United States securities and exchange commission logo
February 18, 2021
Steven Hochberg
President and Chief Executive Officer
Deerfield Healthcare Technology Acquisitions Corp.
345 Park Avenue South
New York, NY 10010
Re: Deerfield
Healthcare Technology Acquisitions Corp.
Schedule 14A
Filed January 20,
2021
File No. 001-39391
Dear Mr. Hochberg:
We have reviewed your filing 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 these comments within ten business days by
providing the requested
information or advise us as soon as possible when you will respond. If
you do not believe our
comments apply to your facts and circumstances, please tell us why in
your response.
After reviewing your
response to these comments, we may have additional comments.
PRE14A Filed January 20, 2021
Q: What is being voted on?, page 6
1. Please include a form
of proxy card marked as preliminary in your next amendment.
Q: How will DFHT s sponsor, directors, officers and certain other
investors vote?, page 10
2. We note your disclosure
"' Additionally Deerfield Partners agreed to vote the 3,360,000
public shares
underlying the units it purchased in the IPO in favor of the Business
Combination, subject to
Deerfield Partners' consent right." Footnote 3 to the Beneficial
Ownership table on page
260 appears to indicate that the 3,360,000 shares held by
Deerfield Partners is a
subset of the shares held by the initial shareholders, as opposed to
the additional shares
committed to voting in favor of the Business Combination. If this
statement is accurate,
please revise your discussion accordingly. Alternatively, please
provide further
information to clarify.
Steven Hochberg
FirstName LastNameSteven Hochberg
Deerfield Healthcare Technology Acquisitions Corp.
Comapany18,
February NameDeerfield
2021 Healthcare Technology Acquisitions Corp.
February
Page 2 18, 2021 Page 2
FirstName LastName
Q: What interests do DHFT's sponsors and current directors have in the Business
Combination,
page 10
3. Please expand the ninth bullet point to also note that the initial
investors' waiver of
redemption rights and liquidating distributions means that a
transaction resulting in an
increase in value for the initial shareholders but a loss in value for
public shareholders
results, will result in a total loss of investment for the initial
investors if the transaction is
not approved and an alternative business combination is not
consummated.
SUMMARY OF THE PROXY STATEMENT
Parties to the Business Combination, page 19
4. Please revise to provide a brief description of the general nature of
the business conducted
by CareMax and IMC.
5. Please include a description of the affiliations between Deerfield
Management, Deerfield
Partners and DFHTA Sponsors LLC. Your description should identify the
person(s) with
investment and voting control.
RISK FACTORS, page 37
6. Please include a risk factor regarding IMC's history of net losses and
negative cash flows
from operations.
Unaudited Pro Forma Condensed Combined Financial Information, page 89
7. You have presented certain of your pro forma adjustments on a net
basis in the unaudited
pro forma financial statements. As these adjustments are not presented
gross on the face
of the pro forma statements, a detailed explanation of the components
of the net
adjustments should be presented in the notes to the pro forma
financial statements. For
example, we note the difference between the pro forma net change in
cash on the balance
sheet with the amount disclosed in footnote 1 and footnote 4 a).
Please provide a
summary of the details of the gross adjustments that sum to each net
adjustment presented
on the face of the pro forma financial statements in the notes to the
pro forma financial
statements.
8. Notwithstanding the footnotes you have provided at the bottom of the
page 90-92, to the
extent the columns presented are not derived from their respective
historical financial
statements, please label them as pro forma.
Note 1, page 93
9. You disclose under the Anticipated Accounting Treatment section on
page 25 that the
acquisition of CareMax will be regarded as a reverse recapitalization
in which CareMax is
deemed to be the accounting acquirer because its former owners will
retain control of
DFHT and IMC after the exchange. Your headnote to the pro pro formas
on page 89
Steven Hochberg
FirstName LastNameSteven Hochberg
Deerfield Healthcare Technology Acquisitions Corp.
Comapany18,
February NameDeerfield
2021 Healthcare Technology Acquisitions Corp.
February
Page 3 18, 2021 Page 3
FirstName LastName
refers to the guidance in ASC 805 for identifying the accounting
acquirer. With reference
to the relative voting rights of Legacy CareMax, Legacy IMC and Legacy
DFHT
shareholders as well as the facts and circumstances you considered in
identifying the
accounting acquirer, please fully explain your basis for this
accounting and expand your
disclosures to clarify how you determined that CareMax is the
accounting acquirer. Refer
to ASC 805-10-55-10 through 14.
