S-1 DRAFTING NOTES AND COMMENT COMPILATION
ARBOR HEALTH TECHNOLOGIES INC.
Initial Public Offering of Common Stock
INTERNAL CALDERWOOD & HARKNESS LLP WORKING DOCUMENT
PRIVILEGED & CONFIDENTIAL / ATTORNEY WORK PRODUCT
DISTRIBUTION: This document is intended for distribution solely to the internal Calderwood & Harkness LLP deal team: Theodore Langston, Vivienne St. Claire, Eric Johannsen, Claire Dempsey, and Sylvia Hartwell. This document constitutes attorney work product and is protected by the attorney-client privilege and the work product doctrine. It should not be forwarded, copied, or disclosed to any person outside the Calderwood & Harkness deal team without the express written consent of Theodore Langston. Inadvertent disclosure does not constitute a waiver of any applicable privilege or protection.
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1. INTRODUCTION AND PURPOSE
This document compiles all drafting comments received from external parties in connection with the preparation and filing of the Registration Statement on Form S-1 (SEC File No. 333-276841) for Arbor Health Technologies Inc. ("AHT" or the "Company"). The compilation covers the full drafting cycle, beginning with the initial internal circulation of Draft 1 on October 2, 2023, and continuing through the filing of Amendment No. 1 to Form S-1/A on February 5, 2024, and the subsequent declaration of effectiveness by the Securities and Exchange Commission (the "SEC" or "Commission") on February 8, 2024.
The purpose of this document is to serve as a comprehensive internal reference for the Calderwood & Harkness LLP ("C&H") deal team, consolidating the substance and disposition of every material comment received during the drafting process. This compilation enables the deal team to reconstruct the history of any drafting decision, trace the origin and resolution of particular disclosure issues, and facilitate post-closing knowledge management and any potential future follow-on offering or periodic reporting reference needs.
Comments documented herein were received from the following sources:
1. Whitfield Barrow & Co., LLC (Lead Left Bookrunner) — Jonathan Pritchett (Managing Director, Equity Capital Markets) and Sarah Langley-Kwan (Director, Healthcare Equity Capital Markets);
2. Calloway Pierce Securities LLC (Joint Bookrunner) — Marcus Delgado (Managing Director, Healthcare Investment Banking) and Anita Pham (Vice President, ECM Syndicate);
3. Velthorn Capital Partners Inc. (Joint Bookrunner) — Robert Acheson (Managing Director, Technology & Healthcare Equity Capital Markets);
4. Pemberton Wallis LLC (Co-Manager) — Elena Vasquez (Director, Equity Capital Markets);
5. Meridian Hale & Quivorn LLP (Underwriters' Counsel) — Graham Neville (Lead Partner) and Kathryn Brennan (Senior Associate);
6. Kellerman & Associates LLP (Independent Auditors) — Richard Olander (Lead Engagement Partner) and Sonia Melendez (Audit Senior Manager); and
7. AHT Management — David Halderman (Chief Financial Officer) and Rachel Moynihan (General Counsel & Corporate Secretary), with additional input from Dr. Nathaniel Rourke (Chief Executive Officer & Co-Founder), Margaret "Meg" Tsujimoto (Chief Technology Officer & Co-Founder), and Dr. Priya Subramanian (Chief Medical Officer).
Format. Comments are organized by prospectus section, then sub-organized chronologically by draft iteration within each section. Each entry includes the following fields: (a) source of comment and individual commenter name; (b) date of comment; (c) substance of the comment; (d) C&H response and disposition; and (e) status (resolved, pending, carried forward, or superseded). Where a comment was resolved in a later draft iteration than the one in which it was initially raised, that trajectory is noted.
SEC Comment Letters. The SEC issued two rounds of comments on the Registration Statement. Round 1, dated December 8, 2023, contained thirty-eight (38) comments, to which C&H responded by letter dated December 22, 2023. Round 2, dated January 12, 2024, contained eleven (11) comments, to which C&H responded by letter dated January 19, 2024. Full responses to the SEC comment letters are tracked in separate, dedicated response letter memoranda maintained in the matter file. However, cross-references to SEC-driven changes are included in this compilation where those changes prompted additional discussion among working group members or required coordination with the underwriters, auditors, or AHT management.
2. DRAFT ITERATION LOG
The following table summarizes all S-1 drafts circulated to the working group during the preparation and filing process, from initial circulation through the filing of Amendment No. 1:
The Registration Statement was declared effective by the SEC on February 8, 2024. The offering was priced at $20.00 per share on the same date. The final prospectus was filed pursuant to Rule 424(b)(4) on February 9, 2024.
3. COMMENTS ON COVER PAGE AND PROSPECTUS SUMMARY
3.1 Cover Page
Comment 3.1.1 — WB Comment (Draft 1, October 10, 2023) — Sarah Langley-Kwan:
Sarah Langley-Kwan of Whitfield Barrow requested that the cover page of the prospectus prominently feature AHT's positioning as a "cloud-based clinical decision support and population health management platform" rather than the generic "healthcare services" description used in Draft 1. Ms. Langley-Kwan emphasized the importance of differentiation in the context of investor marketing and noted that the existing description did not adequately distinguish AHT from traditional healthcare services companies, which generally trade at lower valuation multiples than SaaS-oriented health technology businesses. She indicated that the cover page language was critical for first impressions during the book-building process and that Whitfield Barrow's equity research team had flagged the same issue.
C&H Response: Accepted. Revised the cover page language to highlight AHT's SaaS platform and population health management capabilities. The revised description read: "Arbor Health Technologies Inc. is a cloud-based clinical decision support and population health management platform serving hospital systems and physician groups across the United States." Confirmed with Rachel Moynihan (AHT General Counsel) that the revised description is factually accurate and consistent with the Company's self-characterization in other corporate communications. The revision was incorporated in Draft 2 (October 23, 2023).
Status: Resolved.
Comment 3.1.2 — Meridian Hale Comment (Draft 1, October 12, 2023) — Graham Neville:
Graham Neville of Meridian Hale & Quivorn noted that the cover page of Draft 1 did not include standard placeholder bracketed text for the price range, number of shares being offered, and the NYSE ticker symbol. Mr. Neville confirmed that the Company had reserved the ticker symbol "ARHT" on the New York Stock Exchange and requested that this be included on the cover page. Mr. Neville also requested confirmation of the par value of the Company's common stock, noting that the Amended and Restated Certificate of Incorporation establishes a par value of $0.001 per share, and that this should be stated on the cover page in the manner required by SEC rules.
