1010-00002 · Client 1010 · Registration Statement & Prospectus

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Filed Pursuant to Rule 424(b)(4) Registration Statement No. 333-276841 CIK: 0001987432 Filed: February 9, 2024

PROSPECTUS

Arbor Health Technologies Inc.

20,000,000 Shares of Common Stock

This is the initial public offering of shares of common stock of Arbor Health Technologies Inc., a Delaware corporation. Prior to this offering, there has been no public market for our common stock. All 20,000,000 shares of common stock offered hereby are being sold by the Company. There are no selling stockholders in this offering.

Our common stock has been approved for listing on the New York Stock Exchange, or the NYSE, under the ticker symbol "ARHT."

The initial public offering price is $20.00 per share.

The estimated price range set forth in our Registration Statement on Form S-1 filed with the Securities and Exchange Commission (the "SEC") on January 22, 2024 was $17.00 to $19.00 per share. The estimated price range was subsequently revised in Amendment No. 1 to our Registration Statement on Form S-1/A filed with the SEC on February 5, 2024 to $18.00 to $20.00 per share. The initial public offering price of $20.00 per share is at the top of the revised estimated price range and above the original estimated price range.

The following table sets forth the per share and total public offering price, the underwriting discount, and the proceeds to us before expenses:

We have granted the underwriters an option exercisable for 30 days from the date of this prospectus to purchase up to 3,000,000 additional shares of common stock from the Company at the public offering price, less the underwriting discount, solely to cover overallotments, if any.

Investing in our common stock involves a high degree of risk. See "Risk Factors" beginning on page 19 of this prospectus for a discussion of the risks you should consider before investing in our common stock.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The underwriters expect to deliver the shares of common stock to purchasers on or about February 13, 2024.

Whitfield Barrow & Co. Lead Left Bookrunner

Calloway Pierce Securities Velthorn Capital Partners Joint Bookrunner Joint Bookrunner

Pemberton Wallis Co-Manager

The date of this prospectus is February 8, 2024.

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PROSPECTUS SUMMARY

This summary highlights selected information contained elsewhere in this prospectus. This summary does not contain all of the information you should consider before investing in our common stock. You should read this entire prospectus carefully, including the sections titled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and the related notes included elsewhere in this prospectus, before making an investment decision. Some of the statements in this prospectus are forward-looking statements. See "Special Note Regarding Forward-Looking Statements."

Overview

Arbor Health Technologies Inc. is a leading provider of cloud-based clinical decision support and population health management solutions to hospital systems and physician groups across the United States. We deliver our solutions through our proprietary software-as-a-service ("SaaS") platform, the Arbor Platform, which integrates clinical decision support, population health management, revenue cycle management ("RCM") outsourcing, and real-time analytics into a comprehensive, unified technology solution designed to help healthcare providers improve clinical outcomes while reducing costs.

We were founded in 2014 by Dr. Nathaniel Rourke, a physician with over 15 years of experience at major academic medical centers, and Margaret "Meg" Tsujimoto, a computer scientist with a PhD in computer science and deep expertise in healthcare informatics. From our founding, our mission has been to harness the power of data and technology to transform the delivery of healthcare in the United States. We are a Delaware corporation and are headquartered at 275 Kendall Avenue, Suite 1400, Cambridge, Massachusetts 02142. Our Standard Industrial Classification (SIC) code is 7372 (Prepackaged Software).

As of December 31, 2023, we served over 1,200 hospital systems and physician groups across 42 states. Our customers range from large, multi-hospital integrated delivery networks and academic medical centers to mid-sized community health systems and multi-specialty physician groups. The breadth and depth of our customer relationships reflect the differentiated value that our platform delivers across diverse healthcare settings.

For the fiscal year ended December 31, 2023, we generated revenue of $612.4 million, an increase of 28% compared to revenue of $478.4 million for the fiscal year ended December 31, 2022. Our Adjusted EBITDA for the fiscal year ended December 31, 2023 was $138.7 million, representing an Adjusted EBITDA margin of approximately 22.6%. Our net income for the fiscal year ended December 31, 2023 was $41.3 million. We had approximately 3,400 employees as of December 31, 2023.

Our Platform and Services

The Arbor Platform is a cloud-based, highly scalable SaaS platform that provides an integrated suite of clinical decision support, population health management, revenue cycle management, and real-time analytics capabilities. Our platform is designed to be deployed rapidly across healthcare organizations of all sizes and to integrate seamlessly with existing electronic health record ("EHR") systems and other health IT infrastructure.

Clinical Decision Support. Our clinical decision support module leverages proprietary algorithms and clinical rules engines to provide real-time, evidence-based guidance to clinicians at the point of care. By integrating with EHR systems and clinical workflows, our solution helps clinicians make more informed decisions about diagnosis, treatment, and care management, ultimately improving patient outcomes and reducing unnecessary variation in care delivery.

Population Health Management. Our population health management capabilities enable healthcare organizations to aggregate and analyze patient data across diverse settings of care, identify high-risk patient populations, design and implement targeted intervention programs, and measure the effectiveness of population health initiatives. These capabilities are critical as the U.S. healthcare system continues its shift toward value-based care models.

Revenue Cycle Management Outsourcing. We provide comprehensive revenue cycle management outsourcing services, including coding, billing, claims management, denial management, and collections. Our RCM services leverage technology-enabled processes and analytics to help healthcare organizations optimize their revenue cycles, reduce administrative burden, and improve financial performance.

Real-Time Analytics. Our real-time analytics services provide healthcare organizations with actionable intelligence derived from their clinical, financial, and operational data. Our analytics platform enables customers to monitor key performance indicators, identify trends and opportunities for improvement, and make data-driven decisions across their enterprises.

Our Market Opportunity

We operate at the intersection of healthcare services and healthcare information technology, a large and rapidly growing market driven by several powerful secular trends. These trends include the ongoing digitization of the healthcare industry, the shift from fee-for-service to value-based care reimbursement models, increasing regulatory requirements related to quality measurement and reporting, growing consumer demand for transparency and convenience, and the imperative for healthcare organizations to reduce costs while improving clinical outcomes.

The adoption of clinical decision support systems, population health management tools, and technology-enabled RCM solutions continues to accelerate across the U.S. healthcare system. Our current operational footprint spans 42 states, and we believe there is significant opportunity to expand our geographic reach and deepen our penetration within existing markets.

Key Financial Highlights

The following table presents selected financial data for the periods indicated:

Our strong financial performance reflects the growing demand for our platform, the inherent scalability of our cloud-based SaaS business model, and the substantial recurring revenue characteristics of our customer contracts. We believe our financial profile positions us well for continued growth and profitability.

Our Competitive Strengths

We believe the following competitive strengths differentiate us in the marketplace and position us for long-term success:

Deep Clinical Expertise. Our Chief Medical Officer, Dr. Priya Subramanian, is a board-certified internist and clinical informaticist who leads a team of physicians, nurses, pharmacists, and clinical specialists embedded within our product development and customer success organizations. This deep clinical expertise informs every aspect of our platform and ensures that our solutions are grounded in evidence-based medicine and aligned with the real-world needs of clinicians.

Proprietary Technology Platform. Our platform was architected from the ground up by our Co-Founder and Chief Technology Officer, Margaret "Meg" Tsujimoto, who holds a PhD in computer science. Our cloud-native architecture enables rapid deployment, seamless scalability, and continuous innovation. We believe our technology platform represents a significant competitive moat that is difficult for competitors to replicate.

Broad and Diverse Customer Base. We serve over 1,200 hospital systems and physician groups across 42 states, providing us with a broad and diverse customer base that mitigates concentration risk and provides significant opportunities for cross-selling and upselling. Our customers represent a cross-section of the U.S. healthcare delivery system, from large academic medical centers to mid-sized community hospitals and multi-specialty physician groups.

Integrated Platform Approach. We provide an integrated platform that combines clinical decision support, population health management, RCM outsourcing, and real-time analytics in a single, unified solution. We believe this integrated approach is highly differentiated and provides significant value to our customers by enabling them to break down data silos, improve workflows, and achieve better outcomes across their organizations.

Experienced Management Team. Our management team combines deep domain expertise in healthcare, technology, and business operations. Our leadership has a proven track record of driving growth, building category-defining products, and creating value for stakeholders.

Our Growth Strategies

We intend to grow our business by pursuing the following strategies:

Expand Our Customer Base. We plan to continue investing in our sales and marketing organization to acquire new customers across the United States, including in the eight states in which we do not currently have operations.

Penetrate Existing Customer Accounts. We see significant opportunity to expand our relationships with existing customers by selling additional modules and services across our integrated platform. Many of our current customers use only a subset of our available solutions, presenting a substantial cross-selling opportunity.

Invest in Product Development and R&D. We intend to continue investing in research and development to enhance our existing platform capabilities, develop new modules and features, and leverage emerging technologies such as artificial intelligence and machine learning to deliver even greater value to our customers.

Pursue Strategic Acquisitions. We plan to selectively pursue acquisitions of complementary businesses, technologies, and teams that can accelerate our growth, expand our capabilities, and enhance our competitive position.

Expand into New Geographies and Market Segments. We intend to expand our geographic reach and enter new market segments, including post-acute care, behavioral health, and other care settings where our platform can deliver meaningful value.

Summary of the Offering

The following is a summary of the principal terms of this offering:

The number of shares of our common stock to be outstanding after this offering is based on 80,000,000 shares of our common stock outstanding as of December 31, 2023, and includes the 20,000,000 shares of common stock offered in the base offering and the 3,000,000 shares of common stock subject to the overallotment option (assuming full exercise thereof), for a total of 103,000,000 shares of common stock outstanding after this offering. This number does not include:

• 11,200,000 shares of common stock issuable upon the exercise of stock options outstanding under our 2014 Stock Incentive Plan, at a weighted average exercise price of $3.25 per share, of which options to purchase 8,400,000 shares were vested as of December 31, 2023;

• 10,300,000 shares of common stock reserved for future issuance under our 2024 Equity Incentive Plan, which was adopted by our Board of Directors on January 15, 2024 and will become effective upon the completion of this offering; and

• 2,060,000 shares of common stock reserved for future issuance under our 2024 Employee Stock Purchase Plan, which was adopted by our Board of Directors on January 15, 2024 and will become effective upon the completion of this offering.

