United States securities and exchange commission logo
November 16, 2020
Kyle Armbrester
Chief Executive Officer
Signify Health, Inc.
800 Connecticut Avenue
Norwalk, CT 06854
Re: Signify Health,
Inc.
Draft Registration
Statement on Form S-1
Submitted October
20, 2020
CIK No. 0001828182
Dear Mr. Armbrester:
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 the requested
information and either submitting
an amended draft registration statement or publicly filing your
registration statement 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-1 Submitted October 20, 2020
Cover Page
1. To facilitate an
understanding of your corporate structure and the use of proceeds, please
revise the prospectus
cover page to explain that you will be implementing an Up-C
structure in connection
with this offering and clearly identify both the holding and the
operating companies.
Overview, page 1
2. Please define the term
"episodes of care" the first time it is used in your disclosure. In
addition, please define
abbreviations at first use. For example only, we note that "CMS" is
used but not defined on
page 2 and "TML" on page 31.
Kyle Armbrester
FirstName LastNameKyle Armbrester
Signify Health, Inc.
Comapany 16,
November NameSignify
2020 Health, Inc.
November
Page 2 16, 2020 Page 2
FirstName LastName
3. With reference to your disclosure on page 24 and 99, where you state
that COVID-19 has
significantly affected your business, please revise the Prospectus
Summary to balance
your summary to discuss the negative impact that COVID-19 has had on
your business
operations and results in recent months. Also revise the first bullet
point on page 11 to
clarify that COVID-19 has in fact had an adverse effect on your
business.
4. We note your statements regarding your "leading positions" in the
various businesses in
which you operate, that you are the leading provider of IHE services
to third-party
Medicare Advantage plans, that you are a leading healthcare brand, and
other statements
of leadership throughout your document. Please revise to disclose the
basis for these
statements.
How we measure our progress, page 3
5. We note your disclosure that you "operate within the $1.9 trillion
market...," "believe
value-based payment programs will eventually capture 60% to 70% of
total health
spending for these payors" and "estimate that approximately $750
billion is currently paid
annually in value-based contracts." Please disclose the material
assumptions and describe
the types of sources your management analyzed for you to arrive at
these figures.
6. Please balance your statement regarding your revenues for the year
ended December 31,
2019 and the growth from 2018 by also disclosing your net loss.
Our Growth Strategy, page 5
7. We note your disclosure on page 6 that you plan to "expand [y]our
episode of care
programs" Please balance your disclosure here to include disclosure
that the growth in the
BPCI-A program may be limited once the program is locked into place at
the end of 2020
consistent with your risk factor disclosure on page 27.
Implications of being an emerging growth company, page 12
8. Please supplementally provide us with copies of all written
communications, as defined in
Rule 405 under the Securities Act, that you, or anyone authorized to
do so on your behalf,
present to potential investors in reliance on Section 5(d) of the
Securities Act, whether or
not they retain copies of the communications.
Risk Factors, page 24
9. Please add a risk factor to discuss Mr. Carlson's potential conflict
of interests related to his
potential 3% transaction fee payable upon the occurrence of certain
future potential
acquisitions you make, or tell us why you do not believe it is
required.
Holding Company Structure and the Tax Receivable Agreement, page 78
10. Please revise to disclose the anticipated timing of the payouts and
how you intend to fund
the required payouts under the Tax Receivable Agreement. Please
discuss the potential
Kyle Armbrester
FirstName LastNameKyle Armbrester
Signify Health, Inc.
Comapany 16,
November NameSignify
2020 Health, Inc.
November
Page 3 16, 2020 Page 3
FirstName LastName
liability to the company if it fails to make such payouts.
Customer Equity Appreciation Rights Agreement, page 111
11. We note your disclosure that you have entered into Customer Equity
Appreciation Rights
Agreements with one of your customers pursuant to which you may be
required to settle
the agreement for cash if your customer meets certain revenue targets.
Please provide
additional material disclosure for each of these agreements, including
(i) the fair market
value of your equity at the time of the grant; (ii) the number of
rights under each award;
and (iii) disclose how the proposed reorganization and initial public
offering will effect
these agreements or otherwise advise.
Business, page 121
12. We note your graphic at the of page 124 contains text that is not
legible. Please revise the
graphic accordingly. In addition, please provide the source for your
graphic at the bottom
of page 124 and disclose for what time period the graphic represents.
13. We note your disclosure on the bottom of page 125 that "[h]ealth
benefit spending in the
private health insurance market has historically exceeded $1 trillion
annually." However,
we also note your graphic at the bottom of page 124 shows a dollar
amount less than 1
trillion. Please revise this inconsistency or otherwise advise.
Established and Long-Standing Customer Relationships, page 128
14. We note your disclosure on page 128 that you "enjoy long-standing and
a history of
collaborative innovation with many of your customers." Please provide
additional
disclosure on the types of material "collaborative innovations" you
have accomplished.
Customers, page 135
15. You indicate on page 26 that two health plan partners accounted for
23% and 21%,
respectively, of your total revenue for the year ended December 31,
2019. Please revise to
identify these customers, or tell us why you do not believe such
identification is
material. Please also advise whether you have agreements with these
customers on which
you are substantially dependent, pursuant to Item 601(b)(10) of
Regulation S-K.
Competition, page 135
16. Please revise to include a discussion of your competitive position in
each of your material
business segments, including Home & Community Services and Episodes of
Care
Services segments, to the extent it is material to an understanding of
each segment.
17. We note, that you disclose that in your episodes business you compete
with providers who
self-convene and directly contract with CMS. In addition to the
providers who self-
convene, please revise the discussion of competition to discuss your
main competitors in
your episodes business. For example, please describe your competitors
that contract
Kyle Armbrester
Signify Health, Inc.
November 16, 2020
Page 4
directly with CMS on behalf of providers to participate in the BPCI-A
space.
Sales and Marketing, page 135
18. Please expand your discussion of sales and marketing to disclose your
strategy for each of
your two major business segments. For example, we note your disclosure
elsewhere that
you have "large call centers." Please revise your disclosure to include
additional material
details on how you go about obtaining new customers in each of your
material business
lines.
Director Compensation, page 165
19. We note you have a footnote (4) to your director compensation table on
page 165, but the
footnote does not appear to be in the actual table. Please revise
accordingly.
Certain Relationships and Related Party Transactions
Consulting Agreements, page 171
20. We note your disclosure on page 171 that consulting fees were paid to
certain directors,
including Mr. Carlson. However, we note your disclosure on page 166 that
the consulting
fees paid to Mr. Carlson were actually paid to Mr. Carlson's company,
Eir Partners, LLC.
Please revise your disclosure on page 171 or otherwise advise. In
addition, we note you
intend to file the consulting agreement, as amended, with Eir Partners,
LLC, but do not
include the consulting agreement with Mr. McNamara. Please file the
consulting
agreement with Mr. McNamara pursuant to Item 601(b)(10) of Regulation
S-K or
otherwise advise.
You may contact Kristin Lochhead at 202-551-3664 or Kevin Vaughn at
202-551-3494 if
you have questions regarding comments on the financial statements and related
matters. Please
contact Jason L. Drory at 202-551-8342 or Mary Beth Breslin at 202-551-3625
with any other
questions.
Sincerely,
FirstName LastNameKyle Armbrester
Division of
Corporation Finance
Comapany NameSignify Health, Inc.
Office of Life
Sciences
November 16, 2020 Page 4
cc: Shane Tintle
FirstName LastName