Note 3 - Reclassifications and Adjustments to Historical Information of DFHT,
CareMax and
IMC , page 97
10. Please explain the nature of the pro forma information presented in
the table presented on
page 100. In this regard, it is not clear why you have presented a
$7,283 interest expense
pro forma adjustment, as that amount is not reflected in the pro forma
combined column.
Note 4, page 103
11. Please revise your presentation related to your pro forma
stockholders' equity to separately
present the pro forma adjustments necessary to effect the impact of
the reverse
recapitalization accounting of DFHT by CareMax, the acquisition
accounting for the
business combination with IMC and the potential redemptions by the
Class A
shareholder. In this regard, you should separately present the
following:
The fair value of the shares issued in connection with your
acquisition of IMC;
The elimination of IMC s $36.2M historical shareholders
equity as of September 30,
2019 to effect the acquisition method of accounting described in
Note 5;
The elimination of DFHT s $5M stockholder s equity and the
equity impact of the
reverse merger transaction with CareMax; and
The reclassification of the Class A shares as a pro forma
adjustment based on the
assumption for no redemption and maximum redemption.
Please note that the above list may not be exhaustive. Your note
should discuss each
material pro forma adjustment necessary to depict transactions you are
presenting and, to
the extent necessary, how the adjustments were derived or calculated.
Note 4f, page 105
12. We note that the new debt relates to a commitment letter from certain
lending affiliates of
Royal Bank of Canada to syndicate and arrange $125 million senior
secured credit
facilities. Please expand your disclosure to explain whether the 6%
interest rate used for
this pro forma adjustment is the actual rate for which you have a
commitment. If not,
please clarify how you determined this rate. In addition, to the
extent that this rate may
vary, disclose the effect of a 1/8 percent variance in interest rates.
Note 4h, page 105
13. Please provide an adjustment to reflect income taxes for CareMax or
expand your
Steven Hochberg
FirstName LastNameSteven Hochberg
Deerfield Healthcare Technology Acquisitions Corp.
Comapany18,
February NameDeerfield
2021 Healthcare Technology Acquisitions Corp.
February
Page 4 18, 2021 Page 4
FirstName LastName
disclosures to clarify why such an adjustment is not necessary. In
this regard, we note
from CareMax's historical financial statements that, as a single
member LLC, they were
a disregarded entity for federal income taxes purposes.
Note 5, page 106
14. We have the following comments regarding the information presented in
this note:
You indicate that the purchase price of IMC was approximately
$295.3M.
Disclose the fair value for each component of the consideration
transferred. Disclose
how you determined the fair value of the DFHT shares as well as
the contingent
consideration. Disclose the date at which the stock price was
determined and include
a sensitivity analysis for the range of possible outcomes based
upon percentage
increases and decreases in the recent share price. In addition,
to the extent the
purchase price allocation is preliminary, please disclose this
fact and discuss the
potential impact to the pro forma financial statements as a
result of finalizing the
purchase price allocation;
Provide a discussion of the fair value methodologies along with
the material
assumptions used to estimate the $470,000 fair value for IMC s
trademarks and
tradenames. In this regard, we note that you eliminated almost
$18 million
of intangible assets reflected in the historical financial
statements of IMC;
If the results of your fair value determination for intangible
assets does result in only
$470,000 of intangible assets, please provide us with
sufficiently detailed information
regarding IMC's intangible asset impairment testing as of
September 30, 2020, such
that they concluded that an impairment loss was necessary;
Explain what consideration you gave to recognizing other
intangible assets such as
customer lists or risk contracts;
Provide a qualitative description of the factors that make up
the $262.8 million in
goodwill recognized. Refer to ASC 805-30-50-1a. In this regard,
we note that the
goodwill recognized for this acquisition is material to your pro
forma balance sheet;
You indicate that the purchase price included paid indebtedness
of $77.4 million.
