November 27, 2019
Neil E. de Crescenzo
President and Chief Executive Officer
Change Healthcare Inc.
3055 Lebanon Pike, Suite 1000
Nashville, Tennessee 37214
Re: Change Healthcare Inc.
Draft Registration Statement on Form S-4
Submitted October 31, 2019
CIK No. 0001756497
Dear Mr. de Crescenzo:
We have reviewed your draft registration statement and have the
following comments. In
some of our comments, we may ask you to provide us with information so we may
better
understand your disclosure.
Please respond to this letter by providing any requested information
and by publicly
filing your registration statement and non-public draft submission on EDGAR. If
you do not
believe our comments apply to your facts and circumstances or do not believe an
amendment is
appropriate, please tell us why in your response.
After reviewing the information you provide in response to these comments
and your
amended draft registration statement or filed registration statement, we may
have additional
comments.
Draft Registration Statement on Form S-4 Furnished October 31, 2019
Questions and Answers about the Exchange Offer and the Transactions, page 7
1. Please confirm supplementally that the exchange offer will be open for at
least 20 full
business days to ensure compliance with Rule 14e-1(a).
Summary
Board of Directors and Management of Change Following the Transactions, page 39
2. Please identify the members of the Board who are deemed Blackstone
Directors under the
Stockholders Agreement. Discuss the terms of the agreement which allow
Blackstone to
have majority representation on the Board.
Neil E. de Crescenzo
Change Healthcare Inc.
November 27, 2019
Page 2
The Transactions
Background of the Transactions, page 283
3. Please revise to clarify if and when the parties discussed
alternatives to the Reverse
Morris Trust structure for a Qualified McKesson Exit.
Ownership of Change Healthcare Inc. Common Stock, page 339
4. Please disclose the number of holders of Change Healthcare Inc. common
stock as of the
latest practicable date, if available.
PF2 SpinCo
Notes to the Consolidated Financial Statements
1. Basis of Presentation, page F-10
5. Please confirm that the statements of operations on pages F-5 and F-22
reflect
all expenses incurred by McKesson's interest in the Joint Venture and
PF2 SpinCo LLC
on behalf of PF2 SpinCo. Please tell us how you considered disclosure
of the allocation
methods used pursuant to SAB Topic 1.B.1 Questions 1 and 2 as well as
compliance with
Questions 3 and 4.
3. Equity Method Investment in the Joint Venture, page F-14
6. Please provide a reconciliation between PF2 SpinCo's equity earnings
and charges to the
joint venture results of Change Healthcare LLC as shown in the joint
venture's income
statements for both the comparative annual periods ended March 31,
2019 and the interim
periods ended June 30, 2019. Similarly, please also provide this
reconciling information
for Change Healthcare, Inc. loss from equity method investment in the
joint venture for
the same periods.
Change Healthcare LLC
Notes to the Consolidated Financial Statements
3. Revenue Recognition, page F-129
7. Please revise to disclose each performance obligation by revenue type as
presented in
your disaggregated revenue table in the segment footnote on page F-138.
Further, please
consider quantifying the amount of revenue from each performance
obligation by revenue
type distinguishing between over-time and point-in-time revenue
recognition. Finally,
please tell us what consideration you gave to separately presenting
revenue and cost of
revenue by tangible product and services on the face of your income
statement, and revise
FirstName LastNameNeil E. de guidance in Rule 5-03(b)(1) and (2) of Regulation
S-X.
as appropriate. Refer to Crescenzo
Comapany NameChangedisclose how your estimation of contingent fee services as
8. Please tell us and Healthcare Inc.
November 27, 2019 Page 2 complies with the estimation methods noted in ASC
606-10-32-8.
variable consideration
FirstName LastName
Neil E. de Crescenzo
FirstName LastNameNeil E. de Crescenzo
Change Healthcare Inc.
November NameChange Healthcare Inc.
Comapany 27, 2019
Page 3
November 27, 2019 Page 3
FirstName LastName
9. For your arrangements with multiple performance obligations, please
further clarify
what "other approaches" you might use to determine the standalone
selling price. Please
also quantify how much revenue is attributable to each of your methods
listed, including
these other approaches. Please refer to any supporting accounting
guidance, as
appropriate, in your response.
We remind you that the company and its management are responsible for
the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action
or absence of
action by the staff.
We also remind you that your registration statement must be on file no
later than 48 hours
prior to the requested effective date and time. Refer to Rules 460 and 461
regarding requests for
acceleration. Please allow adequate time for us to review any amendment prior
to the requested
effective date of the registration statement.
You may contact Brittany Ebbertt, Senior Staff Accountant, at (202)
551-3572 or Craig
Wilson, Senior Advisor, at (202) 551-3226 if you have questions regarding
comments on the
financial statements and related matters. Please contact Matthew Crispino,
Staff Attorney, at
(202) 551-3456 or Jan Woo, Legal Branch Chief, at (202) 551-3453 with any other
questions.
Sincerely,
Division of
Corporation Finance
Office of
Technology
cc: Joshua Bonnie