Summary Consolidated Financial Data

The following tables present summary consolidated financial data for the periods and as of the dates indicated. The summary consolidated statements of operations data for the fiscal years ended December 31, 2023 and December 31, 2022, and the summary consolidated balance sheet data as of December 31, 2023, have been derived from our audited consolidated financial statements included elsewhere in this prospectus. You should read the following summary consolidated financial data together with our consolidated financial statements and the related notes, as well as the sections titled "Selected Consolidated Financial Data" and "Management's Discussion and Analysis of Financial Condition and Results of Operations," each included elsewhere in this prospectus. Our historical results are not necessarily indicative of the results that may be expected for any future period.

Summary Consolidated Statements of Operations Data:

Summary Non-GAAP Financial Data:

Adjusted EBITDA is a non-GAAP financial measure. See "Selected Consolidated Financial Data" for a reconciliation of Adjusted EBITDA to net income, the most directly comparable financial measure calculated in accordance with U.S. generally accepted accounting principles ("GAAP"), and a discussion of why we believe Adjusted EBITDA is useful to investors.

Corporate Information

We were incorporated in the State of Delaware in 2014. Our principal executive offices are located at 275 Kendall Avenue, Suite 1400, Cambridge, Massachusetts 02142, and our telephone number is (617) 555-0142. Our website address is www.arborhealthtech.com. The information contained on, or that can be accessed through, our website is not incorporated by reference into this prospectus, and you should not consider any information contained on, or that can be accessed through, our website as part of this prospectus or in deciding whether to purchase our common stock. We have included our website address in this prospectus solely as an inactive textual reference.

Our federal employer identification number (EIN) is 47-3891205. Our registered agent in the State of Delaware is National Registered Agents of Delaware, Inc., 160 Greentree Drive, Suite 101, Dover, Delaware 19904.

"Arbor Health," "Arbor Health Technologies," "Arbor Platform," the Arbor tree leaf logo, and our other registered and common law trademarks, service marks, and trade names appearing in this prospectus are the property of Arbor Health Technologies Inc. Other trademarks and trade names referred to in this prospectus are the property of their respective owners. Solely for convenience, trademarks and trade names referred to in this prospectus may appear without the ® or ™ symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights, or the rights of the applicable licensor, to these trademarks and trade names.

RISK FACTORS

Investing in our common stock involves a high degree of risk. You should carefully consider the following risk factors, as well as all of the other information contained in this prospectus, including our consolidated financial statements and the related notes, before deciding whether to invest in our common stock. The occurrence of any of the following risks could materially and adversely affect our business, financial condition, results of operations, and prospects. In such case, the trading price of our common stock could decline, and you may lose all or part of your investment. The risks described below are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially and adversely affect our business, financial condition, results of operations, and prospects.

Risks Related to Our Business and Industry

Our growth depends on the continued adoption of cloud-based clinical decision support and population health management solutions by hospital systems and physician groups, and any slowdown in this adoption could adversely affect our business.

Our business model is predicated on the continued adoption and expansion of cloud-based clinical decision support and population health management solutions across the U.S. healthcare system. While we believe that these solutions are becoming increasingly critical to the efficient and effective delivery of healthcare, there can be no assurance that the market for these solutions will continue to grow at historical rates, or at all. Hospital systems and physician groups may be reluctant to migrate from legacy on-premise systems to cloud-based solutions due to concerns about data security, system integration complexity, regulatory compliance, or the perceived risks of relying on third-party technology platforms. In addition, budget constraints, competing capital allocation priorities, or changes in healthcare reimbursement policies could cause potential customers to delay or forgo purchasing decisions. If the market for cloud-based clinical decision support and population health management solutions does not continue to grow, or grows more slowly than we expect, our revenue growth could slow, and our business, financial condition, and results of operations could be materially and adversely affected.

We derive a significant portion of our revenue from hospital systems and physician groups, and any concentration of our revenue among a limited number of customers could expose us to significant revenue loss if any such customer were to terminate, reduce, or fail to renew its contract with us.

Although we serve over 1,200 hospital systems and physician groups across 42 states, certain of our larger customers account for a disproportionate share of our total revenue. If any of our significant customers were to terminate their contracts with us, significantly reduce their use of our platform and services, fail to renew their agreements, or experience financial distress, our revenue could decline materially. Additionally, consolidation among healthcare providers could result in the loss of existing customers or increased pricing pressure. We may be unable to replace lost revenue from any significant customer on a timely basis, or at all, which could materially and adversely affect our business, financial condition, and results of operations.

We face significant competition in the healthcare IT and SaaS markets, and our inability to compete effectively could limit our ability to attract and retain customers.

The markets in which we operate are competitive, rapidly evolving, and subject to technological change. We compete with a range of companies, including large, diversified healthcare IT companies with significantly greater financial, technical, marketing, and other resources than we have; specialized clinical decision support and population health management vendors; EHR vendors that are developing or acquiring clinical decision support and analytics capabilities; management consulting firms with healthcare IT practices; and healthcare systems that develop their own internal solutions. Some of our competitors may be willing to reduce prices significantly or bundle their products with other products and services to increase their market share, which could put downward pressure on the prices we are able to charge for our solutions. If we are unable to compete effectively on the basis of price, product capabilities, customer service, brand recognition, or other factors, we may lose existing customers or fail to attract new customers, which could materially and adversely affect our business, financial condition, and results of operations.

Our business is subject to extensive and evolving healthcare regulation, including HIPAA, HITECH, and state privacy laws, and failure to comply with these regulations could result in significant penalties, reputational harm, and loss of customer confidence.

The healthcare industry is one of the most heavily regulated industries in the United States. We are subject to a wide range of federal and state laws and regulations governing, among other things, the privacy and security of patient health information, healthcare fraud and abuse, data protection, and information technology. These include the Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act ("HITECH"), and their implementing regulations (collectively, "HIPAA"), as well as various state privacy and data security laws, many of which are more restrictive than their federal counterparts and impose different and sometimes conflicting obligations. Our failure to comply with these laws and regulations could result in significant civil and criminal penalties, loss of customer confidence, and reputational harm, any of which could materially and adversely affect our business.

We are subject to cybersecurity risks and data breach exposure, and a security incident could result in significant liability, reputational harm, and loss of customer trust.

Our platform processes, stores, and transmits significant volumes of sensitive data, including protected health information ("PHI"), personally identifiable information ("PII"), and proprietary business data. Despite the security measures we have implemented, our information technology systems and infrastructure may be vulnerable to cyberattacks, including hacking, ransomware, phishing, social engineering, computer viruses, and other malicious activities by internal or external actors. A successful cyberattack or data breach could result in unauthorized access to, acquisition of, or disclosure of sensitive data; disruption of our operations; significant legal liability under HIPAA, state privacy laws, and other regulations; costly litigation and regulatory investigations; and loss of customer trust and reputational harm. Any of these consequences could materially and adversely affect our business, financial condition, and results of operations.

We depend on the continued services and performance of our key personnel, including Dr. Nathaniel Rourke and Margaret Tsujimoto, and the loss of one or more of these individuals could adversely affect our business.

Our success depends in significant part on the continued services and contributions of our key personnel, particularly Dr. Nathaniel Rourke, our Co-Founder, Chairman, and Chief Executive Officer, and Margaret "Meg" Tsujimoto, our Co-Founder and Chief Technology Officer. Dr. Rourke and Ms. Tsujimoto are responsible for our strategic vision, product development, and customer relationships, and their loss could significantly disrupt our operations and strategic direction. In addition, we depend on the continued services of our other executive officers, including our Chief Financial Officer, David Halderman, our General Counsel, Rachel Moynihan, and our Chief Medical Officer, Dr. Priya Subramanian. Competition for qualified executives and technical professionals in the healthcare IT industry is intense, and we may be unable to attract and retain the key personnel we need to execute our business strategy. The loss of any of our key personnel could materially and adversely affect our business.

We may face challenges in successfully integrating businesses, technologies, or teams that we acquire, and any failure to do so could disrupt our business and adversely affect our financial condition and results of operations.

As part of our growth strategy, we intend to pursue strategic acquisitions of businesses, technologies, and teams that we believe are complementary to our platform and operations. Acquisitions involve numerous risks, including difficulties in integrating the acquired business's operations, technology, and personnel; potential disruption of our ongoing business and diversion of management attention; the risk of assuming unknown liabilities; potential impairment of acquired intangible assets and goodwill; and the possibility that the expected benefits of the acquisition may not be realized. We have limited experience with acquisitions, and any failure to successfully identify, complete, or integrate acquisitions could materially and adversely affect our business, financial condition, and results of operations.

Our revenue growth rate of 28% in FY2023 may not be sustainable, and investors should not rely on our historical growth rates as indicative of future performance.

Our revenue grew 28% year-over-year from $478.4 million in FY2022 to $612.4 million in FY2023. While we are investing to sustain strong growth, our revenue growth rate may decline in future periods as a result of a number of factors, including increasing market saturation, competitive pressures, customer churn, macroeconomic conditions, and the natural deceleration of growth as our revenue base increases. We also may not be able to sustain the level of investment in sales and marketing, research and development, and other areas necessary to maintain our current growth rate. If our revenue growth slows, investors' perceptions of our business may be adversely affected, which could cause the market price of our common stock to decline.

Risks Related to Our Financial Condition

We have a history of significant expenditures on research and development, and we may incur operating losses in future periods.

We have invested, and intend to continue to invest, significant resources in research and development to enhance our platform, develop new solutions, and maintain our technological leadership. Our research and development expenses may increase in future periods as we expand our product capabilities, invest in artificial intelligence and machine learning, and hire additional engineering and product development personnel. There can be no assurance that our investments in research and development will result in commercially successful products or generate a return on investment. If our revenue does not grow sufficiently to offset increases in operating expenses, including research and development expenses, we may incur operating losses in future periods, which could materially and adversely affect our financial condition and the market price of our common stock.

We have outstanding indebtedness under our Keypoint National Bank revolving credit facility, and our credit agreement contains financial covenants and other restrictions that may limit our operational and financial flexibility.

We are a party to a senior secured revolving credit facility with Keypoint National Bank, N.A., as administrative agent, and Stonemill Capital Bank, as syndicate member, providing for aggregate revolving commitments of $150 million (the "Credit Facility"). As of the most recent practicable date, approximately $65 million was drawn under the Credit Facility. The Credit Facility bears interest at a rate per annum equal to SOFR plus 200 basis points, and matures on March 15, 2027. We intend to use a portion of the net proceeds of this offering to repay the outstanding balance under the Credit Facility. See "Use of Proceeds."

The Credit Facility requires us to maintain compliance with certain financial covenants, including a Total Net Leverage Ratio of not more than 3.50 to 1.00 and a Fixed Charge Coverage Ratio of at least 1.25 to 1.00. The Credit Facility also contains negative covenants that restrict our ability to incur additional indebtedness, grant liens, make certain investments, pay dividends and make other restricted payments, enter into transactions with affiliates, and engage in certain mergers and consolidations. Our failure to comply with these covenants could result in an event of default, which could cause the outstanding indebtedness to become immediately due and payable and could materially and adversely affect our financial condition and liquidity.