C&H Response: Added appropriate placeholder brackets for the price range (to be filled in upon public filing), the number of shares being offered (20,000,000 shares, plus up to 3,000,000 shares subject to overallotment option), and the NYSE ticker symbol (ARHT). Confirmed par value of $0.001 per share from the Company's current Certificate of Incorporation, as certified by the Delaware Secretary of State. The price range was initially set at $17.00 – $19.00 per share upon public filing on January 22, 2024, and subsequently revised to $18.00 – $20.00 per share in the S-1/A filed February 5, 2024.
Status: Resolved.
Comment 3.1.3 — CPS Comment (Draft 2, October 28, 2023) — Marcus Delgado:
Marcus Delgado of Calloway Pierce Securities suggested adding "revenue cycle management outsourcing" to the cover page business description alongside the existing SaaS platform references, in order to capture the full revenue profile of the Company. Mr. Delgado noted that AHT's FY2023 revenue of $612.4 million is attributable to both the SaaS platform and the revenue cycle management outsourcing business, and that omitting the latter from the cover page could create an incomplete impression of the Company's operations and revenue composition. He observed that a meaningful portion of the Company's current revenue base and near-term growth is derived from revenue cycle management services, and that sophisticated institutional investors would be aware of this from the financial statements and might view the omission as inconsistent.
C&H Response: Incorporated a reference to revenue cycle management outsourcing on the cover page alongside the SaaS platform description. Balanced the presentation with appropriate emphasis on the SaaS and analytics components per Whitfield Barrow's guidance on the marketing narrative. The revised cover page description read: "Arbor Health Technologies Inc. is a provider of cloud-based clinical decision support, population health management, and revenue cycle management solutions serving hospital systems and physician groups across the United States." Reviewed with Rachel Moynihan and Sarah Langley-Kwan; both confirmed the revised formulation was acceptable. Incorporated in Draft 3 (November 5, 2023).
Status: Resolved.
3.2 Prospectus Summary
Comment 3.2.1 — AHT Management Comment (Draft 1, October 9, 2023) — David Halderman:
David Halderman, the Company's Chief Financial Officer, requested that the Prospectus Summary include key financial highlights to give investors an immediate sense of AHT's scale and growth trajectory. Specifically, Mr. Halderman requested the inclusion of the following data points: (a) FY2023 total revenue of $612.4 million, representing 28% year-over-year growth from $478.4 million in FY2022; (b) Adjusted EBITDA of $138.7 million for FY2023; (c) net income of $41.3 million for FY2023; and (d) an employee count of approximately 3,400 employees as of December 31, 2023. Mr. Halderman noted that these figures were derived from the audited financial statements and had been finalized by Kellerman & Associates.
C&H Response: Included all requested financial highlights in the Prospectus Summary. Confirmed with Richard Olander of Kellerman & Associates that the audited figures for FY2022 and FY2023 were final and that no further adjustments were anticipated. Added the employee count of approximately 3,400 as of December 31, 2023, based on data provided by AHT's human resources department and confirmed by Mr. Halderman. Incorporated in Draft 2 (October 23, 2023).
Status: Resolved.
Comment 3.2.2 — WB Comment (Draft 1, October 10, 2023) — Jonathan Pritchett:
Jonathan Pritchett, Managing Director of Equity Capital Markets at Whitfield Barrow, requested strengthening of the competitive positioning language in the Prospectus Summary. Mr. Pritchett specifically requested emphasis on the Company's scale metrics, including service to over 1,200 hospital systems and physician groups across 42 states, as a key differentiator from smaller competitors in the clinical decision support and population health management markets. He also asked for mention of the Company's real-time analytics services, which he described as a particularly marketable feature for institutional investors focused on the intersection of data analytics and healthcare. Mr. Pritchett indicated that these metrics would also be central to the roadshow presentation and that consistency between the prospectus and roadshow materials was important.
C&H Response: Accepted with minor qualifications. Incorporated language stating "over 1,200 hospital systems and physician groups" rather than a precise number, to mitigate the risk associated with forward-looking specificity and to account for normal customer churn that could render a precise figure inaccurate before the effectiveness date. Added a reference to the Company's real-time analytics services as part of its integrated platform offering. The revised language was reviewed by Rachel Moynihan for factual accuracy. Incorporated in Draft 2 (October 23, 2023).
Status: Resolved.
Comment 3.2.3 — Meridian Hale Comment (Draft 2, October 28, 2023) — Kathryn Brennan:
Kathryn Brennan of Meridian Hale & Quivorn noted that the Prospectus Summary should include a cross-reference to the "Use of Proceeds" section and should identify that approximately $65 million of the net proceeds of the offering would be used to repay outstanding amounts under the Company's revolving credit facility with Keypoint National Bank, N.A. Ms. Brennan observed that this is standard practice for IPO prospectuses where a material portion of the proceeds is dedicated to debt repayment, and that the cross-reference would help investors understand the immediate capital allocation impact of the offering.
C&H Response: Added a cross-reference to the "Use of Proceeds" section within the Prospectus Summary. Included a brief notation that the Company intends to use approximately $65 million of the net proceeds to repay outstanding borrowings under its revolving credit facility. Detailed description of the use of proceeds was deferred to the dedicated "Use of Proceeds" section of the prospectus. Incorporated in Draft 3 (November 5, 2023).
Status: Resolved.
Comment 3.2.4 — Kellerman Comment (Draft 1, October 14, 2023) — Sonia Melendez:
Sonia Melendez, Audit Senior Manager at Kellerman & Associates, flagged that any reference to "Adjusted EBITDA" in the Prospectus Summary triggers compliance requirements under Regulation G and Item 10(e) of Regulation S-K governing the presentation of non-GAAP financial measures. Ms. Melendez noted that the Draft 1 presentation of Adjusted EBITDA in the summary was not accompanied by the required reconciliation to the most directly comparable GAAP measure (net income) and that the GAAP measure was not presented with equal or greater prominence. She emphasized that the SEC Staff has been particularly focused on non-GAAP financial measure compliance in recent IPO reviews and recommended that any Adjusted EBITDA reference in the summary be accompanied by, at minimum, a cross-reference to a full reconciliation table.
