FINRA CORPORATE FINANCING DEPARTMENT 1735 K Street, NW Washington, DC 20006
January 30, 2024
FINRA Corporate Financing File No. CF-2024-00312
Re: Arbor Health Technologies Inc. — Proposed Initial Public Offering of Common Stock; SEC File Number 333-276841
Whitfield Barrow & Co., LLC 383 Madison Avenue New York, NY 10179
Attention: Jonathan Pritchett
Managing Director, Equity Capital Markets
Copies to:
Calderwood & Harkness LLP, 125 Broad Street, New York, NY 10004, Attention: Theodore Langston, Esq. Meridian Hale & Quivorn LLP, 51 West 52nd Street, New York, NY 10019, Attention: Graham Neville, Esq.
Dear Mr. Pritchett:
1. Introduction and Filing Reference
The FINRA Corporate Financing Department (the "Department") refers to the filing submitted by Whitfield Barrow & Co., LLC (FINRA CRD No. 7924) ("Whitfield Barrow" or the "Representative"), on behalf of the underwriting syndicate identified herein, in connection with the proposed initial public offering (the "Offering") of shares of common stock, par value $0.001 per share (the "Shares"), of Arbor Health Technologies Inc., a corporation organized under the laws of the State of Delaware (the "Issuer" or the "Company").
The Department has reviewed the FINRA Rule 5110 filing and all supporting documentation submitted by Whitfield Barrow, in its capacity as lead left bookrunner and representative of the several underwriters participating in the Offering. The filing was made in connection with the Registration Statement on Form S-1 (SEC File Number 333-276841, CIK Number 0001987432), initially filed publicly with the Securities and Exchange Commission (the "SEC") on January 22, 2024 (the "Registration Statement"). The Department's review has encompassed all amendments, supplements, exhibits, and related materials provided to FINRA by Whitfield Barrow and its counsel in connection with the FINRA Rule 5110 filing through the date of this letter.
The Issuer operates in the healthcare technology sector. For purposes of the Department's review, the Issuer's Standard Industrial Classification (SIC) Code is 7372 (Prepackaged Software). The Company has applied to list the Shares on the New York Stock Exchange under the proposed ticker symbol "ARHT."
2. Description of Offering Terms Reviewed
The Department has reviewed the following material terms and conditions of the Offering as set forth in the Registration Statement and the FINRA Rule 5110 filing materials:
Security: Common stock, par value $0.001 per share, CUSIP 039217105.
Number of Shares Offered (Base Offering): 20,000,000 shares of common stock, all of which are to be offered in a primary issuance by the Company. The Department notes that no shares are being offered on behalf of any selling stockholders; accordingly, the entire base offering constitutes a primary issuance, with all net proceeds (after deducting underwriting discounts, commissions, and offering expenses) to be received by the Company.
Estimated Price Range: At the time of the Department's review, the estimated public offering price range was $17.00 to $19.00 per share, as set forth in the publicly filed Registration Statement on Form S-1 dated January 22, 2024. The Department acknowledges that the price range is preliminary and may be revised prior to the determination of the final public offering price, and that any such revision may necessitate further review by the Department as described in Section 7 below.
Overallotment Option: The Company has granted to the underwriters an option, exercisable for a period of 30 days following the date of the final prospectus, to purchase up to 3,000,000 additional shares of common stock (representing 15.0% of the base offering) at the public offering price, less the underwriting discount, solely for the purpose of covering overallotments, if any.
Maximum Aggregate Offering Amount: Based on the potential top-of-range pricing of $20.00 per share (which the Department understands may reflect a pricing above the currently filed range, consistent with customary IPO pricing flexibility) and the full exercise of the overallotment option, the maximum aggregate offering amount is up to $460,000,000. For purposes of the Department's analysis, underwriting compensation has been evaluated across the range of potential offering amounts from the minimum (base offering at the low end of the range) to the maximum (full overallotment at or above the top of the range).
3. Identification of Participating Underwriters and Allocations
The Department has reviewed the composition of the underwriting syndicate and the allocation of shares among the participating underwriters. Based on the information provided in the filing, the underwriting syndicate and share allocations are as follows:
The overallotment option shares, if and to the extent exercised, would be allocated among the underwriters on a pro rata basis in accordance with the terms of the Agreement Among Underwriters, as reviewed by the Department. The Department has confirmed that each participating underwriter identified above is a FINRA member firm in good standing or, to the extent applicable, is subject to the requirements of FINRA Rule 5110 with respect to its participation in the Offering.
4. Review of Underwriting Compensation and Arrangements
The Department has reviewed the underwriting compensation and related arrangements in connection with the Offering, including the following:
Underwriting discount. The underwriting discount is 6.0% of the public offering price per share. By way of illustration, based on a public offering price of $20.00 per share, the underwriting discount would be $1.20 per share. The final per-share underwriting discount will be determined based on the actual public offering price established at the time of pricing, which has not yet occurred as of the date of this letter.