Future issuances of shares of our common stock, including under our equity compensation plans, may result in significant dilution to investors purchasing shares in this offering.

We have reserved significant numbers of shares for issuance under our equity compensation plans. As of the date of this prospectus, there were 11,200,000 shares of common stock issuable upon the exercise of outstanding stock options under our 2014 Stock Incentive Plan, at a weighted average exercise price of $3.25 per share. In addition, we have reserved 10,300,000 shares for future issuance under our 2024 Equity Incentive Plan and 2,060,000 shares for future issuance under our 2024 Employee Stock Purchase Plan. The issuance of these shares, or the exercise of outstanding options, will dilute the ownership interest of investors purchasing shares in this offering. In addition, the 2024 Equity Incentive Plan includes an annual evergreen provision that automatically increases the number of shares reserved under the plan by 3% of the total number of shares of our common stock outstanding on the last day of the immediately preceding fiscal year. We expect to make significant grants under these plans to attract and retain employees, and such grants will result in additional dilution.

Risks Related to Our Technology

If our platform experiences performance issues, service outages, or downtime, our customer relationships and our reputation could be harmed.

Our customers depend on our platform for critical clinical, financial, and operational workflows. Any significant disruption in the availability or performance of our platform, whether due to software bugs, hardware failures, power outages, natural disasters, cyberattacks, or other causes, could result in the loss of customer data, disruption of clinical and business processes, harm to patient safety, and damage to our reputation. Our service level agreements with customers typically provide for credits or other remedies in the event of material service outages, and significant or prolonged outages could result in customer losses, claims for damages, and other liabilities that could materially and adversely affect our business.

We depend on third-party cloud infrastructure providers to host our platform, and any disruption in the services provided by these third parties could adversely affect our business.

We rely on third-party cloud infrastructure providers, including Ridgeway Industries ("Meridian Technologies") and Crestline Systems, to host our platform and deliver our solutions to customers. We do not control the operation of these third-party facilities, and they may be subject to damage or interruption from natural disasters, cyberattacks, power outages, telecommunications failures, and similar events. Any disruption in or degradation of the services provided by our third-party cloud infrastructure providers could result in prolonged outages or performance issues for our customers, which could harm our reputation, cause customer losses, and materially and adversely affect our business and results of operations.

Our future success depends on our ability to continue to invest in technology and innovation, and any failure to keep pace with technological change could render our platform less competitive.

The healthcare IT and SaaS markets are characterized by rapid technological change, evolving industry standards, and frequent introductions of new products and features. Our future success depends on our ability to continue to innovate, develop new features and capabilities, and adapt our platform to emerging technologies such as artificial intelligence, machine learning, and natural language processing. If we are unable to anticipate or respond to technological developments in a timely and cost-effective manner, our platform could become less competitive, and our business, financial condition, and results of operations could be materially and adversely affected.

Our ability to protect our intellectual property is important to our business, and any failure to adequately protect our intellectual property rights could impair our competitive position.

Our success depends in part on our ability to protect our proprietary technology, trade secrets, and know-how. We rely on a combination of patents, trademarks, copyrights, trade secret laws, confidentiality agreements, and other contractual provisions to protect our intellectual property. However, these protections may not be sufficient to prevent unauthorized use or misappropriation of our intellectual property by competitors or other third parties. Additionally, we may be subject to claims that our products or services infringe, misappropriate, or otherwise violate the intellectual property rights of others, which could result in costly litigation, distract management attention, and require us to enter into licensing agreements, modify our products, or cease using certain technology. Any of these outcomes could materially and adversely affect our business.

Risks Related to Government Regulation

We are subject to complex and evolving healthcare regulatory requirements, and changes in laws, regulations, or enforcement could adversely affect our business.

In addition to HIPAA and HITECH, our business is subject to various federal and state healthcare laws and regulations, including the federal physician self-referral prohibition (the "Stark Law"), the federal Anti-Kickback Statute, the federal False Claims Act, and analogous state laws. These laws are broad and complex, and their application to our business activities is not always clear. If our activities were found to violate any of these laws, we could be subject to significant civil and criminal penalties, including fines, exclusion from federal healthcare programs, and imprisonment, any of which could materially and adversely affect our business, financial condition, and results of operations.

We are subject to state-level data privacy and security regulations that are complex, evolving, and sometimes conflicting.

In addition to HIPAA, we are subject to a patchwork of state data privacy and security laws, including the California Consumer Privacy Act (as amended by the California Privacy Rights Act), the Virginia Consumer Data Protection Act, the Colorado Privacy Act, and similar laws in other states where we operate. These state laws impose varying and sometimes conflicting obligations regarding the collection, use, disclosure, and protection of personal information, and require us to maintain comprehensive data privacy and security programs. Compliance with these laws is complex and costly, and any failure to comply could result in regulatory enforcement actions, fines, and reputational harm.

Changes in healthcare reimbursement policies could reduce demand for our solutions.

Our customers — hospital systems and physician groups — operate in an environment of constantly evolving healthcare reimbursement policies established by the Centers for Medicare & Medicaid Services ("CMS"), commercial payers, and state Medicaid programs. Changes in reimbursement rates, payment methodologies, or coverage policies could adversely affect the financial health of our customers, which in turn could reduce demand for our solutions, increase customer churn, or pressure the prices we are able to charge. We cannot predict the timing, nature, or impact of future changes in healthcare reimbursement policies.

Certain features of our platform may be subject to regulation by the U.S. Food and Drug Administration, and any requirement to obtain FDA clearance or approval could delay or limit our ability to offer certain features.

Certain clinical decision support features of our platform may be subject to regulation by the U.S. Food and Drug Administration ("FDA") as medical devices under the Federal Food, Drug, and Cosmetic Act. The 21st Century Cures Act exempted certain clinical decision support software from FDA regulation, but the scope of this exemption is subject to ongoing interpretation and rulemaking by the FDA. If the FDA were to determine that certain features of our platform constitute medical devices subject to FDA regulation, we could be required to obtain FDA clearance or approval before offering such features, which could be costly, time-consuming, and uncertain. Additionally, we could be subject to FDA enforcement actions, recalls, or other remedies, any of which could materially and adversely affect our business.

Risks Related to Our Organizational Structure and Corporate Governance

Following this offering, Brindoval Trelvon Partners and Ridgeline Growth Equity will collectively hold approximately 42.72% of our outstanding common stock and will have significant influence over corporate matters.

Upon completion of this offering (assuming full exercise of the overallotment option), Brindoval Trelvon Partners Fund IV, L.P. will beneficially own approximately 28,000,000 shares, or 27.18%, of our outstanding common stock, and Ridgeline Growth Equity Fund III, LLC will beneficially own approximately 16,000,000 shares, or 15.53%, of our outstanding common stock. Together, these pre-IPO investors will collectively hold approximately 42.72% of our outstanding common stock. As a result, these investors will have significant influence over the election and removal of our directors, the approval of mergers, acquisitions, and other business combinations, and the outcome of other matters submitted to a vote of our stockholders. The interests of these investors may not always be aligned with the interests of our other stockholders, and their concentrated ownership could have the effect of delaying, deferring, or preventing a change in control of our Company that might otherwise be beneficial to our other stockholders.

Our classified board structure and other anti-takeover provisions in our Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws may discourage or prevent takeover attempts that stockholders may consider favorable.

Our Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws contain a number of provisions that may have the effect of delaying, deferring, or preventing a change in control of our Company that stockholders may consider favorable. These provisions include:

• a classified board of directors divided into three classes with staggered three-year terms, so that only approximately one-third of directors are elected each year;

• a prohibition on stockholder action by written consent, requiring all stockholder actions to be taken at a duly called meeting of stockholders;

• a supermajority vote requirement (66⅔%) to amend our bylaws;

• the authorization of 50,000,000 shares of "blank check" preferred stock, which our Board of Directors may issue in one or more series with such designations, preferences, and rights as the Board may determine without stockholder approval;

• an exclusive forum provision designating the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings;

• advance notice requirements for stockholder nominations and proposals (requiring between 90 and 120 days' advance notice); and

• proxy access provisions.

In addition, we have not opted out of Section 203 of the Delaware General Corporation Law ("DGCL"), which restricts certain business combinations with interested stockholders (i.e., stockholders who beneficially own 15% or more of the outstanding voting stock) for a period of three years following the time the stockholder became an interested stockholder, unless the business combination or the transaction which resulted in the stockholder becoming an interested stockholder is approved by the Board of Directors prior to such time or certain other conditions are met. These anti-takeover provisions could limit the price that investors are willing to pay in the future for shares of our common stock and could deprive stockholders of the opportunity to receive a premium for their shares.

Risks Related to This Offering and Ownership of Our Common Stock

There has been no prior public market for our common stock, and an active trading market may not develop or be sustained.

Prior to this offering, there has been no public market for our common stock. Although our common stock has been approved for listing on the NYSE under the ticker symbol "ARHT," we cannot assure you that an active trading market for our common stock will develop upon the completion of this offering, or, if developed, that such market will be sustained. If an active and liquid trading market does not develop or is not sustained, you may have difficulty selling your shares at or above the initial public offering price, or at all.

The initial public offering price of $20.00 per share may not be indicative of the market price of our common stock after this offering.

The initial public offering price of $20.00 per share was determined by negotiation among us and the representatives of the underwriters and may not be indicative of the market price of our common stock after this offering. Our post-offering market capitalization at the initial public offering price is approximately $2,060,000,000 (based on 103,000,000 shares of common stock outstanding after this offering, assuming full exercise of the overallotment option), which implies a multiple of approximately 3.36 times our FY2023 revenue of $612.4 million and approximately 14.85 times our FY2023 Adjusted EBITDA of $138.7 million. The market price of our common stock may fluctuate significantly in response to a number of factors, many of which are beyond our control, and investors may not be able to resell their shares at or above the initial public offering price.

Upon the expiration of the 180-day lock-up period, a substantial number of shares will become eligible for sale, which could depress the market price of our common stock.