C&H Response: Added a non-GAAP reconciliation table reference in the Prospectus Summary with a cross-reference to the full reconciliation table in the "Selected Financial Data" section of the prospectus. Ensured that net income (the most directly comparable GAAP measure) was presented with equal or greater prominence throughout the summary. The Adjusted EBITDA figure was accompanied by the following statement: "For a reconciliation of Adjusted EBITDA to net income, the most directly comparable GAAP measure, see 'Selected Financial Data.'" Incorporated in Draft 2 (October 23, 2023).
Status: Resolved. Note: SEC Round 1 comments (December 8, 2023) included additional non-GAAP measure comments requiring further refinement of the reconciliation — see Section 8 below for related working group discussion.
Comment 3.2.5 — AHT Management Comment (Draft 3, November 3, 2023) — Rachel Moynihan:
Rachel Moynihan, General Counsel, requested the inclusion of a brief founding narrative in the Prospectus Summary. Ms. Moynihan noted that AHT was co-founded in 2014 by Dr. Nathaniel Rourke and Margaret "Meg" Tsujimoto. Dr. Rourke, a physician by training, brought 15 years of clinical and operational experience at major academic medical centers, where he identified the need for better clinical decision support tools. Ms. Tsujimoto, who holds a PhD in computer science from the Massachusetts Institute of Technology, served as the architect of the Arbor Platform, the Company's core technology. Ms. Moynihan stated that the founding story was a key element of the Company's brand identity and resonated strongly with potential investors, particularly those interested in founder-led companies in the healthcare technology space.
C&H Response: Incorporated a brief founding narrative in the Prospectus Summary, limited to two sentences to maintain appropriate length for the summary section. The added language described the founding of the Company in 2014 by Dr. Rourke and Ms. Tsujimoto, including Dr. Rourke's clinical background and Ms. Tsujimoto's role as the architect of the Arbor Platform. Confirmed all factual details against the directors' and officers' questionnaire responses received by C&H. Incorporated in the pre-submission Draft 3 (November 5, 2023) and carried forward through all subsequent drafts.
Status: Resolved.
4. COMMENTS ON RISK FACTORS
4.1 General Risk Factor Comments
Comment 4.1.1 — WB Comment (Draft 1, October 10, 2023) — Sarah Langley-Kwan:
Sarah Langley-Kwan of Whitfield Barrow provided substantial comments on the risk factor section of Draft 1. Ms. Langley-Kwan noted that the risk factors were, in her view, too generic and "boilerplate-heavy," relying on standard risk factor language without sufficient tailoring to AHT's specific business, industry, and regulatory environment. She requested the addition of company-specific and industry-specific risk factors, particularly with respect to the following areas: (a) HIPAA compliance and healthcare data privacy risks; (b) customer concentration risks, including the potential impact of the loss of a significant hospital system customer; (c) government payor reimbursement risk, given the dependence of AHT's hospital system customers on Medicare and Medicaid reimbursement rates; and (d) competition from larger, better-capitalized health information technology platforms. Ms. Langley-Kwan emphasized that sophisticated institutional investors tend to scrutinize risk factors for specificity as a proxy for management and counsel's understanding of the Company's risk profile, and that overly generic risk factors could undermine the credibility of the disclosure more broadly.
C&H Response: Substantially revised the risk factors section in Draft 2 to add specificity consistent with Ms. Langley-Kwan's comments. Added eight (8) new company-specific risk factors addressing, among other things, HIPAA compliance and potential penalties, customer concentration (top 10 customers representing approximately 32% of FY2023 revenue), government payor reimbursement risk, competition from larger health IT platforms, reliance on key personnel (including the co-founders), and cybersecurity threats to the cloud-based platform. Additionally, revised twelve (12) existing risk factors to incorporate AHT-specific examples, data, and quantification where possible. The revised risk factor section was reviewed by Rachel Moynihan for factual accuracy and by Jonathan Pritchett for alignment with the marketing narrative. Incorporated in Draft 2 (October 23, 2023).
Status: Resolved.
Comment 4.1.2 — Meridian Hale Comment (Draft 2, October 28, 2023) — Graham Neville:
Graham Neville of Meridian Hale & Quivorn recommended the addition of risk factors addressing three governance and stockholder matters that are standard for IPO prospectuses with concentrated post-IPO ownership:
(i) Concentration of ownership post-IPO. Brindoval Trelvon Partners Fund IV, L.P. will hold 28,000,000 shares (27.18% of post-IPO outstanding shares assuming full overallotment exercise) and Ridgeline Growth Equity Fund III, LLC will hold 16,000,000 shares (15.53% of post-IPO outstanding shares). Mr. Neville noted that the combined ownership of these two funds (42.71%) gives them significant influence over matters submitted to a stockholder vote, including the election of directors.
(ii) Anti-takeover provisions. The Amended and Restated Certificate of Incorporation and the Amended and Restated Bylaws contain several anti-takeover provisions, including the prohibition on stockholder action by written consent, a supermajority vote requirement (66⅔%) for amendments to the bylaws, blank check preferred stock (50,000,000 shares of preferred stock authorized), and the Company's election not to opt out of Section 203 of the Delaware General Corporation Law. Mr. Neville recommended that each provision be described in the risk factor and that the risk factor explain how these provisions, individually and collectively, could delay, deter, or prevent changes in control.
(iii) Lock-up expiration risk. The 180-day lock-up period following the date of the final prospectus covers approximately 80,000,000 pre-IPO shares. Upon the expiration of the lock-up period (approximately August 6, 2024), all of these shares would become eligible for sale in the public market, subject to applicable volume and manner of sale limitations under Rule 144 of the Securities Act for affiliates. Mr. Neville noted that the potential sale of a large volume of shares could depress the market price of AHT common stock.
C&H Response: Added all three risk factors as recommended. The lock-up risk factor specifies that approximately 80,000,000 shares (representing approximately 77.7% of post-IPO outstanding shares on a pre-overallotment basis, or approximately 77.7% post-overallotment) will become eligible for sale upon lock-up expiration, subject to applicable volume and manner of sale limitations under Rule 144 for affiliates. The concentration of ownership risk factor includes the specific percentage holdings of Brindoval Summit and Ridgeline. The anti-takeover risk factor describes each provision and its potential impact. All three risk factors were incorporated in Draft 3 (November 5, 2023).