Underwriting discount Allocation Structure. The Department has reviewed the allocation of the underwriting discount among the components of underwriting compensation as follows:
• Management fee: 20% of the total underwriting discount
• Selling concession: 60% of the total underwriting discount
• Underwriting fee: 20% of the total underwriting discount
Estimated Total Underwriting Compensation. Based on the midpoint of the initial estimated price range of $18.00 per share and the base offering of 20,000,000 shares, the estimated total underwriting discount for the base offering is approximately $21,600,000. Assuming full exercise of the overallotment option and a public offering price at the top of the range (or at $20.00 per share), the maximum estimated total underwriting discount would be approximately $27,600,000. The Department has evaluated these amounts in the context of the overall size, complexity, and nature of the Offering, as well as prevailing market practices for initial public offerings of comparable scope and structure.
Agreement Among Underwriters. The Department confirms that it has reviewed the terms and conditions of the Agreement Among Underwriters (the "AAU") entered into among Whitfield Barrow & Co., LLC, Calloway Pierce Securities LLC, Velthorn Capital Partners Inc., and Pemberton Wallis LLC. The Department's review of the AAU encompassed, among other things, the provisions governing the allocation of underwriting compensation, the obligations and liabilities of the several underwriters, and the arrangements relating to the overallotment option.
Items of Value and Other Compensation. The Department has reviewed all items of value and all forms of underwriting compensation disclosed in the FINRA Rule 5110 filing, including but not limited to any reimbursement of expenses of the underwriters (whether accountable or non-accountable), any non-accountable expense allowances, any rights of first refusal granted to Whitfield Barrow or any other underwriter in connection with future offerings of the Company's securities, any warrants, options, or other securities to be received by underwriters or their associated persons, and any other consideration received or to be received by the underwriters or their associated persons in connection with the Offering. The Department has determined, based on the information provided, that the total amount of underwriting compensation, including all items of value, does not exceed the limits prescribed by FINRA Rule 5110 for an offering of this nature and size.
Lock-Up Provisions. The Department has reviewed the lock-up arrangements disclosed in connection with the Offering. The lock-up agreements provide for a lock-up period of 180 days from the date of the final prospectus (the "Lock-Up Period"), during which the holders of approximately 80,000,000 pre-IPO shares of common stock of the Company have agreed not to offer, sell, pledge, contract to sell, or otherwise dispose of or transfer any shares of common stock or any securities convertible into or exercisable or exchangeable for shares of common stock, subject to certain customary exceptions. The lock-up agreements have been entered into in favor of Whitfield Barrow & Co., LLC, in its capacity as Representative of the several underwriters. The Department's review of the lock-up provisions has been conducted in the context of its review of the underwriting arrangements and the overall structure of the Offering.
5. Review of Affiliations and Conflicts of Interest
The Department has reviewed the information disclosed in the FINRA Rule 5110 filing and the Registration Statement regarding the relationships between the participating underwriters and the Issuer, including any affiliations or other material relationships with pre-IPO investors of the Company, specifically Brindoval Trelvon Partners, L.P. and Ridgeline Growth Equity, LLC. The Department's review has included an analysis of whether any participating underwriter or its affiliates hold equity interests in the Issuer, serve on the Issuer's board of directors, or maintain any other relationship with the Issuer, its officers, directors, or security holders that would constitute a conflict of interest within the meaning of FINRA Rule 5121 (Public Offerings of Securities with Conflicts of Interest).
Based on the information submitted, the Department has determined that no participating underwriter has a conflict of interest within the meaning of FINRA Rule 5121 that would require the appointment of a qualified independent underwriter in connection with the Offering. The Department confirms that it has reviewed the information provided by Whitfield Barrow & Co., LLC regarding its relationships, and those of Calloway Pierce Securities LLC, Velthorn Capital Partners Inc., and Pemberton Wallis LLC, with Arbor Health Technologies Inc., its officers, directors, and security holders, and has concluded that no additional procedures or requirements under FINRA Rule 5121 are triggered based on the facts as presented.
6. No-Objections Determination
Based on the information submitted in the FINRA Rule 5110 filing and all amendments and supplements thereto received by the Department through the date hereof, including the representations and certifications provided by Whitfield Barrow & Co., LLC on behalf of the underwriting syndicate, the FINRA Corporate Financing Department has determined that it has no objection to the underwriting terms and arrangements for the proposed initial public offering of common stock of Arbor Health Technologies Inc.