Approximately 80,000,000 shares of our common stock held by our directors, executive officers, and holders of 1% or more of our pre-IPO shares are subject to 180-day lock-up agreements entered into in connection with this offering. These lock-up agreements are expected to expire on August 6, 2024. Upon the expiration of the lock-up period (or if Whitfield Barrow & Co., LLC, as the representative of the underwriters, releases some or all of the locked-up parties from their lock-up restrictions), a substantial number of additional shares will become eligible for sale in the public market. In addition, Brindoval Trelvon Partners Fund IV, L.P. and Ridgeline Growth Equity Fund III, LLC hold demand registration rights and piggyback registration rights under our Amended and Restated Registration Rights Agreement. The sale or potential sale of a significant number of shares could cause the market price of our common stock to decline significantly.

The market price of our common stock may be volatile, and you could lose all or part of your investment.

The market price of our common stock may fluctuate significantly in response to various factors, including our quarterly or annual financial results; changes in financial estimates or recommendations by securities analysts; changes in the healthcare regulatory environment; announcements by us or our competitors of new products, significant contracts, acquisitions, or strategic alliances; general market conditions; and other factors described elsewhere in these "Risk Factors." In addition, the stock market in general, and the market for technology and healthcare IT companies in particular, has experienced significant price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of the affected companies. These market and industry fluctuations may materially and adversely affect the market price of our common stock regardless of our actual operating performance.

Future issuances of our common stock or securities convertible into or exchangeable for common stock could dilute your ownership and adversely affect the market price of our common stock.

In addition to the shares reserved for issuance under our equity compensation plans as described above, we may issue additional shares of common stock or securities convertible into or exchangeable for common stock in the future for a number of reasons, including to finance our operations, to fund acquisitions, in connection with strategic transactions, or to compensate employees and directors. Any such future issuances could dilute the ownership interest of investors who purchase shares in this offering and could adversely affect the market price of our common stock.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). All statements other than statements of historical fact contained in this prospectus, including statements regarding our future results of operations and financial position, our business strategy and plans, our market opportunity, competitive position, industry and regulatory trends, and our objectives for future operations, are forward-looking statements. In some cases, you can identify forward-looking statements because they contain words such as "anticipate," "believe," "contemplate," "continue," "could," "estimate," "expect," "intend," "may," "plan," "potential," "predict," "project," "seek," "should," "target," "will," "would," or the negative of these words or similar terms or expressions.

These forward-looking statements are based on our current expectations and assumptions about future events and are subject to a number of risks, uncertainties, and assumptions, including those described in "Risk Factors" and elsewhere in this prospectus. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for us to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make.

In light of these risks, uncertainties, and assumptions, the forward-looking events and circumstances discussed in this prospectus may not occur, and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. We caution you not to rely on forward-looking statements as predictions of future events.

We note that the safe harbor provisions under the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act, and Section 21E of the Exchange Act do not apply to forward-looking statements made in connection with an initial public offering pursuant to Section 27A(b)(2)(D) of the Securities Act and Section 21E(b)(2)(D) of the Exchange Act.

We undertake no obligation, and we expressly disclaim any obligation, to update, alter, or otherwise revise or supplement any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law. You should read this prospectus and the documents that we have filed as exhibits to the registration statement of which this prospectus forms a part completely and with the understanding that our actual future results may be materially different from what we expect.

MARKET AND INDUSTRY DATA

This prospectus contains statistical data, estimates, and forecasts that are based on independent industry publications or reports, other publicly available information, and information from internal company sources. Some data are also based on our good faith estimates, which are derived from our review of internal surveys and data, as well as independent sources. Although we believe these sources are reliable, we have not independently verified the accuracy or completeness of the data obtained from these sources, and the data involve a number of assumptions and limitations. In addition, projections, assumptions, and estimates of our future performance and the future performance of the markets in which we operate are necessarily subject to a high degree of uncertainty and risk due to range factors, including those described in "Risk Factors" and elsewhere in this prospectus.

Certain market and industry data included in this prospectus were obtained from third-party industry research reports, publicly available information, and government data. Industry publications and other reports generally state that the information contained therein has been obtained from sources believed to be reliable, but that the accuracy and completeness of such information is not guaranteed. Forecasts and other forward-looking information obtained from these sources are subject to the same qualifications and additional uncertainties regarding the other forward-looking statements in this prospectus. These forecasts and other forward-looking information are subject to uncertainty and risk due to range factors, including those described under "Risk Factors." These and other factors could cause results to differ materially from those expressed in the forecasts and estimates from independent third parties and us.

USE OF PROCEEDS

Estimated Net Proceeds

We estimate that the net proceeds to us from this offering will be approximately $371.8 million (or approximately $428.2 million if the underwriters exercise their overallotment option in full), after deducting the underwriting discount and estimated offering expenses payable by us. This estimate is based on the initial public offering price of $20.00 per share.

The following table sets forth our calculation of estimated net proceeds:

We estimate that we will incur approximately $4.2 million in offering expenses (excluding the underwriting discount) in connection with this offering, consisting of the following:

A $1.00 increase (decrease) in the assumed initial public offering price of $20.00 per share would increase (decrease) the net proceeds to us from this offering by approximately $18.8 million (or approximately $21.6 million if the underwriters exercise their overallotment option in full), assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the underwriting discount.

Intended Use of Proceeds

We intend to use the net proceeds from this offering as follows:

• approximately $65,000,000 to repay the outstanding balance on our senior secured revolving credit facility with Keypoint National Bank, N.A., as administrative agent, and Stonemill Capital Bank, as syndicate member. The Credit Facility was entered into on March 15, 2022, and was amended on January 18, 2024 pursuant to a First Amendment to Credit Agreement, which, among other things, amended the change of control definition and added a permitted equity issuance carve-out in connection with this offering. The Credit Facility provides for aggregate revolving commitments of $150 million, matures on March 15, 2027, and bears interest at a rate per annum equal to SOFR plus 200 basis points. As of the most recent practicable date, approximately $65 million was drawn under the Credit Facility. The proceeds of borrowings under the Credit Facility were used primarily for working capital, capital expenditures, and general corporate purposes;

• approximately $120,000,000 for product development and research and development investment, including the expansion of our engineering and data science teams, the development of new platform modules and features, and investment in artificial intelligence and machine learning capabilities;

• approximately $100,000,000 for potential acquisitions and strategic investments, including acquisitions of complementary businesses, technologies, and teams that can accelerate our growth and enhance our competitive position; and

• the balance for general corporate purposes and working capital, including sales and marketing, general and administrative expenses, and capital expenditures.

We will retain broad discretion over the use of the net proceeds from this offering. Pending the uses described above, we intend to invest the net proceeds in short-term, investment-grade, interest-bearing securities, such as money market funds, certificates of deposit, commercial paper, and guaranteed obligations of the U.S. government.

The amount and timing of our actual expenditures and the allocation of net proceeds to the uses described above will depend on a number of factors, including the pace of our revenue growth, the success of our product development and commercialization efforts, the availability and attractiveness of potential acquisition targets, and other factors described in "Risk Factors."

DIVIDEND POLICY

We have never declared or paid cash dividends on our common stock. We do not currently intend to pay cash dividends on our common stock in the foreseeable future. We currently intend to retain all available funds and future earnings, if any, for the development and growth of our business. In addition, our senior secured revolving credit facility with Keypoint National Bank, N.A. contains certain restrictions on the payment of dividends and distributions on our common stock.

Any future determination regarding the declaration and payment of dividends, if any, will be at the discretion of our Board of Directors and will depend on then-existing conditions, including our financial condition, results of operations, contractual restrictions, capital requirements, business prospects, and other factors that our Board of Directors may deem relevant. Investors should not purchase our common stock with the expectation of receiving cash dividends.

CAPITALIZATION

The following table sets forth our capitalization as of December 31, 2023:

• on an actual basis; and

• on a pro forma as adjusted basis, giving effect to (i) the issuance and sale of 20,000,000 shares of our common stock in this offering at the initial public offering price of $20.00 per share, (ii) the issuance and sale of 3,000,000 additional shares of our common stock upon full exercise of the underwriters' overallotment option at the initial public offering price of $20.00 per share, (iii) the receipt of approximately $428.2 million of net proceeds therefrom (after deducting the underwriting discount and estimated offering expenses), and (iv) the application of approximately $65 million of such net proceeds to repay the outstanding balance on our revolving credit facility with Keypoint National Bank, N.A.

You should read this table together with "Use of Proceeds," "Selected Consolidated Financial Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations," and our consolidated financial statements and the related notes included elsewhere in this prospectus.

Capitalization Table (in thousands, except share and per share data)

(1) Represents actual cash and cash equivalents as of December 31, 2023, as set forth in our audited consolidated financial statements included elsewhere in this prospectus.

(2) Pro forma as adjusted to reflect receipt of approximately $428.2 million of net proceeds from this offering (including full exercise of the overallotment option) after deducting the underwriting discount and estimated offering expenses, and the application of approximately $65 million of such net proceeds to repay the outstanding balance on the Keypoint National Bank revolving credit facility.

(3) As derived from our audited consolidated financial statements included elsewhere in this prospectus.

(4) Adjusted to reflect the receipt of net proceeds from this offering and the application of proceeds as described in "Use of Proceeds."

The number of shares of our common stock outstanding in the table above is based on 80,000,000 shares of our common stock outstanding as of December 31, 2023, and excludes:

• 11,200,000 shares of common stock issuable upon the exercise of outstanding stock options under our 2014 Stock Incentive Plan, at a weighted average exercise price of $3.25 per share, of which options to purchase 8,400,000 shares were vested as of December 31, 2023;

DILUTION

If you invest in our common stock in this offering, your ownership interest will be diluted to the extent of the difference between the initial public offering price per share and the pro forma net tangible book value per share after this offering.

Net Tangible Book Value Per Share

Our historical net tangible book value is the amount of our total tangible assets less our total liabilities. As of December 31, 2023, our historical net tangible book value was approximately $286.4 million, or approximately $3.58 per share of common stock (based on 80,000,000 shares of common stock outstanding as of December 31, 2023).

After giving effect to (i) the sale of 20,000,000 shares of our common stock in this offering at the initial public offering price of $20.00 per share, (ii) the sale of 3,000,000 additional shares upon full exercise of the underwriters' overallotment option at the initial public offering price of $20.00 per share, (iii) the receipt of approximately $428.2 million in net proceeds therefrom, and (iv) the application of approximately $65 million of net proceeds to repay the outstanding balance on our revolving credit facility, our pro forma as adjusted net tangible book value as of December 31, 2023 would have been approximately $649.6 million, or approximately $6.31 per share of common stock (based on 103,000,000 shares of common stock outstanding after this offering, assuming full exercise of the overallotment option).