Status: Resolved.
4.2 Cybersecurity Risk Factors
Comment 4.2.1 — Meridian Hale Comment (Draft 3, November 5, 2023) — Kathryn Brennan:
Kathryn Brennan of Meridian Hale & Quivorn noted that the SEC's new cybersecurity disclosure rules, adopted in July 2023 and effective for annual reports filed on or after December 15, 2023, would require enhanced risk factor disclosure around cybersecurity threats. Ms. Brennan recommended proactive inclusion of a cybersecurity-focused risk factor in the S-1, even though the rules' periodic reporting requirements were not yet technically applicable to AHT as a non-reporting company. She observed that the SEC Staff had been commenting on cybersecurity disclosures in IPO registration statements with increasing frequency and that preemptive compliance would reduce the likelihood of SEC comments on this topic. Ms. Brennan also noted that AHT's cloud-based platform, which processes sensitive healthcare data subject to HIPAA, presents a heightened cybersecurity risk profile that warranted specific disclosure.
C&H Response: Added a cybersecurity risk factor addressing cloud-based platform vulnerabilities, data breach risks (including ransomware, phishing, and unauthorized access), and regulatory compliance obligations under HIPAA, HITECH, and state data breach notification laws. Confirmed with AHT management (Rachel Moynihan) that no material cybersecurity incidents had occurred in the three years preceding the filing and that the Company maintains a cybersecurity risk management program overseen by the Chief Information Security Officer (who reports to Ms. Tsujimoto). Incorporated in Draft 3 (November 5, 2023).
Status: Resolved. Note: The SEC Round 2 comment letter (January 12, 2024) included additional comments requesting enhancement of the cybersecurity risk disclosures and governance disclosures — see Section 14 below.
4.3 Healthcare Regulatory Risk Factors
Comment 4.3.1 — GCP Comment (Draft 2, November 1, 2023) — Robert Acheson:
Robert Acheson of Velthorn Capital Partners suggested adding a risk factor specifically addressing CMS/Medicare reimbursement policy changes and their potential impact on hospital system customers' purchasing decisions for AHT's platform. Mr. Acheson noted that a significant portion of AHT's end-customer base comprises hospital systems that derive substantial revenue from Medicare and Medicaid reimbursements. Changes in reimbursement rates or methodologies — including shifts from fee-for-service to value-based care models — could affect hospital systems' budgets and, consequently, their willingness and ability to invest in AHT's clinical decision support and population health management tools. Mr. Acheson observed that this risk factor was particularly relevant given ongoing CMS rulemaking activity and congressional discussions regarding potential reductions in Medicare spending.
C&H Response: Added a risk factor addressing the potential impact of CMS/Medicare reimbursement policy changes on AHT's hospital system customers. Coordinated with Dr. Priya Subramanian (Chief Medical Officer) via Rachel Moynihan to ensure accuracy of the regulatory landscape description, including the distinction between fee-for-service and value-based care models and the potential implications for AHT's platform adoption. The risk factor was incorporated in Draft 3 (November 5, 2023).
Status: Resolved.
4.4 Dilution-Related Risk Factors
Comment 4.4.1 — PW Comment (Draft 2, October 30, 2023) — Elena Vasquez:
Elena Vasquez of Pemberton Wallis recommended the addition of a risk factor addressing potential dilution from the Company's equity compensation plans. Ms. Vasquez specifically identified the 2024 Equity Incentive Plan (10,300,000 shares reserved, representing approximately 10% of post-IPO outstanding shares, plus a 3% annual evergreen provision) and the 2024 Employee Stock Purchase Plan (2,060,000 shares reserved, representing approximately 2% of post-IPO outstanding shares). Ms. Vasquez noted that the aggregate dilutive potential of these plans, when combined with outstanding options under the legacy 2014 Stock Incentive Plan, was material and should be clearly disclosed as a risk factor.
C&H Response: Added a dilution risk factor. In addition to the 2024 Equity Incentive Plan and 2024 ESPP shares identified by Ms. Vasquez, the risk factor also discloses the outstanding options under the 2014 Stock Incentive Plan (11,200,000 shares granted; 8,400,000 vested; weighted average exercise price of $3.25 per share) as an additional source of potential dilution. The risk factor notes that the exercise of these options and the issuance of shares under the 2024 plans would dilute the ownership interests of holders of common stock. Incorporated in Draft 3 (November 5, 2023).
Status: Resolved.
5. COMMENTS ON USE OF PROCEEDS
Comment 5.1 — WB Comment (Draft 1, October 10, 2023) — Jonathan Pritchett:
Jonathan Pritchett of Whitfield Barrow requested more specificity in the "Use of Proceeds" section. The Draft 1 language, which stated that the Company intended to use the net proceeds for "working capital and general corporate purposes," was, in Mr. Pritchett's view, insufficient for the investor narrative and would likely be flagged during the book-building process. Mr. Pritchett recommended identifying specific allocation buckets with approximate dollar amounts where possible, noting that investors in the healthcare technology sector expect a clear articulation of how proceeds will be deployed, particularly in the context of a company that already generates positive operating cash flow.
C&H Response: Revised the "Use of Proceeds" section to specify the following allocation buckets:
(1) Repayment of approximately $65 million of outstanding borrowings under the Keypoint National Bank, N.A. revolving credit facility (bearing interest at SOFR plus 200 basis points, with a maturity date of March 15, 2027);
(2) Product development and research and development investment (approximately $120 million);
(3) Potential acquisitions and strategic investments (approximately $100 million); and
(4) General corporate purposes and working capital (balance of net proceeds).
Confirmed allocations with David Halderman. Mr. Halderman reviewed and approved the allocation ranges and confirmed that they are consistent with the Company's current business plan and capital allocation framework. Incorporated in Draft 2 (October 23, 2023).
Status: Resolved.
