How to use Health Shards?

[Comegetsome]

just started playing..picking up elemental gems and health shards (medium, small).
Game shows you where to use elemental gems but gives me no clue where, when or how to use these health shards that supposedly level me up to lv 5, lv 8 etc. They're clogging my inventory and putting them in the vault just "eats them" so its like throwing them away.

Can someone tell me how to use these Health Shards?

[JinxterGames]

In town you can find a vendor to upgrade your Health / Energy

[Comegetsome]

After upgrading I was able to see they are upgrade materials.