This represents a

Filed Pursuant to Rule 424(b)(4) Registration Statement No. 333-276841 CIK: 0001987432 Filed: February 9, 2024
PROSPECTUS
Arbor Health Technologies Inc.
20,000,000 Shares of Common Stock
This is the initial public offering of shares of common stock of Arbor Health Technologies Inc., a Delaware corporation. Prior to this offering, there has been no public market for our common stock. All 20,000,000 shares of common stock offered hereby are being sold by the Company. There are no selling stockholders in this offering.
Our common stock has been approved for listing on the New York Stock Exchange, or the NYSE, under the ticker symbol "ARHT."
The initial public offering price is $20.00 per share.
The estimated price range set forth in our Registration Statement on Form S-1 filed with the Securities and Exchange Commission (the "SEC") on January 22, 2024 was $17.00 to $19.00 per share. The estimated price range was subsequently revised in Amendment No. 1 to our Registration Statement on Form S-1/A filed with the SEC on February 5, 2024 to $18.00 to $20.00 per share. The initial public offering price of $20.00 per share is at the top of the revised estimated price range and above the original estimated price range.
The following table sets forth the per share and total public offering price, the underwriting discount, and the proceeds to us before expenses:
We have granted the underwriters an option exercisable for 30 days from the date of this prospectus to purchase up to 3,000,000 additional shares of common stock from the Company at the public offering price, less the underwriting discount, solely to cover overallotments, if any.
Investing in our common stock involves a high degree of risk. See "Risk Factors" beginning on page 19 of this prospectus for a discussion of the risks you should consider before investing in our common stock.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
The underwriters expect to deliver the shares of common stock to purchasers on or about February 13, 2024.
Whitfield Barrow & Co. Lead Left Bookrunner
Calloway Pierce Securities          Velthorn Capital Partners Joint Bookrunner                                      Joint Bookrunner
Pemberton Wallis Co-Manager
The date of this prospectus is February 8, 2024.
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PROSPECTUS SUMMARY
This summary highlights selected information contained elsewhere in this prospectus. This summary does not contain all of the information you should consider before investing in our common stock. You should read this entire prospectus carefully, including the sections titled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and the related notes included elsewhere in this prospectus, before making an investment decision. Some of the statements in this prospectus are forward-looking statements. See "Special Note Regarding Forward-Looking Statements."
Overview
Arbor Health Technologies Inc. is a leading provider of cloud-based clinical decision support and population health management solutions to hospital systems and physician groups across the United States. We deliver our solutions through our proprietary software-as-a-service ("SaaS") platform, the Arbor Platform, which integrates clinical decision support, population health management, revenue cycle management ("RCM") outsourcing, and real-time analytics into a comprehensive, unified technology solution designed to help healthcare providers improve clinical outcomes while reducing costs.
We were founded in 2014 by Dr. Nathaniel Rourke, a physician with over 15 years of experience at major academic medical centers, and Margaret "Meg" Tsujimoto, a computer scientist with a PhD in computer science and deep expertise in healthcare informatics. From our founding, our mission has been to harness the power of data and technology to transform the delivery of healthcare in the United States. We are a Delaware corporation and are headquartered at 275 Kendall Avenue, Suite 1400, Cambridge, Massachusetts 02142. Our Standard Industrial Classification (SIC) code is 7372 (Prepackaged Software).
As of December 31, 2023, we served over 1,200 hospital systems and physician groups across 42 states. Our customers range from large, multi-hospital integrated delivery networks and academic medical centers to mid-sized community health systems and multi-specialty physician groups. The breadth and depth of our customer relationships reflect the differentiated value that our platform delivers across diverse healthcare settings.
For the fiscal year ended December 31, 2023, we generated revenue of $612.4 million, an increase of 28% compared to revenue of $478.4 million for the fiscal year ended December 31, 2022. Our Adjusted EBITDA for the fiscal year ended December 31, 2023 was $138.7 million, representing an Adjusted EBITDA margin of approximately 22.6%. Our net income for the fiscal year ended December 31, 2023 was $41.3 million. We had approximately 3,400 employees as of December 31, 2023.
Our Platform and Services
The Arbor Platform is a cloud-based, highly scalable SaaS platform that provides an integrated suite of clinical decision support, population health management, revenue cycle management, and real-time analytics capabilities. Our platform is designed to be deployed rapidly across healthcare organizations of all sizes and to integrate seamlessly with existing electronic health record ("EHR") systems and other health IT infrastructure.
Clinical Decision Support. Our clinical decision support module leverages proprietary algorithms and clinical rules engines to provide real-time, evidence-based guidance to clinicians at the point of care. By integrating with EHR systems and clinical workflows, our solution helps clinicians make more informed decisions about diagnosis, treatment, and care management, ultimately improving patient outcomes and reducing unnecessary variation in care delivery.
Population Health Management. Our population health management capabilities enable healthcare organizations to aggregate and analyze patient data across diverse settings of care, identify high-risk patient populations, design and implement targeted intervention programs, and measure the effectiveness of population health initiatives. These capabilities are critical as the U.S. healthcare system continues its shift toward value-based care models.
Revenue Cycle Management Outsourcing. We provide comprehensive revenue cycle management outsourcing services, including coding, billing, claims management, denial management, and collections. Our RCM services leverage technology-enabled processes and analytics to help healthcare organizations optimize their revenue cycles, reduce administrative burden, and improve financial performance.
Real-Time Analytics. Our real-time analytics services provide healthcare organizations with actionable intelligence derived from their clinical, financial, and operational data. Our analytics platform enables customers to monitor key performance indicators, identify trends and opportunities for improvement, and make data-driven decisions across their enterprises.
Our Market Opportunity
We operate at the intersection of healthcare services and healthcare information technology, a large and rapidly growing market driven by several powerful secular trends. These trends include the ongoing digitization of the healthcare industry, the shift from fee-for-service to value-based care reimbursement models, increasing regulatory requirements related to quality measurement and reporting, growing consumer demand for transparency and convenience, and the imperative for healthcare organizations to reduce costs while improving clinical outcomes.
The adoption of clinical decision support systems, population health management tools, and technology-enabled RCM solutions continues to accelerate across the U.S. healthcare system. Our current operational footprint spans 42 states, and we believe there is significant opportunity to expand our geographic reach and deepen our penetration within existing markets.
Key Financial Highlights
The following table presents selected financial data for the periods indicated:
Our strong financial performance reflects the growing demand for our platform, the inherent scalability of our cloud-based SaaS business model, and the substantial recurring revenue characteristics of our customer contracts. We believe our financial profile positions us well for continued growth and profitability.
Our Competitive Strengths
We believe the following competitive strengths differentiate us in the marketplace and position us for long-term success:
Deep Clinical Expertise. Our Chief Medical Officer, Dr. Priya Subramanian, is a board-certified internist and clinical informaticist who leads a team of physicians, nurses, pharmacists, and clinical specialists embedded within our product development and customer success organizations. This deep clinical expertise informs every aspect of our platform and ensures that our solutions are grounded in evidence-based medicine and aligned with the real-world needs of clinicians.
Proprietary Technology Platform. Our platform was architected from the ground up by our Co-Founder and Chief Technology Officer, Margaret "Meg" Tsujimoto, who holds a PhD in computer science. Our cloud-native architecture enables rapid deployment, seamless scalability, and continuous innovation. We believe our technology platform represents a significant competitive moat that is difficult for competitors to replicate.
Broad and Diverse Customer Base. We serve over 1,200 hospital systems and physician groups across 42 states, providing us with a broad and diverse customer base that mitigates concentration risk and provides significant opportunities for cross-selling and upselling. Our customers represent a cross-section of the U.S. healthcare delivery system, from large academic medical centers to mid-sized community hospitals and multi-specialty physician groups.
Integrated Platform Approach. We provide an integrated platform that combines clinical decision support, population health management, RCM outsourcing, and real-time analytics in a single, unified solution. We believe this integrated approach is highly differentiated and provides significant value to our customers by enabling them to break down data silos, improve workflows, and achieve better outcomes across their organizations.
Experienced Management Team. Our management team combines deep domain expertise in healthcare, technology, and business operations. Our leadership has a proven track record of driving growth, building category-defining products, and creating value for stakeholders.
Our Growth Strategies
We intend to grow our business by pursuing the following strategies:
Expand Our Customer Base. We plan to continue investing in our sales and marketing organization to acquire new customers across the United States, including in the eight states in which we do not currently have operations.
Penetrate Existing Customer Accounts. We see significant opportunity to expand our relationships with existing customers by selling additional modules and services across our integrated platform. Many of our current customers use only a subset of our available solutions, presenting a substantial cross-selling opportunity.
Invest in Product Development and R&D. We intend to continue investing in research and development to enhance our existing platform capabilities, develop new modules and features, and leverage emerging technologies such as artificial intelligence and machine learning to deliver even greater value to our customers.
Pursue Strategic Acquisitions. We plan to selectively pursue acquisitions of complementary businesses, technologies, and teams that can accelerate our growth, expand our capabilities, and enhance our competitive position.
Expand into New Geographies and Market Segments. We intend to expand our geographic reach and enter new market segments, including post-acute care, behavioral health, and other care settings where our platform can deliver meaningful value.
Summary of the Offering
The following is a summary of the principal terms of this offering:
The number of shares of our common stock to be outstanding after this offering is based on 80,000,000 shares of our common stock outstanding as of December 31, 2023, and includes the 20,000,000 shares of common stock offered in the base offering and the 3,000,000 shares of common stock subject to the overallotment option (assuming full exercise thereof), for a total of 103,000,000 shares of common stock outstanding after this offering. This number does not include:
•  11,200,000 shares of common stock issuable upon the exercise of stock options outstanding under our 2014 Stock Incentive Plan, at a weighted average exercise price of $3.25 per share, of which options to purchase 8,400,000 shares were vested as of December 31, 2023;
•  10,300,000 shares of common stock reserved for future issuance under our 2024 Equity Incentive Plan, which was adopted by our Board of Directors on January 15, 2024 and will become effective upon the completion of this offering; and
•  2,060,000 shares of common stock reserved for future issuance under our 2024 Employee Stock Purchase Plan, which was adopted by our Board of Directors on January 15, 2024 and will become effective upon the completion of this offering.
Summary Consolidated Financial Data
The following tables present summary consolidated financial data for the periods and as of the dates indicated. The summary consolidated statements of operations data for the fiscal years ended December 31, 2023 and December 31, 2022, and the summary consolidated balance sheet data as of December 31, 2023, have been derived from our audited consolidated financial statements included elsewhere in this prospectus. You should read the following summary consolidated financial data together with our consolidated financial statements and the related notes, as well as the sections titled "Selected Consolidated Financial Data" and "Management's Discussion and Analysis of Financial Condition and Results of Operations," each included elsewhere in this prospectus. Our historical results are not necessarily indicative of the results that may be expected for any future period.
Summary Consolidated Statements of Operations Data:
Summary Non-GAAP Financial Data:
