United States securities and exchange commission logo
April 20, 2021
Stephen C. Farrell
Chief Executive Officer and Director
Cannes Holding Parent, Inc.
100 SE 3rd Avenue, 26th Floor
Fort Lauderdale, FL 33394
Re: Cannes Holding
Parent, Inc.
Draft Registration
Statement on Form S-1
Submitted March 24,
2021
CIK No. 0001787640
Dear Mr. Farrell:
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 Filed on March 24, 2021
PROSPECTUS SUMMARY
Business Overview, page 1
1. We note your statements
that you are a "leading healthcare platform," "leader in providing
technology-enabled
solutions for the government-sponsored market," "market-
leading," and other
statements of leadership throughout your document. Please revise to
disclose the basis for
these statements.
2. Where you quantify the
total number of clients, please include balancing disclosure
regarding your highly
concentrated client base and dependence on a small number of
clients for a
substantial portion of your total revenue. In this regard, we note your
Stephen C. Farrell
FirstName LastNameStephen
Cannes Holding Parent, Inc. C. Farrell
Comapany
April NameCannes Holding Parent, Inc.
20, 2021
April 220, 2021 Page 2
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FirstName LastName
disclosure on page 20 that 46% of your total revenue was from two
clients and your
disclosure on page 21 that "[you] believe that a majority of [your]
revenues will continue
to be derived from a limited number of key clients." Please revise
your summary to
include these statements.
3. We note that your Gross Dollar Retention ( GDR ) rate measures
annual contracted
revenue at the beginning of the fiscal period and reducing it by
dollar attrition during the
fiscal period. As part of this metric, you state that the GDR shows
high client
retention. With a view towards revised disclosure, including your
MD&A section, please
tell us how the GDR measures client retention. Please consider
including a roll-forward
that presents the beginning and ending numbers of clients, separately
quantifying the
additions of new clients from any reductions in clients not retained.
4. With reference to your disclosure on pages 27 and 72, where you state
that COVID-19 has
impacted 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.
5. Please revise the last paragraph of the Business Overview to quantify
the amount of debt
outstanding.
Implications of Being an Emerging Growth Company, page 11
6. 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.
Our History and Principal Stockholder, page 12
7. Please revise to state the consideration paid for acquiring Convey
Health Solutions, Inc
and discuss and quantify the debt issued.
Risk Factors
Our amended and restated certificate of incorporation will contain a provision
renouncing our
interest..., page 55
8. We note your disclosure that TPG, and the members of your board of
directors who are
affiliated with them, will not be required to offer you any corporate
opportunity of which
they become aware. Please clarify the scope of this provision and
identify the members of
your board of directors who are affiliated with TPG.
MARKET, INDUSTRY AND OTHER DATA, page 60
9. We note your statements here that investors are "cautioned not to
place undue reliance on
this market and industry data or any other such estimates." Please
note that you are
responsible for the disclosure contained in your registration
statement and you may not
Stephen C. Farrell
FirstName LastNameStephen
Cannes Holding Parent, Inc. C. Farrell
Comapany
April NameCannes Holding Parent, Inc.
20, 2021
April 320, 2021 Page 3
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FirstName LastName
use language that could be interpreted as a disclaimer of information
contained in your
filing. Please revise.
USE OF PROCEEDS, page 61
10. We note your disclosure of intended uses for proceeds is limited to
general corporate purposes. Please revise to provide more
meaningful and specific
disclosure of the intended use of proceeds, to the extent known. This
section does not
require disclosure of definitive plans and it is acceptable to provide
a quantitative
discussion of preliminary plans. You may also reserve the right to
change the use of
proceeds as indicated in instruction 7 to Item 504 of Regulation S-K.
11. You state on page 47 that, as of December 31, 2020, you had
approximately $247 million
face value of outstanding indebtedness, in addition to $39.5 million
of undrawn
commitments under the Credit Agreement. You also disclose on page 133
that you may
voluntarily prepay any outstanding loans or reduce any outstanding
commitments under
the Credit Agreement. To the extent you intend to use a portion of the
net proceeds to
repay the debt, please revise to provide the information required by
Instruction 4 to Item
504 of Regulation S-K, or provide appropriate cross references.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Non-GAAP Financial Measures, page 75
12. Please explain in further detail the nature of the non-GAAP "Cost of
Covid-19"
adjustments to EBITDA. In your response, tell us how you reasonably
quantified the
adjustments and the length of time you applied to the calculations. In
addition, for the
adjustments labeled "higher pricing from vendors due to supply chain
disruptions, product
shortages and increases in shipping costs" and "early hire of
employees due to social
distancing and work at home protocols", explain to us how the
adjustments are a) directly
attributable to COVID-19 and were incremental to charges incurred
prior to COVID-
19, b) not expected to recur once the pandemic has subsided and
operations return to
normal and c) clearly separable from normal operations. We may have
further comment
upon reviewing your response.
13. Please revise to address the following regarding the difference
between the Adjusted
EBITDA presented on page 75 and the Adjusted EBITDA presented as a
segment
measure in Note 18 to your consolidated financial statements:
Revise to more clearly explain the differences between these
measures.