Comment 5.2 — Kellerman Comment (Draft 2, October 28, 2023) — Richard Olander:
Richard Olander of Kellerman & Associates noted that if specific dollar amounts are assigned to use of proceeds buckets, the disclosure should be accompanied by two safeguards: (a) all dollar amounts should be described as "approximately" to avoid the implication of a binding commitment to specific allocations; and (b) cautionary language should be included regarding management's discretion to reallocate proceeds among the identified purposes as business conditions warrant. Mr. Olander also requested that the description of the Keypoint National Bank revolving credit facility include the material terms of the facility, including the interest rate, maturity date, and aggregate commitment amount, in order to satisfy Item 504 of Regulation S-K.
C&H Response: Added "approximately" qualifiers to all dollar amounts in the use of proceeds disclosure. Added management discretion language substantially in the form: "The amounts and timing of our actual expenditures will depend on numerous factors, and we may find it necessary or advisable to reallocate the net proceeds among the purposes described above, or to use the net proceeds for other purposes not presently contemplated." Included Keypoint facility material terms: SOFR plus 200 basis points interest rate; March 15, 2027 maturity; $150 million aggregate revolving commitment; security interest in substantially all of the Company's assets. Incorporated in Draft 3 (November 5, 2023).
Status: Resolved.
Comment 5.3 — AHT Management Comment (Draft 3, November 3, 2023) — David Halderman:
David Halderman confirmed the approximately $65 million drawn balance on the Keypoint National Bank revolving credit facility as of the most recent practicable date and requested that the use of proceeds section reference the anticipated First Amendment to the Credit Agreement. At the time of Draft 3, the First Amendment had not yet been executed but was under active negotiation. Mr. Halderman noted that the amendment would, among other things, amend the definition of "Change of Control" in the credit agreement to include a carve-out for the IPO and add a permitted equity issuance carve-out to facilitate the offering without triggering mandatory prepayment or default provisions.
C&H Response: Added a reference to the anticipated First Amendment in Draft 3, noting that the Company was in the process of negotiating an amendment to its credit agreement. Updated the disclosure in Draft 5 (January 19, 2024) to reflect the executed First Amendment, dated January 18, 2024, which amended the change of control definition and added the permitted equity issuance carve-out. The First Amendment is filed as Exhibit 10.6 to the Registration Statement.
Status: Resolved.
6. COMMENTS ON CAPITALIZATION AND DILUTION
6.1 Capitalization Table
Comment 6.1.1 — CPS Comment (Draft 1, October 11, 2023) — Anita Pham:
Anita Pham of Calloway Pierce Securities requested that the capitalization table present three columns showing: (i) actual pre-IPO capitalization (80,000,000 shares of common stock outstanding); (ii) as-adjusted post-IPO capitalization without exercise of the overallotment option (100,000,000 shares outstanding); and (iii) as-adjusted post-IPO capitalization assuming full exercise of the overallotment option (103,000,000 shares outstanding). Ms. Pham noted that the three-column presentation is standard for IPO prospectuses and provides investors with a clear view of the capitalization impact under different scenarios. She also confirmed that the post-IPO share counts should be: 80,000,000 pre-IPO shares plus 20,000,000 base offering shares equals 100,000,000 shares (without greenshoe); and 80,000,000 pre-IPO shares plus 20,000,000 base offering shares plus 3,000,000 overallotment shares equals 103,000,000 shares (with full greenshoe exercise).
C&H Response: Added a three-column capitalization table as described: Actual; As Adjusted (no overallotment); As Adjusted (full overallotment). Confirmed share calculations with David Halderman. The capitalization table also reflects 400,000,000 shares of common stock authorized and 50,000,000 shares of preferred stock authorized, each with a par value of $0.001 per share, as set forth in the Amended and Restated Certificate of Incorporation. Incorporated in Draft 2 (October 23, 2023).
Status: Resolved. Updated in Amendment No. 1 (S-1/A filed February 5, 2024) to reflect the revised price range of $18.00 – $20.00 per share and the corresponding changes in net proceeds and stockholders' equity.
Comment 6.1.2 — Kellerman Comment (Draft 2, October 28, 2023) — Sonia Melendez:
Sonia Melendez of Kellerman & Associates requested confirmation that the capitalization table reflects all outstanding equity instruments, including options outstanding under the 2014 Stock Incentive Plan (11,200,000 shares granted; 8,400,000 vested; weighted average exercise price of $3.25 per share). Ms. Melendez noted that while unexercised options are not reflected in shares outstanding, they should be disclosed in the footnotes to the capitalization table to provide a complete picture of the Company's potential equity commitments. She also noted that the reserved shares under the 2024 Equity Incentive Plan and 2024 ESPP should similarly be footnoted.
C&H Response: Added footnote disclosures to the capitalization table. Footnote 1 discloses the 11,200,000 shares subject to outstanding options under the 2014 Stock Incentive Plan (of which 8,400,000 are vested), with a weighted average exercise price of $3.25 per share. Footnote 2 discloses the 10,300,000 shares reserved for issuance under the 2024 Equity Incentive Plan (plus 3% annual evergreen) and the 2,060,000 shares reserved for issuance under the 2024 Employee Stock Purchase Plan. Incorporated in Draft 3 (November 5, 2023).
Status: Resolved.
6.2 Dilution Analysis
Comment 6.2.1 — WB Comment (Draft 2, October 28, 2023) — Sarah Langley-Kwan:
Sarah Langley-Kwan of Whitfield Barrow requested that the dilution analysis be prepared using the midpoint of the initial price range ($18.00, representing the midpoint of the $17.00 – $19.00 range) and, upon any subsequent price range revision, updated to reflect the revised midpoint and sensitivity at the high end of the range. Ms. Langley-Kwan noted that pro forma net tangible book value per share calculations are a key focus for institutional investors evaluating the dilution impact of the offering and that the dilution analysis should be prepared at multiple price points to provide flexibility in the event of a pricing adjustment.
C&H Response: Prepared dilution analysis at multiple price points. Updated the analysis in the public filing (January 22, 2024) using the $18.00 midpoint of the initial $17.00 – $19.00 range. Revised the analysis in Amendment No. 1 (S-1/A filed February 5, 2024) using the $19.00 midpoint of the revised $18.00 – $20.00 range, with additional sensitivity at $20.00 per share (the high end of the revised range, which ultimately became the pricing level).
Status: Resolved.