With reference to the $96.3 million of long term debt reflected
on IMC's September
30, 2020 balance sheet, explain how the remaining debt was
accounted for;
Explain why there are no apparent pro forma income statement
adjustments other
than interest expense. In this regard, we note that IMC has $1.6
million and $1.2
million of amortization expense recognized in its historical
financial statements for
the year ended December 31, 2019 and the nine months ended
September 30, 2020
related to trademarks and tradenames which have been all but
eliminated in your pro
forma balance sheet; and
Present information in this note to that provides how the pro
forma adjustments
reflected on pages 90 through 92 were derived or calculated.
Comparative Per Share Information, page 107
Steven Hochberg
FirstName LastNameSteven Hochberg
Deerfield Healthcare Technology Acquisitions Corp.
Comapany18,
February NameDeerfield
2021 Healthcare Technology Acquisitions Corp.
February
Page 5 18, 2021 Page 5
FirstName LastName
15. Please expand your disclosures to provide historical book value per
share and earnings per
share information for CareMax and IMC as well equivalent pro forma per
share data.
Refer to the instructions to Item 14, paragraph 7(b)(10) of Schedule
14A. See Instruction
2 to the Item for guidance on equivalent per share data.
PROPOSAL NO. 1 APPROVAL OF THE BUSINESS COMBINATION PROPOSAL
Background of the Business Combination, page 130
16. Please revise your disclosure throughout this section to provide
greater detail as to the
background of the transaction, including the material issues discussed
and key negotiated
terms. The disclosure should provide shareholders with an
understanding of how, when,
and why the material terms of your proposed transaction evolved and
why this transaction
is being recommended as opposed to any alternatives. In your revised
disclosure, please
ensure that you address the following:
the material terms for any proposals and subsequent proposals and
counter offers;
valuations; and
at what point other strategic alternatives were eliminated from
consideration.
17. To the extent material, please identify the individuals who
participated in the meetings
and discussions described in this section. For example, please
identify the representatives
and advisors of DFHT and IMC that participated in the discussions
referenced in the
fourth paragraph on page 131.
18. We note that representatives of DFHT were contacted by numerous
individuals and
entities who offered to present ideas for acquisition opportunities,
some with which
DFHT s officers and directors had pre-existing relationships. Please
clarify when
CareMax and IMC were introduced or identified as acquisition
opportunities and, if
applicable, whether introductions were by entities with a pre-existing
relationship with
DFHT s officers and directors.
19. With reference to the second and third paragraphs on page 131, please
revise this section
to describe all contacts with various parties during the evaluation by
the Company of
potential business combinations. Please disclose the number of
companies that were
contacted, how the potential acquisition opportunities were
identified, and the analysis and
evaluation that was conducted with respect to each potential
acquisition opportunity. To
the extent that any preliminary proposals were submitted/received from
eliminated targets,
please disclose all material proposal terms, including transaction
structure, valuation, and
equity split distribution.
20. We note that insufficient profitability is one of the reasons cited
for abandoning
consideration of certain potential targets. Please include a
discussion of your decision to
pursue a business combination with IMC despite the fact that it has
not been profitable.
DFHT s Board of Directors Reasons for the Approval of the Business
Combination, page 134
21. Please describe in greater detail all material analyses the board
relied upon in evaluating
Steven Hochberg
FirstName LastNameSteven Hochberg
Deerfield Healthcare Technology Acquisitions Corp.
Comapany18,
February NameDeerfield
2021 Healthcare Technology Acquisitions Corp.
February
Page 6 18, 2021 Page 6
FirstName LastName
the financial aspects of the business combination. If there were any
analyses that did not
support the fairness of the transaction, please include appropriate
disclosure.
Additionally, for your Comparable Companies discussion, please further
describe the
criteria used to select the Comparable Companies and disclose whether
any comparables
were excluded from your evluation, and, if so, the reasons for making
such exclusions.
Selected Historical Financial Information of DFHT, page 162
22. Please provide selected financial data in accordance with Item 301 of
Regulation S-K for
your pro forma financial information. Refer to Item 14, Instruction
7(b)(9) to Schedule
14A for guidance.
BUSINESS OF CAREMAX
Payor Relationships, page 178
23. We note your disclosure that a significant portion of your revenue is
concentrated with
three large payors which comprised approximately 98% of your revenue
for the nine
months ended September 30, 2020. Please revise to state that 92% of
your revenue for the
nine months ended September 30, 2020 was from a single payor,
HealthSun. Please also
revise to discuss the material terms of your capitation arrangement
with HealthSun.
