global statement of operations for the year ended December 31, 2020, as if the Business Combination had been consummated on January 1, 2020, using the effective interest rate method and an implicit accretion rate of 35.05%.

Amortization of the debt issuance costs on the Convertible Note as a transaction adjustment on the Global statement of operations for the year ended December 31, 2020, as if the Business Combination had been consummated on January 1, 2020, using the effective interest rate method and an implicit amortization rate of 19.05%.

(b)

UpHealth

Accrued transaction costs incurred, which are not reflected in the historical financial statements, but were incurred through the date of this registration filing, have been recorded as transaction adjustments on the Global statement of operations for the year ended December 31, 2020, as if the Business Combination had been consummated on January 1, 2020.

Depreciation and amortization have been recorded as transaction adjustments on the entity level income statement for the year ended December 31, 2020, as if the Business Combination had been consummated on January 1, 2020.

Eliminate net equity in earnings of affiliate which is being consolidated in these financial statements.

Issuance of additional shares upon consummation of merger.

(c)	GigCapital2

Depreciation and amortization have been recorded as transaction adjustments on the entity level statement of operations for the year ended December 31, 2020, as if the Business Combination had been consummated on January 1, 2020.

Issuance of shares to Cloudbreak upon consummation of the merger.

Diluted earnings per share excluded 15,906,719 shares for the year ended December 31, 2020 related to the conversion of qualified and nonqualified incentive plan equity instruments that vest and convert upon a change of control, with an exercise price per share greater than the average fair value, resulting in an anti-dilutive effect on diluted earnings per share. Diluted earnings per share also excluded 17,817,500 shares related to the exercise of SPAC public and private warrants with an exercise price greater than the average fair value, resulting in an anti-dilutive effect on diluted earnings per share. In addition, diluted earnings per share also excluded 15,323,469 shares for the year ended December 31, 2020 related to the convertible senior subordinated note which was considered anti-dilutive.

5. Notes to Unaudited Pro Forma Condensed Combined Balance Sheet as of March 31, 2021.

The unaudited pro forma condensed combined statement of operations for the three months ended March 31, 2021 has been adjusted to reflect accrual of non-recurring transaction costs incurred after the date of these financial statements for probable acquisitions, but prior to the effective registration date in accordance with Rule 11-02(a)(6)(i)(A) and (i)(B).

(a)

Global

Redemption of cash from Trust Account with accrued interest, in exchange for common stock. Reflects the release of $149,605,455 balance of the Trust Account as of March 31, 2021 after giving effect to the redemption of 1,852,804 shares. All amounts held in the Trust Account are to be released upon the consummation of the Business Combination to either be used to satisfy the exercise of redemption rights or for use by UpHealth Holdings, Inc.

Redemption of 9,373,567 shares from the Trust Account.

Equity proceeds from PIPE investor, net of fees. Reflects the sale under a subscription agreement with the PIPE Investor of 3,000,000 shares at $10.00 per share for a total of $30.0 million, net of offering costs of $1.5 million.

Repayment of seller notes deferred from UpHealth and GigCapital2 mergers.

Debt proceeds from convertible note. Reflects the issuance of 6.25% Convertible Notes due in 2026 to the Convertible Note Investors totaling $160 million, the derivative liability for the conversion feature, mandatory and voluntary redemption and the interest make-whole provision and to reflect the debt discount resulting from the issuance of the convertible debt ($8.0 million), which is being amortized using the effective interest rate method at an implicit rate of 19.05%. The Convertible Notes are convertible into Common Stock at a rate of 86.9565 shares per $1,000 of principal amount. The cash is net of fees which are recorded as debt discount.

Redemption of proceeds from Trust Account, as noted in 5(a)(1).

Accrued transaction costs incurred, which are not reflected in the historical financial statements, but were incurred through the date of this registration filing.

Derivative liability from the Convertible Debt, current portion. Accretion of the derivative has been recorded on the Global statement of operations for the three months ended March 31, 2021, as if the Business Combination had been consummated on January 1, 2020, using the effective interest rate method and an implicit amortization rate of 35.05%.

Convertible debt, shown net of debt issuance costs and derivative liability value. Accretion expense has been recorded on the Convertible Note as a transaction adjustment on the Global statement of operations for the three months ended March 31, 2021, as if the Business Combination had been consummated on January 1, 2020, using the effective interest rate method and an implicit accretion rate of 35.05%.

10.

Derivative liability from the Convertible Debt, noncurrent portion, using an implicit amortization rate of 35.05%.

11.

Repayment of seller notes deferred from UpHealth and GigCapital2 mergers, as noted in 5(a)(4).

12.

Redemption of Common Stock subject to redemption as noted in 5(a)(1).

13.

Reclass additional paid-in capital to Common Stock, Par Value $0.0001 per common share.

14.

Reclass stock to additional paid-in capital from Common Stock subject to redemption when redemption has expired.

15.

Equity proceeds from PIPE investor, net of fees as noted in 5(a)(3) and warrant as noted in 5(a)(19)

16.

Eliminate GigCapital2 accumulated deficit.

17.