Adjusted EBITDA is a non-GAAP financial measure. See "Selected Consolidated Financial Data" for a reconciliation of Adjusted EBITDA to net income, the most directly comparable financial measure calculated in accordance with U.S. generally accepted accounting principles ("GAAP"), and a discussion of why we believe Adjusted EBITDA is useful to investors.
Corporate Information
We were incorporated in the State of Delaware in 2014. Our principal executive offices are located at 275 Kendall Avenue, Suite 1400, Cambridge, Massachusetts 02142, and our telephone number is (617) 555-0142. Our website address is www.arborhealthtech.com. The information contained on, or that can be accessed through, our website is not incorporated by reference into this prospectus, and you should not consider any information contained on, or that can be accessed through, our website as part of this prospectus or in deciding whether to purchase our common stock. We have included our website address in this prospectus solely as an inactive textual reference.
Our federal employer identification number (EIN) is 47-3891205. Our registered agent in the State of Delaware is National Registered Agents of Delaware, Inc., 160 Greentree Drive, Suite 101, Dover, Delaware 19904.
"Arbor Health," "Arbor Health Technologies," "Arbor Platform," the Arbor tree leaf logo, and our other registered and common law trademarks, service marks, and trade names appearing in this prospectus are the property of Arbor Health Technologies Inc. Other trademarks and trade names referred to in this prospectus are the property of their respective owners. Solely for convenience, trademarks and trade names referred to in this prospectus may appear without the ® or ™ symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights, or the rights of the applicable licensor, to these trademarks and trade names.
RISK FACTORS
Investing in our common stock involves a high degree of risk. You should carefully consider the following risk factors, as well as all of the other information contained in this prospectus, including our consolidated financial statements and the related notes, before deciding whether to invest in our common stock. The occurrence of any of the following risks could materially and adversely affect our business, financial condition, results of operations, and prospects. In such case, the trading price of our common stock could decline, and you may lose all or part of your investment. The risks described below are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially and adversely affect our business, financial condition, results of operations, and prospects.
Risks Related to Our Business and Industry
Our growth depends on the continued adoption of cloud-based clinical decision support and population health management solutions by hospital systems and physician groups, and any slowdown in this adoption could adversely affect our business.
Our business model is predicated on the continued adoption and expansion of cloud-based clinical decision support and population health management solutions across the U.S. healthcare system. While we believe that these solutions are becoming increasingly critical to the efficient and effective delivery of healthcare, there can be no assurance that the market for these solutions will continue to grow at historical rates, or at all. Hospital systems and physician groups may be reluctant to migrate from legacy on-premise systems to cloud-based solutions due to concerns about data security, system integration complexity, regulatory compliance, or the perceived risks of relying on third-party technology platforms. In addition, budget constraints, competing capital allocation priorities, or changes in healthcare reimbursement policies could cause potential customers to delay or forgo purchasing decisions. If the market for cloud-based clinical decision support and population health management solutions does not continue to grow, or grows more slowly than we expect, our revenue growth could slow, and our business, financial condition, and results of operations could be materially and adversely affected.
We derive a significant portion of our revenue from hospital systems and physician groups, and any concentration of our revenue among a limited number of customers could expose us to significant revenue loss if any such customer were to terminate, reduce, or fail to renew its contract with us.
Although we serve over 1,200 hospital systems and physician groups across 42 states, certain of our larger customers account for a disproportionate share of our total revenue. If any of our significant customers were to terminate their contracts with us, significantly reduce their use of our platform and services, fail to renew their agreements, or experience financial distress, our revenue could decline materially. Additionally, consolidation among healthcare providers could result in the loss of existing customers or increased pricing pressure. We may be unable to replace lost revenue from any significant customer on a timely basis, or at all, which could materially and adversely affect our business, financial condition, and results of operations.
We face significant competition in the healthcare IT and SaaS markets, and our inability to compete effectively could limit our ability to attract and retain customers.
The markets in which we operate are competitive, rapidly evolving, and subject to technological change. We compete with a range of companies, including large, diversified healthcare IT companies with significantly greater financial, technical, marketing, and other resources than we have; specialized clinical decision support and population health management vendors; EHR vendors that are developing or acquiring clinical decision support and analytics capabilities; management consulting firms with healthcare IT practices; and healthcare systems that develop their own internal solutions. Some of our competitors may be willing to reduce prices significantly or bundle their products with other products and services to increase their market share, which could put downward pressure on the prices we are able to charge for our solutions. If we are unable to compete effectively on the basis of price, product capabilities, customer service, brand recognition, or other factors, we may lose existing customers or fail to attract new customers, which could materially and adversely affect our business, financial condition, and results of operations.
Our business is subject to extensive and evolving healthcare regulation, including HIPAA, HITECH, and state privacy laws, and failure to comply with these regulations could result in significant penalties, reputational harm, and loss of customer confidence.
The healthcare industry is one of the most heavily regulated industries in the United States. We are subject to a wide range of federal and state laws and regulations governing, among other things, the privacy and security of patient health information, healthcare fraud and abuse, data protection, and information technology. These include the Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act ("HITECH"), and their implementing regulations (collectively, "HIPAA"), as well as various state privacy and data security laws, many of which are more restrictive than their federal counterparts and impose different and sometimes conflicting obligations. Our failure to comply with these laws and regulations could result in significant civil and criminal penalties, loss of customer confidence, and reputational harm, any of which could materially and adversely affect our business.
We are subject to cybersecurity risks and data breach exposure, and a security incident could result in significant liability, reputational harm, and loss of customer trust.
Our platform processes, stores, and transmits significant volumes of sensitive data, including protected health information ("PHI"), personally identifiable information ("PII"), and proprietary business data. Despite the security measures we have implemented, our information technology systems and infrastructure may be vulnerable to cyberattacks, including hacking, ransomware, phishing, social engineering, computer viruses, and other malicious activities by internal or external actors. A successful cyberattack or data breach could result in unauthorized access to, acquisition of, or disclosure of sensitive data; disruption of our operations; significant legal liability under HIPAA, state privacy laws, and other regulations; costly litigation and regulatory investigations; and loss of customer trust and reputational harm. Any of these consequences could materially and adversely affect our business, financial condition, and results of operations.
We depend on the continued services and performance of our key personnel, including Dr. Nathaniel Rourke and Margaret Tsujimoto, and the loss of one or more of these individuals could adversely affect our business.
Our success depends in significant part on the continued services and contributions of our key personnel, particularly Dr. Nathaniel Rourke, our Co-Founder, Chairman, and Chief Executive Officer, and Margaret "Meg" Tsujimoto, our Co-Founder and Chief Technology Officer. Dr. Rourke and Ms. Tsujimoto are responsible for our strategic vision, product development, and customer relationships, and their loss could significantly disrupt our operations and strategic direction. In addition, we depend on the continued services of our other executive officers, including our Chief Financial Officer, David Halderman, our General Counsel, Rachel Moynihan, and our Chief Medical Officer, Dr. Priya Subramanian. Competition for qualified executives and technical professionals in the healthcare IT industry is intense, and we may be unable to attract and retain the key personnel we need to execute our business strategy. The loss of any of our key personnel could materially and adversely affect our business.
We may face challenges in successfully integrating businesses, technologies, or teams that we acquire, and any failure to do so could disrupt our business and adversely affect our financial condition and results of operations.
As part of our growth strategy, we intend to pursue strategic acquisitions of businesses, technologies, and teams that we believe are complementary to our platform and operations. Acquisitions involve numerous risks, including difficulties in integrating the acquired business's operations, technology, and personnel; potential disruption of our ongoing business and diversion of management attention; the risk of assuming unknown liabilities; potential impairment of acquired intangible assets and goodwill; and the possibility that the expected benefits of the acquisition may not be realized. We have limited experience with acquisitions, and any failure to successfully identify, complete, or integrate acquisitions could materially and adversely affect our business, financial condition, and results of operations.
Our revenue growth rate of 28% in FY2023 may not be sustainable, and investors should not rely on our historical growth rates as indicative of future performance.
Our revenue grew 28% year-over-year from $478.4 million in FY2022 to $612.4 million in FY2023. While we are investing to sustain strong growth, our revenue growth rate may decline in future periods as a result of a number of factors, including increasing market saturation, competitive pressures, customer churn, macroeconomic conditions, and the natural deceleration of growth as our revenue base increases. We also may not be able to sustain the level of investment in sales and marketing, research and development, and other areas necessary to maintain our current growth rate. If our revenue growth slows, investors' perceptions of our business may be adversely affected, which could cause the market price of our common stock to decline.
Risks Related to Our Financial Condition
We have a history of significant expenditures on research and development, and we may incur operating losses in future periods.
We have invested, and intend to continue to invest, significant resources in research and development to enhance our platform, develop new solutions, and maintain our technological leadership. Our research and development expenses may increase in future periods as we expand our product capabilities, invest in artificial intelligence and machine learning, and hire additional engineering and product development personnel. There can be no assurance that our investments in research and development will result in commercially successful products or generate a return on investment. If our revenue does not grow sufficiently to offset increases in operating expenses, including research and development expenses, we may incur operating losses in future periods, which could materially and adversely affect our financial condition and the market price of our common stock.
We have outstanding indebtedness under our Keypoint National Bank revolving credit facility, and our credit agreement contains financial covenants and other restrictions that may limit our operational and financial flexibility.
We are a party to a senior secured revolving credit facility with Keypoint National Bank, N.A., as administrative agent, and Stonemill Capital Bank, as syndicate member, providing for aggregate revolving commitments of $150 million (the "Credit Facility"). As of the most recent practicable date, approximately $65 million was drawn under the Credit Facility. The Credit Facility bears interest at a rate per annum equal to SOFR plus 200 basis points, and matures on March 15, 2027. We intend to use a portion of the net proceeds of this offering to repay the outstanding balance under the Credit Facility. See "Use of Proceeds."
The Credit Facility requires us to maintain compliance with certain financial covenants, including a Total Net Leverage Ratio of not more than 3.50 to 1.00 and a Fixed Charge Coverage Ratio of at least 1.25 to 1.00. The Credit Facility also contains negative covenants that restrict our ability to incur additional indebtedness, grant liens, make certain investments, pay dividends and make other restricted payments, enter into transactions with affiliates, and engage in certain mergers and consolidations. Our failure to comply with these covenants could result in an event of default, which could cause the outstanding indebtedness to become immediately due and payable and could materially and adversely affect our financial condition and liquidity.
Future issuances of shares of our common stock, including under our equity compensation plans, may result in significant dilution to investors purchasing shares in this offering.