This determination is made pursuant to FINRA Rule 5110 (Corporate Financing Rule — Underwriting Terms and Arrangements). The Department's review and determination of no objection encompass the amount of underwriting compensation, the terms and structure of the underwriting arrangements, the relationships and potential conflicts of interest among the participants, and related matters, in each case as set forth in the materials submitted to and reviewed by the Department.
This determination of no objection is based solely on the information as submitted and reviewed by the Department as of the date of this letter. No inference should be drawn from this determination beyond the scope of the Department's review as described herein.
7. Conditions and Qualifications
This letter and the Department's no-objections determination are subject to the following conditions and qualifications:
(a) This letter is based exclusively on the information provided in the FINRA Rule 5110 filing, including all amendments and supplements thereto, received by the Department as of the date hereof. The Department has relied upon the accuracy and completeness of the information submitted by Whitfield Barrow & Co., LLC and its counsel in making this determination. Any material inaccuracy, misrepresentation, or omission in the information provided could render this determination void or require additional review.
(b) Any material change in the terms and conditions of the Offering, including but not limited to (i) changes to the amount or structure of underwriting compensation, (ii) the addition of underwriters, co-managers, or selling group members not previously disclosed, (iii) modifications to the offering structure, including changes in the number of shares offered, the price range, or the nature of the securities being offered, (iv) changes to the lock-up arrangements, or (v) any new or revised affiliations or conflicts of interest, must be promptly reported to the FINRA Corporate Financing Department. Such changes may require additional review by the Department and, depending on the nature and materiality of the changes, could result in the modification or withdrawal of this no-objections determination.
(c) This letter does not constitute approval of the Offering or the Registration Statement and should not be construed as such. FINRA's role under Rule 5110 is limited to the review of the underwriting terms and arrangements and related matters; FINRA does not approve or disapprove of the Offering itself, the merits of the Company's business or securities, or the adequacy or accuracy of the disclosure contained in the Registration Statement or Prospectus.
(d) The issuance of this letter does not constitute FINRA's endorsement of the merits of the Offering or the accuracy or adequacy of the disclosure in the Registration Statement or Prospectus. The Department's review is limited in scope to the matters described herein, and the Department expresses no opinion regarding the investment merits of the Shares, the financial condition or prospects of the Company, or any other matter not specifically addressed in this letter.
(e) This letter is not to be used or cited for any purpose other than to confirm FINRA's no-objections determination in connection with the closing of the Offering. Whitfield Barrow & Co., LLC and the other participating underwriters may not reproduce, distribute, or reference this letter in any public filing, offering document, marketing material, or other communication, except to the extent required by applicable law or regulation or as specifically authorized in writing by the Department.
8. Contact Information and Filing Records
The Department's review of this filing was conducted by the undersigned analyst. Any questions regarding this letter, the Department's determination, or subsequent filings in connection with the Offering should be directed to the FINRA Corporate Financing Department at the contact information set forth below:
FINRA Staff Reviewer: Catherine R. Delacroix, Senior Analyst FINRA Corporate Financing Department 1735 K Street, NW Washington, DC 20006 Telephone: (202) 728-8274
Email: catherine.delacroix@finra.org
FINRA Corporate Financing File No.: CF-2024-00312
All future correspondence and filings relating to this matter should reference the FINRA Corporate Financing File Number set forth above. The Department requests that any amendments to the FINRA Rule 5110 filing or notifications of material changes be submitted electronically through the FINRA Corporate Financing filing system and that copies be provided to the undersigned reviewer at the contact information noted above.
Sincerely,
FINRA CORPORATE FINANCING DEPARTMENT
By: ________
Name: Catherine R. Delacroix
Title: Senior Analyst, Corporate Financing Department
Date: January 30, 2024
cc:
Arbor Health Technologies Inc. 275 Kendall Avenue, Suite 1400 Cambridge, MA 02142
Attention: Rachel Moynihan, General Counsel & Corporate Secretary
Calderwood & Harkness LLP 125 Broad Street New York, NY 10004
Attention: Theodore Langston, Esq. / Eric Johannsen, Esq.
Meridian Hale & Quivorn LLP 51 West 52nd Street New York, NY 10019
Attention: Graham Neville, Esq. / Kathryn Brennan, Esq.
| Role | Underwriter | FINRA CRD No. | Number of Shares (Base) | Percentage of Base Offering |
| Lead Left Bookrunner and Representative | Whitfield Barrow & Co., LLC | 7924 | 10,000,000 | 50.0% |
| Joint Bookrunner | Calloway Pierce Securities LLC | — | 6,000,000 | 30.0% |
| Joint Bookrunner | Velthorn Capital Partners Inc. | — | 2,400,000 | 12.0% |
| Co-Manager | Pemberton Wallis LLC | — | 1,600,000 | 8.0% |
| Total | 20,000,000 | 100.0% |