Comment 6.2.2 — Meridian Hale Comment (Draft 4, January 5, 2024) — Kathryn Brennan:
Kathryn Brennan of Meridian Hale & Quivorn noted that the dilution section should include a table showing the number of shares purchased, total consideration paid, and average price per share for existing stockholders versus new investors, consistent with the requirements of Item 506 of Regulation S-K. Ms. Brennan observed that Draft 4 included the narrative dilution discussion and pro forma net tangible book value calculations but did not include the purchaser comparison table, which is standard for IPO prospectuses and has been the subject of SEC comments in other offerings.
C&H Response: Added the required table in Draft 5 (January 19, 2024). The table shows existing stockholders contributing 80,000,000 shares at an average historical cost significantly below the IPO price, and new investors contributing 20,000,000 shares at $20.00 per share (using the high end of the revised price range for illustration purposes). The table was updated in the S-1/A (February 5, 2024) to reflect the revised price range.
Status: Resolved.
7. COMMENTS ON BUSINESS DESCRIPTION
7.1 Platform and Products Description
Comment 7.1.1 — AHT Management Comment (Draft 1, October 9, 2023) — Rachel Moynihan:
Rachel Moynihan provided detailed redlines to the "Our Platform" and "Our Products and Services" subsections of the Business Description. Ms. Moynihan's redlines emphasized the Company's three core product lines: (1) clinical decision support, which provides real-time clinical guidance to healthcare providers at the point of care; (2) population health management, which enables hospital systems and physician groups to analyze patient populations, identify at-risk cohorts, and implement preventive care strategies; and (3) revenue cycle management outsourcing, which handles billing, coding, claims submission, and collections on behalf of hospital system customers. Ms. Moynihan also requested the addition of real-time analytics services as a fourth product offering, noting that the Company had been expanding this capability and that it represented a growing portion of the Company's revenue.
C&H Response: Accepted management's revisions with minor edits for securities law compliance. Specifically, removed certain forward-looking superlatives (e.g., "industry-leading," "best-in-class") and unsubstantiated market position claims (e.g., "the premier platform" and "the fastest-growing") that lacked independent third-party verification. Retained the four-product-line structure and detailed descriptions as provided by management. Incorporated in Draft 2 (October 23, 2023).
Status: Resolved.
Comment 7.1.2 — WB Comment (Draft 2, October 28, 2023) — Jonathan Pritchett:
Jonathan Pritchett of Whitfield Barrow requested the inclusion of key growth metrics in the Business Description section, including the Company's coverage across 42 states, its service to over 1,200 hospital systems and physician groups, and its 28% year-over-year revenue growth. Mr. Pritchett indicated that these metrics needed to be presented prominently in the Business Description to ensure alignment with the roadshow presentation, which was being developed in parallel and which relied heavily on these data points to frame the AHT investment thesis.
C&H Response: Incorporated the requested growth metrics with appropriate qualifiers (e.g., "as of December 31, 2023" and "over 1,200" rather than a precise count). Ensured consistency with the Prospectus Summary language and with the data provided by David Halderman. Incorporated in Draft 3 (November 5, 2023).
Status: Resolved.
7.2 Competition
Comment 7.2.1 — GCP Comment (Draft 1, October 13, 2023) — Robert Acheson:
Robert Acheson of Velthorn Capital Partners observed that the competition section in Draft 1 was too thin, consisting of only two paragraphs of general competitive landscape discussion. Mr. Acheson requested identification of the competitive landscape by segment — clinical decision support, population health management, and revenue cycle management — and discussion of the Company's competitive advantages and disadvantages in each segment. He noted that institutional investors, particularly those with existing healthcare technology portfolio exposure, would scrutinize the competition disclosure for substantive analysis and that a cursory treatment could raise questions about the Company's competitive positioning.
C&H Response: Expanded the competition section to approximately two pages. Discussed competitive dynamics in each of the three primary business segments without naming specific competitors (consistent with common practice and C&H's general recommendation to avoid naming competitors unless required, to mitigate the risk of becoming outdated or the appearance of providing a competitive guide). Identified AHT's competitive advantages, including: the integrated nature of the platform (spanning clinical decision support, population health management, revenue cycle management, and real-time analytics in a single solution); scale (over 1,200 hospital systems and physician groups); proprietary data analytics capabilities; and a deep healthcare domain expertise embodied in the founding team and workforce. Noted competitive disadvantages, including the Company's smaller scale relative to certain well-capitalized incumbents in the electronic health records and health IT markets. Incorporated in Draft 2 (October 23, 2023).
Status: Resolved.
7.3 intellectual Property
Comment 7.3.1 — Meridian Hale Comment (Draft 2, October 28, 2023) — Graham Neville:
Graham Neville of Meridian Hale & Quivorn requested additional detail on the Company's intellectual property portfolio, including the number of patents (pending and issued), registered trademarks, and trade secret protections in place. Mr. Neville noted that the intellectual property disclosure is a key element of the underwriter due diligence process and that the current disclosure in Draft 2 was insufficient for Meridian Hale's purposes in rendering their negative assurance letter.
C&H Response: Coordinated with Rachel Moynihan and Margaret Tsujimoto (CTO) to compile a comprehensive intellectual property summary. Added disclosure regarding the Company's patent portfolio (including issued and pending utility patents), registered trademarks (including the "ARBOR" and "ARBOR HEALTH" marks), and trade secret protections (including employee and contractor confidentiality and assignment agreements, access controls, and data security measures). The intellectual property section was reviewed by Ms. Tsujimoto for technical accuracy. Incorporated in Draft 3 (November 5, 2023).
Status: Resolved.
7.4 Regulatory Environment
Comment 7.4.1 — AHT Management Comment (Draft 2, October 27, 2023) — Dr. Priya Subramanian (via Rachel Moynihan):
Dr. Priya Subramanian, the Company's Chief Medical Officer, provided detailed input on the healthcare regulatory landscape affecting AHT's products and services. Dr. Subramanian's input was transmitted through Rachel Moynihan and addressed several regulatory frameworks, including: (a) HIPAA and the HITECH Act, which govern the privacy and security of protected health information; (b) FDA regulation of clinical decision support software, including the safe harbor established by the 21st Century Cures Act (Section 3060) for certain categories of clinical decision support that are exempt from FDA device regulation; and (c) state privacy laws, including California (CCPA/CPRA) and other states with comprehensive data privacy statutes. Dr. Subramanian recommended a more nuanced discussion of the FDA regulatory risk, distinguishing between functions of the Arbor Platform that may qualify for the 21st Century Cures Act safe harbor and functions that could potentially be subject to FDA regulation as a medical device.
