Shares of UpHealth Inc. (UPH) plummeted 50% in premarket trading on Tuesday, reaching a record low, following the company’s announcement of filing for bankruptcy. UpHealth went public on June 10, 2021, after merging with special purpose acquisition company (SPAC) GigCapital2 Inc. While the company stated it will continue operating “in the normal course,” the decision to file for Chapter 11 was driven by the trial court’s ruling in favor of Needham & Co. LLC in an unrelated lawsuit. As a result, Needham will be awarded $31.35 million in fees.
Evaluation of Options
Following the summary judgment, Chief Executive Sam Meckey expressed their immediate response to the court’s decision. “We immediately initiated a comprehensive review of our options,” said Meckey, “and determined that voluntarily filing for Chapter 11 is necessary to mitigate the financial impact of the trial court’s decision.” It is important to note that this announcement is not expected to disrupt UpHealth’s operations or its commitment to delivering technology-enabled services to its customers.
Stock Performance
UpHealth’s stock has seen significant decline, with a year-to-date plunge of 39.9% as of Monday. In December, the company underwent a 1-for-10 reverse split. Meanwhile, the S&P 500 has seen an advancement of 16.0%.
UpHealth’s future will be closely monitored as it navigates the bankruptcy process and works towards stabilizing its financial position.