We have reserved significant numbers of shares for issuance under our equity compensation plans. As of the date of this prospectus, there were 11,200,000 shares of common stock issuable upon the exercise of outstanding stock options under our 2014 Stock Incentive Plan, at a weighted average exercise price of $3.25 per share. In addition, we have reserved 10,300,000 shares for future issuance under our 2024 Equity Incentive Plan and 2,060,000 shares for future issuance under our 2024 Employee Stock Purchase Plan. The issuance of these shares, or the exercise of outstanding options, will dilute the ownership interest of investors purchasing shares in this offering. In addition, the 2024 Equity Incentive Plan includes an annual evergreen provision that automatically increases the number of shares reserved under the plan by 3% of the total number of shares of our common stock outstanding on the last day of the immediately preceding fiscal year. We expect to make significant grants under these plans to attract and retain employees, and such grants will result in additional dilution.
Risks Related to Our Technology
If our platform experiences performance issues, service outages, or downtime, our customer relationships and our reputation could be harmed.
Our customers depend on our platform for critical clinical, financial, and operational workflows. Any significant disruption in the availability or performance of our platform, whether due to software bugs, hardware failures, power outages, natural disasters, cyberattacks, or other causes, could result in the loss of customer data, disruption of clinical and business processes, harm to patient safety, and damage to our reputation. Our service level agreements with customers typically provide for credits or other remedies in the event of material service outages, and significant or prolonged outages could result in customer losses, claims for damages, and other liabilities that could materially and adversely affect our business.
We depend on third-party cloud infrastructure providers to host our platform, and any disruption in the services provided by these third parties could adversely affect our business.
We rely on third-party cloud infrastructure providers, including Ridgeway Industries ("Meridian Technologies") and Crestline Systems, to host our platform and deliver our solutions to customers. We do not control the operation of these third-party facilities, and they may be subject to damage or interruption from natural disasters, cyberattacks, power outages, telecommunications failures, and similar events. Any disruption in or degradation of the services provided by our third-party cloud infrastructure providers could result in prolonged outages or performance issues for our customers, which could harm our reputation, cause customer losses, and materially and adversely affect our business and results of operations.
Our future success depends on our ability to continue to invest in technology and innovation, and any failure to keep pace with technological change could render our platform less competitive.
The healthcare IT and SaaS markets are characterized by rapid technological change, evolving industry standards, and frequent introductions of new products and features. Our future success depends on our ability to continue to innovate, develop new features and capabilities, and adapt our platform to emerging technologies such as artificial intelligence, machine learning, and natural language processing. If we are unable to anticipate or respond to technological developments in a timely and cost-effective manner, our platform could become less competitive, and our business, financial condition, and results of operations could be materially and adversely affected.
Our ability to protect our intellectual property is important to our business, and any failure to adequately protect our intellectual property rights could impair our competitive position.
Our success depends in part on our ability to protect our proprietary technology, trade secrets, and know-how. We rely on a combination of patents, trademarks, copyrights, trade secret laws, confidentiality agreements, and other contractual provisions to protect our intellectual property. However, these protections may not be sufficient to prevent unauthorized use or misappropriation of our intellectual property by competitors or other third parties. Additionally, we may be subject to claims that our products or services infringe, misappropriate, or otherwise violate the intellectual property rights of others, which could result in costly litigation, distract management attention, and require us to enter into licensing agreements, modify our products, or cease using certain technology. Any of these outcomes could materially and adversely affect our business.
Risks Related to Government Regulation
We are subject to complex and evolving healthcare regulatory requirements, and changes in laws, regulations, or enforcement could adversely affect our business.
In addition to HIPAA and HITECH, our business is subject to various federal and state healthcare laws and regulations, including the federal physician self-referral prohibition (the "Stark Law"), the federal Anti-Kickback Statute, the federal False Claims Act, and analogous state laws. These laws are broad and complex, and their application to our business activities is not always clear. If our activities were found to violate any of these laws, we could be subject to significant civil and criminal penalties, including fines, exclusion from federal healthcare programs, and imprisonment, any of which could materially and adversely affect our business, financial condition, and results of operations.
We are subject to state-level data privacy and security regulations that are complex, evolving, and sometimes conflicting.
In addition to HIPAA, we are subject to a patchwork of state data privacy and security laws, including the California Consumer Privacy Act (as amended by the California Privacy Rights Act), the Virginia Consumer Data Protection Act, the Colorado Privacy Act, and similar laws in other states where we operate. These state laws impose varying and sometimes conflicting obligations regarding the collection, use, disclosure, and protection of personal information, and require us to maintain comprehensive data privacy and security programs. Compliance with these laws is complex and costly, and any failure to comply could result in regulatory enforcement actions, fines, and reputational harm.
Changes in healthcare reimbursement policies could reduce demand for our solutions.
Our customers — hospital systems and physician groups — operate in an environment of constantly evolving healthcare reimbursement policies established by the Centers for Medicare & Medicaid Services ("CMS"), commercial payers, and state Medicaid programs. Changes in reimbursement rates, payment methodologies, or coverage policies could adversely affect the financial health of our customers, which in turn could reduce demand for our solutions, increase customer churn, or pressure the prices we are able to charge. We cannot predict the timing, nature, or impact of future changes in healthcare reimbursement policies.
Certain features of our platform may be subject to regulation by the U.S. Food and Drug Administration, and any requirement to obtain FDA clearance or approval could delay or limit our ability to offer certain features.
Certain clinical decision support features of our platform may be subject to regulation by the U.S. Food and Drug Administration ("FDA") as medical devices under the Federal Food, Drug, and Cosmetic Act. The 21st Century Cures Act exempted certain clinical decision support software from FDA regulation, but the scope of this exemption is subject to ongoing interpretation and rulemaking by the FDA. If the FDA were to determine that certain features of our platform constitute medical devices subject to FDA regulation, we could be required to obtain FDA clearance or approval before offering such features, which could be costly, time-consuming, and uncertain. Additionally, we could be subject to FDA enforcement actions, recalls, or other remedies, any of which could materially and adversely affect our business.
Risks Related to Our Organizational Structure and Corporate Governance
Following this offering, Brindoval Trelvon Partners and Ridgeline Growth Equity will collectively hold approximately 42.72% of our outstanding common stock and will have significant influence over corporate matters.
Upon completion of this offering (assuming full exercise of the overallotment option), Brindoval Trelvon Partners Fund IV, L.P. will beneficially own approximately 28,000,000 shares, or 27.18%, of our outstanding common stock, and Ridgeline Growth Equity Fund III, LLC will beneficially own approximately 16,000,000 shares, or 15.53%, of our outstanding common stock. Together, these pre-IPO investors will collectively hold approximately 42.72% of our outstanding common stock. As a result, these investors will have significant influence over the election and removal of our directors, the approval of mergers, acquisitions, and other business combinations, and the outcome of other matters submitted to a vote of our stockholders. The interests of these investors may not always be aligned with the interests of our other stockholders, and their concentrated ownership could have the effect of delaying, deferring, or preventing a change in control of our Company that might otherwise be beneficial to our other stockholders.
Our classified board structure and other anti-takeover provisions in our Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws may discourage or prevent takeover attempts that stockholders may consider favorable.
Our Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws contain a number of provisions that may have the effect of delaying, deferring, or preventing a change in control of our Company that stockholders may consider favorable. These provisions include:
•  a classified board of directors divided into three classes with staggered three-year terms, so that only approximately one-third of directors are elected each year;
•  a prohibition on stockholder action by written consent, requiring all stockholder actions to be taken at a duly called meeting of stockholders;
•  a supermajority vote requirement (66⅔%) to amend our bylaws;
•  the authorization of 50,000,000 shares of "blank check" preferred stock, which our Board of Directors may issue in one or more series with such designations, preferences, and rights as the Board may determine without stockholder approval;
•  an exclusive forum provision designating the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings;
•  advance notice requirements for stockholder nominations and proposals (requiring between 90 and 120 days' advance notice); and
•  proxy access provisions.
In addition, we have not opted out of Section 203 of the Delaware General Corporation Law ("DGCL"), which restricts certain business combinations with interested stockholders (i.e., stockholders who beneficially own 15% or more of the outstanding voting stock) for a period of three years following the time the stockholder became an interested stockholder, unless the business combination or the transaction which resulted in the stockholder becoming an interested stockholder is approved by the Board of Directors prior to such time or certain other conditions are met. These anti-takeover provisions could limit the price that investors are willing to pay in the future for shares of our common stock and could deprive stockholders of the opportunity to receive a premium for their shares.
Risks Related to This Offering and Ownership of Our Common Stock
There has been no prior public market for our common stock, and an active trading market may not develop or be sustained.
Prior to this offering, there has been no public market for our common stock. Although our common stock has been approved for listing on the NYSE under the ticker symbol "ARHT," we cannot assure you that an active trading market for our common stock will develop upon the completion of this offering, or, if developed, that such market will be sustained. If an active and liquid trading market does not develop or is not sustained, you may have difficulty selling your shares at or above the initial public offering price, or at all.
The initial public offering price of $20.00 per share may not be indicative of the market price of our common stock after this offering.
The initial public offering price of $20.00 per share was determined by negotiation among us and the representatives of the underwriters and may not be indicative of the market price of our common stock after this offering. Our post-offering market capitalization at the initial public offering price is approximately $2,060,000,000 (based on 103,000,000 shares of common stock outstanding after this offering, assuming full exercise of the overallotment option), which implies a multiple of approximately 3.36 times our FY2023 revenue of $612.4 million and approximately 14.85 times our FY2023 Adjusted EBITDA of $138.7 million. The market price of our common stock may fluctuate significantly in response to a number of factors, many of which are beyond our control, and investors may not be able to resell their shares at or above the initial public offering price.
Upon the expiration of the 180-day lock-up period, a substantial number of shares will become eligible for sale, which could depress the market price of our common stock.
Approximately 80,000,000 shares of our common stock held by our directors, executive officers, and holders of 1% or more of our pre-IPO shares are subject to 180-day lock-up agreements entered into in connection with this offering. These lock-up agreements are expected to expire on August 6, 2024. Upon the expiration of the lock-up period (or if Whitfield Barrow & Co., LLC, as the representative of the underwriters, releases some or all of the locked-up parties from their lock-up restrictions), a substantial number of additional shares will become eligible for sale in the public market. In addition, Brindoval Trelvon Partners Fund IV, L.P. and Ridgeline Growth Equity Fund III, LLC hold demand registration rights and piggyback registration rights under our Amended and Restated Registration Rights Agreement. The sale or potential sale of a significant number of shares could cause the market price of our common stock to decline significantly.