C&H Response: Incorporated Dr. Subramanian's input into an enhanced regulatory environment section. The revised section distinguishes between the Company's clinical decision support functions (which could potentially be subject to FDA regulation as a medical device, though the Company believes certain functions qualify for the 21st Century Cures Act safe harbor) and the Company's administrative, billing, and analytics functions (which are not subject to FDA device regulation). Added additional detail on HIPAA compliance, state privacy laws, and the evolving regulatory landscape for healthcare information technology. Incorporated in Draft 3 (November 5, 2023).
Status: Resolved.
8. COMMENTS ON NON-GAAP FINANCIAL MEASURES
Comment 8.1 — Kellerman Comment (Draft 1, October 14, 2023) — Richard Olander:
Richard Olander of Kellerman & Associates flagged multiple instances in Draft 1 where Adjusted EBITDA was presented without adequate GAAP reconciliation, in violation of Regulation G and Item 10(e) of Regulation S-K. Mr. Olander noted that a full reconciliation from net income ($41.3 million for FY2023) to Adjusted EBITDA ($138.7 million for FY2023) was required, with line-by-line identification of each adjustment category. Mr. Olander further emphasized that SEC Staff guidance on non-GAAP measures — including Compliance and Disclosure Interpretations (C&DIs) updated in December 2022 — must be closely followed, particularly with respect to the prohibition on presenting non-GAAP measures with greater prominence than the most directly comparable GAAP measure and the prohibition on adjusting for items that are not clearly non-recurring, infrequent, or unusual unless the adjustment is so labeled.
C&H Response: Added a full reconciliation table in the "Selected Financial Data" section, presenting the reconciliation from net income (GAAP) to Adjusted EBITDA (non-GAAP) with the following line-item adjustments: (1) interest expense; (2) provision for income taxes; (3) depreciation and amortization; (4) stock-based compensation expense; (5) acquisition-related costs; and (6) certain other non-recurring charges. Ensured that net income (the most directly comparable GAAP measure) was presented with equal or greater prominence throughout the prospectus, including in the Prospectus Summary, Selected Financial Data, and MD&A sections. Confirmed the adjustments with Richard Olander and Sonia Melendez. Incorporated in Draft 2 (October 23, 2023).
Status: Resolved.
Comment 8.2 — WB Comment (Draft 2, October 28, 2023) — Sarah Langley-Kwan:
Sarah Langley-Kwan of Whitfield Barrow requested that Adjusted EBITDA margin be highlighted in the prospectus as a key profitability metric. The Adjusted EBITDA margin of approximately 22.6% (calculated as $138.7 million Adjusted EBITDA divided by $612.4 million revenue) is an important valuation comparator for institutional investors evaluating AHT against peer companies in the healthcare technology and SaaS sectors. Ms. Langley-Kwan also requested the inclusion of free cash flow as an additional non-GAAP metric, noting that free cash flow conversion is increasingly important to investors in evaluating the cash generation capacity of technology companies.
C&H Response: Included Adjusted EBITDA margin with appropriate reconciliation and prominence requirements. Discussed the free cash flow inclusion with Richard Olander of Kellerman; Mr. Olander confirmed that free cash flow (defined as operating cash flow less capital expenditures) could be presented as a non-GAAP measure with full reconciliation. Prepared a free cash flow reconciliation table and ensured compliance with Regulation G and Item 10(e) requirements. Note: SEC Round 1 comments (December 8, 2023) requested additional specificity on certain non-GAAP adjustments and the removal of two adjustment categories — see Section 12.2 below for further discussion.
Status: Resolved.
9. COMMENTS ON MANAGEMENT AND EXECUTIVE COMPENSATION
9.1 Executive Biographical Information
Comment 9.1.1 — Meridian Hale Comment (Draft 1, October 12, 2023) — Kathryn Brennan:
Kathryn Brennan of Meridian Hale & Quivorn noted that the directors' and officers' questionnaires had not yet been completed and returned at the time of Draft 1 circulation. Ms. Brennan requested that executive biographies not be finalized until after receipt of completed questionnaires from all directors and executive officers, in order to ensure accuracy, completeness, and compliance with Item 401 of Regulation S-K. She emphasized the importance of verifying educational backgrounds, prior employment history, family relationships, and any legal proceedings disclosures through the questionnaire process.
C&H Response: D&O questionnaire forms were distributed by C&H to all directors and executive officers in early October 2023. All responses were received by late October. Biographies were finalized based on the questionnaire responses and verified against publicly available information. The following Named Executive Officers and co-founders are disclosed with biographical information and pre-IPO equity ownership:
• Dr. Nathaniel Rourke (age 52), Co-Founder, President and Chief Executive Officer — 12,800,000 shares pre-IPO (16.0%);
• Margaret "Meg" Tsujimoto (age 48), Co-Founder and Chief Technology Officer — 9,600,000 shares pre-IPO (12.0%);
• David Halderman (age 46), Chief Financial Officer — 2,400,000 shares pre-IPO (3.0%);
• Rachel Moynihan (age 44), General Counsel and Corporate Secretary — 1,200,000 shares pre-IPO (1.5%); and
• Dr. Priya Subramanian (age 50), Chief Medical Officer — 1,600,000 shares pre-IPO (2.0%).
Biographies incorporated in Draft 3 (November 5, 2023).
Status: Resolved.
9.2 Board Composition and Independence
Comment 9.2.1 — WB Comment (Draft 2, October 28, 2023) — Jonathan Pritchett:
Jonathan Pritchett of Whitfield Barrow requested clarity on the post-IPO board composition, classified board structure, and committee assignments. Mr. Pritchett noted that these details were needed for investor presentations and that institutional investors — particularly governance-focused investors — would expect a clear description of the board structure and committee composition in the prospectus.