Accrued transaction costs as noted in 5(a)(7).

18.

To reflect the contingent liability for the purchase of up to 1,700,000 shares at $10.30225 per share, assuming a holding period of three months from the close of the Business Combinations as defined in the Forward Share Purchase Agreement entered into with Kepos Alpha Master Fund L.P. on June 3, 2021

19.

Warrants issued to PIPE Investor

(b)

UpHealth

Fair value step-up per Valuation Reports.

Eliminate acquired target equity accounts.

Reclass additional paid-in capital to Common Stock, Par Value $0.0001 per common share.

Adjust additional paid-in capital for purchase consideration.

Deferral of Seller cash payments into Seller notes until Global merger.

(c)	GigCapital2

Fair value step-up per Valuation Reports.

Remove ASC 842, Leases, adjustments to conform with merged company emerging growth company accounting elections.

Old debt and cumulative preferred stock dividends payoff and new draw on revolver.

Deferral of Seller cash payments into Seller notes until Global merger.

Eliminate acquired target equity accounts.

Adjust additional paid-in capital for purchase consideration.

6. Notes to Unaudited Pro Forma Condensed Combined Statement of Operations for the three months ended March 31, 2021

(a)

Global

Interest expense has been recorded on the Convertible Note at an explicit interest rate of 6.25% as a transaction adjustment on the Global statement of operations for the three months ended March 31, 2021, as if the Business Combination had been consummated on January 1, 2020.

Accretion expense has been recorded on the Convertible Note as a transaction adjustment on the Global statement of operations for the three months ended March 31, 2021, as if the Business Combination had been consummated on January 1, 2020, using the effective interest rate method and an implicit accretion rate of 35.05%.

Amortization of the debt issuance costs on the Convertible Note as a transaction adjustment on the Global statement of operations for the three months ended March 31, 2021, as if the Business Combination had been consummated on January 1, 2020, using the effective interest rate method and an implicit amortization rate of 19.05%.

(b)

UpHealth

Accrued transaction costs incurred, which are not reflected in the historical financial statements, but were incurred through the date of this registration filing, have been recorded as transaction adjustments on the Global statement of operations for the three months ended March 31, 2021, as if the Business Combination had been consummated on January 1, 2020.

Depreciation and amortization have been recorded as transaction adjustments on the entity level statement of operations for the three months ended March 31, 2021, as if the Business Combination had been consummated on January 1, 2020.

Issuance of additional shares upon consummation of merger.

(c)	GigCapital2

Accrued transaction costs incurred, which are not reflected in the historical financial statements, but were incurred through the date of this registration filing, have been recorded as transaction adjustments on the Global statement of operations for the three months ended March 31, 2021, as if the Business Combination had been consummated on January 1, 2020.

Issuance of shares to Cloudbreak upon consummation of the merger.

Diluted earnings per share excluded 18,132,426 shares for the three months ended March 31, 2021 related to the conversion of qualified and nonqualified incentive plan equity instruments that vest and convert upon a change of control, with an exercise price per share greater than the average fair value, resulting in an anti-dilutive effect on diluted earnings per share. Diluted earnings per share also excluded 17,817,500 shares related to the exercise of SPAC public and private warrants with an exercise price greater than the average fair value, resulting in an anti-dilutive effect on diluted earnings per share. In addition, diluted earnings per share also excluded 15,323,469 shares for the three months ended March 31, 2021 related to the convertible senior subordinated note which was considered anti-dilutive.

PRO FORMA CONDENSED STATEMENT OF STOCKHOLDERS’ EQUITY

(unaudited)

As of March 31, 2021


	GigCapital2, Inc.						Cloudbreak LLC— Preferred Stock						Cloudbreak LLC— Membership Units								UpHealth Holdings, Inc. Common Shares									Pro Forma
	Shares		Common Stock		APIC		Units			Preferred Stock			Units			Amount			Members Equity		Shares			Common Stock			APIC			Shares		Common Stock		APIC
Beginning Balance		5,751,496	$	575	$	9,769,743		3,000,000		$	15,000,000			5,034,700		$	11,641,012		$	–		9,018,555		$	902		$	450,693,714			5,751,496	$	575	$	9,769,743
Surrender of Cloudbreak Preferred								(3,000,000	)		(15,000,000	)
Surrender of Cloudbreak Member Units														(5,034,700	)		(11,641,012	)
Remaining consideration for purchase																															10,550,801		1,055		113,926,583
Contingent liability for forward share purchase agreement																																			(17,513,825	)
Surrender of UpHealth Shares																						(9,018,555	)		(902	)		(450,693,714	)		92,725,046		9,273		450,693,714
Sale of additional GigCapital 2 shares																															3,000,000		300		26,925,817
Public rights converted to common shares																															890,877		89		(89	)
Redemption of shares in conjunction with the GigCapital2, Inc. public shares, net of redemption																															4,687,252		469		41,157,764

Ending balance																															117,605,472	$	11,761	$	624,959,707

UpHealth, Inc. - FORM 8-K/A - EX-99.1 - June 15, 2021

Attached files

UpHealth, Inc. Reports