The market price of our common stock may be volatile, and you could lose all or part of your investment.
The market price of our common stock may fluctuate significantly in response to various factors, including our quarterly or annual financial results; changes in financial estimates or recommendations by securities analysts; changes in the healthcare regulatory environment; announcements by us or our competitors of new products, significant contracts, acquisitions, or strategic alliances; general market conditions; and other factors described elsewhere in these "Risk Factors." In addition, the stock market in general, and the market for technology and healthcare IT companies in particular, has experienced significant price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of the affected companies. These market and industry fluctuations may materially and adversely affect the market price of our common stock regardless of our actual operating performance.
Future issuances of our common stock or securities convertible into or exchangeable for common stock could dilute your ownership and adversely affect the market price of our common stock.
In addition to the shares reserved for issuance under our equity compensation plans as described above, we may issue additional shares of common stock or securities convertible into or exchangeable for common stock in the future for a number of reasons, including to finance our operations, to fund acquisitions, in connection with strategic transactions, or to compensate employees and directors. Any such future issuances could dilute the ownership interest of investors who purchase shares in this offering and could adversely affect the market price of our common stock.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). All statements other than statements of historical fact contained in this prospectus, including statements regarding our future results of operations and financial position, our business strategy and plans, our market opportunity, competitive position, industry and regulatory trends, and our objectives for future operations, are forward-looking statements. In some cases, you can identify forward-looking statements because they contain words such as "anticipate," "believe," "contemplate," "continue," "could," "estimate," "expect," "intend," "may," "plan," "potential," "predict," "project," "seek," "should," "target," "will," "would," or the negative of these words or similar terms or expressions.
These forward-looking statements are based on our current expectations and assumptions about future events and are subject to a number of risks, uncertainties, and assumptions, including those described in "Risk Factors" and elsewhere in this prospectus. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for us to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make.
In light of these risks, uncertainties, and assumptions, the forward-looking events and circumstances discussed in this prospectus may not occur, and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. We caution you not to rely on forward-looking statements as predictions of future events.
We note that the safe harbor provisions under the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act, and Section 21E of the Exchange Act do not apply to forward-looking statements made in connection with an initial public offering pursuant to Section 27A(b)(2)(D) of the Securities Act and Section 21E(b)(2)(D) of the Exchange Act.
We undertake no obligation, and we expressly disclaim any obligation, to update, alter, or otherwise revise or supplement any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law. You should read this prospectus and the documents that we have filed as exhibits to the registration statement of which this prospectus forms a part completely and with the understanding that our actual future results may be materially different from what we expect.
MARKET AND INDUSTRY DATA
This prospectus contains statistical data, estimates, and forecasts that are based on independent industry publications or reports, other publicly available information, and information from internal company sources. Some data are also based on our good faith estimates, which are derived from our review of internal surveys and data, as well as independent sources. Although we believe these sources are reliable, we have not independently verified the accuracy or completeness of the data obtained from these sources, and the data involve a number of assumptions and limitations. In addition, projections, assumptions, and estimates of our future performance and the future performance of the markets in which we operate are necessarily subject to a high degree of uncertainty and risk due to range factors, including those described in "Risk Factors" and elsewhere in this prospectus.
Certain market and industry data included in this prospectus were obtained from third-party industry research reports, publicly available information, and government data. Industry publications and other reports generally state that the information contained therein has been obtained from sources believed to be reliable, but that the accuracy and completeness of such information is not guaranteed. Forecasts and other forward-looking information obtained from these sources are subject to the same qualifications and additional uncertainties regarding the other forward-looking statements in this prospectus. These forecasts and other forward-looking information are subject to uncertainty and risk due to range factors, including those described under "Risk Factors." These and other factors could cause results to differ materially from those expressed in the forecasts and estimates from independent third parties and us.
USE OF PROCEEDS
Estimated Net Proceeds
We estimate that the net proceeds to us from this offering will be approximately $371.8 million (or approximately $428.2 million if the underwriters exercise their overallotment option in full), after deducting the underwriting discount and estimated offering expenses payable by us. This estimate is based on the initial public offering price of $20.00 per share.
The following table sets forth our calculation of estimated net proceeds:
We estimate that we will incur approximately $4.2 million in offering expenses (excluding the underwriting discount) in connection with this offering, consisting of the following:
A $1.00 increase (decrease) in the assumed initial public offering price of $20.00 per share would increase (decrease) the net proceeds to us from this offering by approximately $18.8 million (or approximately $21.6 million if the underwriters exercise their overallotment option in full), assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the underwriting discount.
Intended Use of Proceeds
We intend to use the net proceeds from this offering as follows:
•  approximately $65,000,000 to repay the outstanding balance on our senior secured revolving credit facility with Keypoint National Bank, N.A., as administrative agent, and Stonemill Capital Bank, as syndicate member. The Credit Facility was entered into on March 15, 2022, and was amended on January 18, 2024 pursuant to a First Amendment to Credit Agreement, which, among other things, amended the change of control definition and added a permitted equity issuance carve-out in connection with this offering. The Credit Facility provides for aggregate revolving commitments of $150 million, matures on March 15, 2027, and bears interest at a rate per annum equal to SOFR plus 200 basis points. As of the most recent practicable date, approximately $65 million was drawn under the Credit Facility. The proceeds of borrowings under the Credit Facility were used primarily for working capital, capital expenditures, and general corporate purposes;
•  approximately $120,000,000 for product development and research and development investment, including the expansion of our engineering and data science teams, the development of new platform modules and features, and investment in artificial intelligence and machine learning capabilities;
•  approximately $100,000,000 for potential acquisitions and strategic investments, including acquisitions of complementary businesses, technologies, and teams that can accelerate our growth and enhance our competitive position; and
•  the balance for general corporate purposes and working capital, including sales and marketing, general and administrative expenses, and capital expenditures.
We will retain broad discretion over the use of the net proceeds from this offering. Pending the uses described above, we intend to invest the net proceeds in short-term, investment-grade, interest-bearing securities, such as money market funds, certificates of deposit, commercial paper, and guaranteed obligations of the U.S. government.
The amount and timing of our actual expenditures and the allocation of net proceeds to the uses described above will depend on a number of factors, including the pace of our revenue growth, the success of our product development and commercialization efforts, the availability and attractiveness of potential acquisition targets, and other factors described in "Risk Factors."
DIVIDEND POLICY
We have never declared or paid cash dividends on our common stock. We do not currently intend to pay cash dividends on our common stock in the foreseeable future. We currently intend to retain all available funds and future earnings, if any, for the development and growth of our business. In addition, our senior secured revolving credit facility with Keypoint National Bank, N.A. contains certain restrictions on the payment of dividends and distributions on our common stock.
Any future determination regarding the declaration and payment of dividends, if any, will be at the discretion of our Board of Directors and will depend on then-existing conditions, including our financial condition, results of operations, contractual restrictions, capital requirements, business prospects, and other factors that our Board of Directors may deem relevant. Investors should not purchase our common stock with the expectation of receiving cash dividends.
CAPITALIZATION
The following table sets forth our capitalization as of December 31, 2023:
•  on an actual basis; and
•  on a pro forma as adjusted basis, giving effect to (i) the issuance and sale of 20,000,000 shares of our common stock in this offering at the initial public offering price of $20.00 per share, (ii) the issuance and sale of 3,000,000 additional shares of our common stock upon full exercise of the underwriters' overallotment option at the initial public offering price of $20.00 per share, (iii) the receipt of approximately $428.2 million of net proceeds therefrom (after deducting the underwriting discount and estimated offering expenses), and (iv) the application of approximately $65 million of such net proceeds to repay the outstanding balance on our revolving credit facility with Keypoint National Bank, N.A.
You should read this table together with "Use of Proceeds," "Selected Consolidated Financial Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations," and our consolidated financial statements and the related notes included elsewhere in this prospectus.
Capitalization Table (in thousands, except share and per share data)
(1) Represents actual cash and cash equivalents as of December 31, 2023, as set forth in our audited consolidated financial statements included elsewhere in this prospectus.
(2) Pro forma as adjusted to reflect receipt of approximately $428.2 million of net proceeds from this offering (including full exercise of the overallotment option) after deducting the underwriting discount and estimated offering expenses, and the application of approximately $65 million of such net proceeds to repay the outstanding balance on the Keypoint National Bank revolving credit facility.
(3) As derived from our audited consolidated financial statements included elsewhere in this prospectus.
(4) Adjusted to reflect the receipt of net proceeds from this offering and the application of proceeds as described in "Use of Proceeds."
The number of shares of our common stock outstanding in the table above is based on 80,000,000 shares of our common stock outstanding as of December 31, 2023, and excludes:
•  11,200,000 shares of common stock issuable upon the exercise of outstanding stock options under our 2014 Stock Incentive Plan, at a weighted average exercise price of $3.25 per share, of which options to purchase 8,400,000 shares were vested as of December 31, 2023;
•  10,300,000 shares of common stock reserved for future issuance under our 2024 Equity Incentive Plan, which was adopted by our Board of Directors on January 15, 2024 and will become effective upon the completion of this offering; and
•  2,060,000 shares of common stock reserved for future issuance under our 2024 Employee Stock Purchase Plan, which was adopted by our Board of Directors on January 15, 2024 and will become effective upon the completion of this offering.
DILUTION
If you invest in our common stock in this offering, your ownership interest will be diluted to the extent of the difference between the initial public offering price per share and the pro forma net tangible book value per share after this offering.
Net Tangible Book Value Per Share
Our historical net tangible book value is the amount of our total tangible assets less our total liabilities. As of December 31, 2023, our historical net tangible book value was approximately $286.4 million, or approximately $3.58 per share of common stock (based on 80,000,000 shares of common stock outstanding as of December 31, 2023).
After giving effect to (i) the sale of 20,000,000 shares of our common stock in this offering at the initial public offering price of $20.00 per share, (ii) the sale of 3,000,000 additional shares upon full exercise of the underwriters' overallotment option at the initial public offering price of $20.00 per share, (iii) the receipt of approximately $428.2 million in net proceeds therefrom, and (iv) the application of approximately $65 million of net proceeds to repay the outstanding balance on our revolving credit facility, our pro forma as adjusted net tangible book value as of December 31, 2023 would have been approximately $649.6 million, or approximately $6.31 per share of common stock (based on 103,000,000 shares of common stock outstanding after this offering, assuming full exercise of the overallotment option).
This represents a