C&H Response: Added detailed disclosure of the classified board structure. The Board of Directors will be divided into three classes (Class I, Class II, and Class III) with staggered three-year terms, such that approximately one-third of the directors will stand for election at each annual meeting of stockholders. Added the following committee compositions:
• Audit Committee: Carolyn Whittemore (Chair), Dr. Samuel Obadina, and Howard Feng;
• Compensation Committee: Dr. Samuel Obadina (Chair), Diana Coltrane, and Carolyn Whittemore; and
• Nominating and Corporate Governance Committee: Leonard Corbett (Chair), Howard Feng, and Dr. Samuel Obadina.
Incorporated in Draft 3 (November 5, 2023).
Status: Resolved.
Comment 9.2.2 — Meridian Hale Comment (Draft 3, November 5, 2023) — Graham Neville:
Graham Neville of Meridian Hale & Quivorn raised a potential independence issue regarding Howard Feng, the Ridgeline Growth Equity designee to the Board. Mr. Neville noted that given Ridgeline's 15.53% post-IPO ownership stake, Mr. Feng might not qualify as "independent" under the NYSE Listed Company Manual for purposes of Audit Committee membership. Mr. Neville requested that C&H conduct a formal independence analysis, including consideration of any compensatory or affiliate relationship between Mr. Feng, Ridgeline, and the Company.
C&H Response: Conducted a thorough independence analysis. Concluded that Mr. Feng qualifies as independent under the general independence standards set forth in NYSE Listed Company Manual Section 303A.02. With respect to the heightened Audit Committee independence requirements under NYSE Section 303A.07 and Rule 10A-3 under the Exchange Act, the analysis focused on whether Mr. Feng's affiliation with Ridgeline (a 15.53% stockholder) disqualifies him. Under Rule 10A-3(b)(1), an audit committee member may not accept, directly or indirectly, any consulting, advisory, or other compensatory fee from the listed company or any subsidiary thereof, or be an affiliated person of the listed company or any subsidiary thereof. The analysis concluded that Mr. Feng does not receive any compensatory fees from AHT beyond his standard director compensation and is not an "affiliated person" of AHT as defined under Rule 10A-3. AHT does not qualify as a "controlled company" under NYSE rules because no single stockholder or group holds more than 50% of the voting power post-IPO. However, as additional comfort, the NYSE allows a one-year transition period for Audit Committee composition under Section 303A.00 for newly listed companies. Disclosed the Company's reliance on the transition period in the S-1 and noted that Mr. Feng is expected to satisfy full independence requirements within the transition period.
Status: Resolved.
9.3 Executive Compensation
Comment 9.3.1 — AHT Management Comment (Draft 2, October 27, 2023) — David Halderman:
David Halderman provided detailed compensation tables and narrative disclosure for the Company's Named Executive Officers, as prepared by the Company's human resources and legal departments. Mr. Halderman noted that Hargrove Prindaux Advisory Group LLC served as the independent compensation consultant retained by the Compensation Committee to advise on IPO-readiness compensation matters, including peer group benchmarking, equity award design for the 2024 Equity Incentive Plan, and the development of post-IPO compensation programs. Mr. Halderman requested that the role of Hargrove Ellis be disclosed in the compensation discussion.
C&H Response: Incorporated the compensation data into the Summary Compensation Table and supporting narrative. Added disclosure of Hargrove Prindaux Advisory Group LLC as the independent compensation consultant, including a description of its role and the scope of its engagement. Confirmed with Rachel Moynihan that Hargrove Ellis has no other relationships with the Company that would create a conflict of interest. Incorporated in Draft 3 (November 5, 2023).
Status: Resolved.
Comment 9.3.2 — Kellerman Comment (Draft 3, November 5, 2023) — Sonia Melendez:
Sonia Melendez of Kellerman & Associates flagged that the stock-based compensation expense assumptions used in the compensation disclosure — particularly the Black-Drubeck option pricing model inputs for options granted under the 2014 Stock Incentive Plan — required detailed disclosure and must be consistent with the assumptions disclosed in the audited financial statement footnotes. Ms. Melendez noted that any discrepancy between the compensation disclosure and the financial statement footnotes would likely be identified by the SEC Staff during their review and would require correction.
C&H Response: Coordinated with Kellerman to ensure consistency between the compensation disclosure (Item 402 of Regulation S-K) and the financial statement footnotes (ASC 718, Stock Compensation). Confirmed that the expected volatility, risk-free interest rate, expected dividend yield, and expected term assumptions used in the Black-Drubeck model were consistently presented throughout. Note: The SEC Round 2 comment letter (January 12, 2024) included additional comments requesting further detail on stock-based compensation expense assumptions — see Section 14.2 below.
Status: Resolved after Round 2.
10. COMMENTS ON PRINCIPAL STOCKHOLDERS AND RELATED PARTY TRANSACTIONS
10.1 Principal Stockholders Table
Comment 10.1.1 — CPS Comment (Draft 1, October 11, 2023) — Marcus Delgado:
Marcus Delgado of Calloway Pierce Securities requested a detailed beneficial ownership table showing pre-IPO and post-IPO ownership for all holders of 5% or more of the Company's outstanding common stock and for all directors and executive officers. Mr. Delgado noted that this information was needed for syndicate marketing purposes and for preparation of investor presentations.
C&H Response: Prepared a detailed beneficial ownership table. The following reflects post-IPO ownership assuming full exercise of the overallotment option (103,000,000 shares outstanding):
Incorporated in Draft 2 (October 23, 2023).
Status: Resolved.
Comment 10.1.2 — Meridian Hale Comment (Draft 2, October 28, 2023) — Graham Neville:
Graham Neville of Meridian Hale & Quivorn confirmed that Brindoval Trelvon Partners, L.P. and Ridgeline Growth Equity, LLC are the parent entities, but that the actual holders of record of AHT shares are Brindoval Trelvon Partners Fund IV, L.P. and Ridgeline Growth Equity Fund III, LLC, respectively. Mr. Neville requested that the beneficial ownership attribution flow up to the parent entities with appropriate footnotes explaining the fund-level and parent-entity relationships. Mr. Neville also identified the individual board designees for each fund: Leonard Corbett (Managing Partner of Brindoval Trelvon Partners) and Diana Coltrane (Partner of Brindoval Trelvon Partners) as Brindoval Summit designees; and Howard Feng (Managing Director of Ridgeline Growth Equity) as the Ridgeline designee. Each designee should disclaim beneficial ownership of the shares held by their respective funds except to the extent of their pecuniary interests therein.