Intellectual Property, page 188
24. Your disclosure on page 53 states that you do not currently hold a
patent or other
registered or applied for intellectual property protection for the
CareOptimize platform.
Please revise your disclosure here to make this clear and, if
applicable, discuss the other
types of intellectual property right protections applicable to
CareOptimize. Please also
include similar revisions on page 225.
CAREMAX MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Key Factors Affecting CareMax s Performance
CareMax's Patients, page 192
25. We note CareMax s value proposition to improve patients health
and reduce healthcare
costs by providing a more comprehensive patient experience via the
CareMax system,
whereby CareMax invests more heavily in primary care to avoid more
expensive
downstream costs, such as hospital admissions. Please revise to
disclose whether
COVID-19 increased hospital admissions and emergency department
visits. Quantify any
applicable increases and clarify how those expenses impacted your
income statement for
the reported periods. Please also include similar disclosure for IMC.
BUSINESS OF IMC
Overview, page 212
26. We note your statement that IMC has proven that it can translate the
above high touch
Steven Hochberg
FirstName LastNameSteven Hochberg
Deerfield Healthcare Technology Acquisitions Corp.
Comapany18,
February NameDeerfield
2021 Healthcare Technology Acquisitions Corp.
February
Page 7 18, 2021 Page 7
FirstName LastName
service model into economic benefits. Please revise to provide context
for this statement
by disclosing the fact that you have incurred net losses for fiscal
year ended December 31,
2019 and 2018 and that you have limited experience managing contracts
with full risk. In
this section, please also disclose your reliance on a limited number
of payors, identify
them, and quantify the portion of your revenues attributable to them.
Report of Independent Registered Public Accounting Firm, page F-50
27. We note that the auditor for CareMax has only served as their auditor
since 2020. Please
address whether the whether the disclosures required by Item 304(b) of
Regulation S-K
are necessary. Address this comment as it relates to IMC. Refer to
Item 14(c)(2) of
Schedule 14A and Part C of Form S-4.
CareMax Medical Group, LLC and Affiliates Combined Financial Statements
Note 1. Nature of Business - Bases of Presentation and Consolidation, page F-55
28. You disclose that MHP and CMG share common ownership, with the
majority of
ownership being through organizations controlled by the Company
management, which is
consistent across MHP and CMG. Please provide us a table that shows
the
ownership interests in both MHP and CMG. Identify the significant
shareholders of each
entity and indicate the voting percentage they hold in each entity.
Explain whether there
are any voting agreements. Please also show us the ownership interests
after the
transaction described on page 30 in which each equity holder of MHP
shall contribute its
HMP equity interests for equity interests in CareMax. In this regard,
based on the lack of
disclosures presented in your pro forma financial information, we
assume you will
account for this transaction as entities under common control. Please
provide support for
such accounting.
29. You indicate that the Company consolidates Hialeah, Pembroke Pines,
and Pines Care
because it has a controlling financial interest in them. You also
disclose that the Company
assesses whether it has a controlling financial interest through
means other than voting
rights over potential variable interest entities (or VIEs ) and
consolidates a VIE if the
Company is the primary beneficiary of the VIE. With reference to ASC
810-10-15-14,
please expand disclosures to clarify whether Hialeah, Pembroke Pines
and Pines Care are
VIEs. To the extent these entities are VIEs, expand your disclosures
to provide all the
information required by ASC 805-10-50-7 through 50-14.
General
30. We note that the Closing Consideration includes the issuance Class A
common Stock to
the equityholders of CareMax and IMC. Please tell us what exemption
from the Securities
Act that you are relying upon and the facts supporting your use of the
exemption.
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.
Steven Hochberg
Deerfield Healthcare Technology Acquisitions Corp.
February 18, 2021
Page 8
You may contact Gary Newberry at 202-551-3761 or Jeanne Baker at
202-551-3691 if
you have questions regarding comments on the financial statements and related
matters. Please
contact Jeffrey Gabor at 202-551-2544 or Suzanne Hayes at 202-551-3675 with any
other
questions.
FirstName LastNameSteven Hochberg Sincerely,
Comapany NameDeerfield Healthcare Technology Acquisitions Corp.
Division of Corporation
Finance
February 18, 2021 Page 8 Office of Life Sciences
FirstName LastName