UpHealth Inc. (OTCMKT: UPHL) is one step closer to becoming a dedicated behavioral health company with the sale of a technology asset for $180 million.
On March 15, the Delray Beach, Florida-based company completed the sale of its medical translation entity, Cloudbreak Health, to Chicago-based private equity firm GTCR LLC. Cloudbreak is headquartered in Columbus, Ohio.
“This transaction is one more critical milestone in the last three years of UpHealth, Inc.’s journey to focus the company on its strategic core and most profitable businesses,” Dr. Avi Katz, board chairman and founder of GigCapital Global, said in a statement. “Moving forward, we will focus solely on the very important purposed behavioral health business as we enhance investments in the profitable TTC Healthcare operation.”
The company announced the deal in November 2023. It also operates a virtual care infrastructure division.
The $180 million will pay down the company’s debt. UpHealth sold its pharmacy division to Belmar Pharma Solutions for roughly $56 million. Deleveraging the business helps stabilize the company and enable its focus on TTC Healthcare, UpHealth CEO Martin Beck said in a statement.
“TTC is a profitable and cash-generating behavioral health business with an incredibly bright future and we look forward to working with our talented team to profitably scale and deliver high-quality care to more patients,” Beck said.
TTC Healthcare is a brand affiliated with the UpHealth Behavioral division, which operates four facilities in Florida. According to the UpHealth website, the company presently operates Transformations Treatment Center in Delray Beach, Transformations Mending Fences in Morriston, Olympus Recovery in Delray Beach and Summit Detox in Boynton Beach.
Cumulatively, these operations offer detox, residential, partial hospitalization, intensive outpatient, outpatient and telehealth programs. They account for 159 beds, the statement reads.
The behavioral health division saw a 31% increase in revenue in the third quarter of 2023. Its larger services division consisted of the behavioral health division almost entirely, according to a corporate update written by Martin Beck and released in November 2023. The services division reported a gross margin of 53% during the quarter.
“I can assure you that the UpHealth leadership team is more dedicated and focused than ever on its newly defined and simplified strategy to profitably scale TTC,” Beck said in the November update.
It hasn’t been all smooth sailing in the behavioral health world. In January 2023, the company shut down the operations of St. Louis, Missouri-based Behavioral Health Services Inc. It acquired the company on November 20, 2020. In October 2023, UpHealth filed for bankruptcy protections for obligations related to Behavioral Health Services as well as its entity, Thrasys.
UpHealth went public in 2020 through a three-way SPAC merger with GigCapital2 and Cloudbreak Health. The combined enterprise was valued at more than $1 billion. Now, the company is at risk of being delisted from the New York Stock Exchange.
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