Revise the labels of the two measures to accurately reflect the
difference in their
basis. .
Please also revise to include in the segment discussion in MD&A on
page 84 a
complete discussion of the reconciling items that apply to the
segment Adjusted
EBITDA being discussed. Refer to Question 104.02 in the Compliance
& Disclosure
Interpretations for Non-GAAP Financial Measures dated April 4,
2018.
Stephen C. Farrell
FirstName LastNameStephen
Cannes Holding Parent, Inc. C. Farrell
Comapany
April NameCannes Holding Parent, Inc.
20, 2021
April 420, 2021 Page 4
Page
FirstName LastName
As part of your response, clarify the definition, basis, and
purpose of the line item
titled "Consultant lower utilization due to COVID-19" of
$2,062,000 on page F-50.
Tell how how and where this trend of lower utilization is
appropriate quantified in
your MD&A disclosure.
Managements Discussion and Analysis of Financial Condition and Results of
Operations
Results of Operations, page 80
14. Please discuss your interest expense in relation to your operating
income. Also, please
disclose separately the amount of interest expense that is in
connection with the Term
Facility from your other interest expense such as your revolving
credit facility.
Liquidity and Capital Resources, page 85
15. Please explain in greater detail the reasons for incurring the debt
and the use of proceeds.
To the extent debt has been incurred for general working capital
purposes, please indicate
and discuss any anticipated amounts and timing of such working capital
needs. Please
refer to SEC Release No. 33-8350 Dec. 19, 2003. See also, Item 303 of
Regulation S-K.
Credit Facilities, page 86
16. Please define the First Lien Net Leverage Ratio.
17. For a better understanding of your interest expense, please discuss
how the interest
expense was calculated for fiscal year ended December 31, 2020 or
advise us why such
disclosure is not necessary.
Critical Accounting Policies and Use of Estimates
Stock Compensation Policy, page 91
18. Since there is no active external or internal market for your common
shares, please revise
to disclose the methods used to determine the fair value of your
underlying common stock
as an input to the Black-Scholes Merton model and/or the Monte-Carlo
simulation model
in determining the fair value of share based compensation. In
addition, once you have an
estimated offering price or range, please explain to us how you
determined
the fair value of the common stock underlying your equity issuances
and the reasons for
any differences between the recent valuations of your common stock
leading up to the
IPO and the estimated offering price. This information will help
facilitate our review of
your accounting for equity issuances including stock compensation and
beneficial
conversion features. Please discuss with the staff how to submit your
response.
Business
Market Opportunity, page 100
19. Please revise to clarify how you determined that the addressable
market size of
$77 billion, disclosing and quantifying any assumptions underlying the
calculation.
Stephen C. Farrell
Cannes Holding Parent, Inc.
April 20, 2021
Page 5
Our Clients, page 108
20. We note that a significant portion of your revenue is concentrated
with two clients which
comprised approximately 46% of your total revenue. Please revise to
identify the clients
and discuss the material terms of your agreements. Please also file
the agreements as
exhibits to the registration statement or tell us why you do not
believe they are required to
be filed. See Item 601(b)(10) of Regulation S-K.
Intellectual Property, page 111
21. Please revise here to disclose the type of intellectual property right
protection applicable
to Miramar. In your revised disclosure, please clarify the source of
protection for your
"proprietary technology platform," explain why technology is
"proprietary," and disclose
the duration of the underlying intellectual property protection.
Note 4. Acquisitions, page F-29
22. We reference the disclosure that Cannes was deemed to be the
accounting acquirer and the
Parent was deemed the accounting acquiree with respect to the Merger
consummated on
September 4, 2019. Please revise to disclose your accounting basis for
that conclusion,
including factors considered. Refer to the guidance outlined in ASC
805-10-55-11 through
ASC 805- 10-55-15.
Notes to Consolidated Financial Statements
Note 19. Subsequent Event, page F-51
23. In light of the special dividend declared on February 11, 2021, tell
us how you considered
the guidance of Staff Accounting Bulletin Topic 1B.3 and sections
3420.1 and 3420.2 of
the Financial Reporting Manual available on our website in determining
whether pro
forma balance sheet and earnings per share presentations on the face
of your financial
statements are necessary.
Exhibits
FirstName LastNameStephen C. Farrell
Comapany
24. WithNameCannes Holding
reference to the Parent,
disclosure in Inc.
the third bullet point on page 79,
please file the Merger
Agreement or
April 20, 2021 Page 5advise.
FirstName LastName
Stephen C. Farrell
FirstName LastNameStephen
Cannes Holding Parent, Inc. C. Farrell
Comapany
April NameCannes Holding Parent, Inc.
20, 2021
April 620, 2021 Page 6
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FirstName LastName
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 Jeffrey Gabor at 202-551-2544 or Tom Kluck at 202-551-3233 with any
other questions.
Sincerely,
Division of
Corporation Finance
Office of Life
Sciences
cc: Michael E. Mariani, Esq.