SecProbe.io

CORRESP
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filename1.htm

CORRESP

 Matthew B. Hemington

+1 650 843 5062

 hemingtonmb@cooley.com

 *FOIA Confidential Treatment Request*

Confidential Treatment Requested by 1Life Healthcare, Inc.

in connection with its Registration Statement

on Form S-1 filed on January 3, 2020

 VIA EDGAR AND COURIER

 January 8, 2020

 U.S.
Securities and Exchange Commission

 Division of Corporation Finance

100 F Street, N.E., Mail Stop 4546

 Washington, D.C. 20549

Attn:
 Folake Ayoola
Celeste Murphy
Tracey Houser
Mary Mast

RE:
 1Life Healthcare, Inc.
Registration Statement on Form S-1

Filed on January 3, 2020
File No. 333-235792

 Ladies and Gentlemen:

On behalf of 1Life Healthcare, Inc. (the “Company”), we are supplementally providing the staff (the “Staff”)
of the Securities and Exchange Commission (the “Commission”) with information regarding the proposed price range per share of the Company’s common stock to be offered in the proposed initial public offering (the
“IPO”) pursuant to the Company’s Registration Statement on Form S-1 (File No. 333-235792), filed with the
Commission on January 3, 2020 (the “Registration Statement”), as well as historical information with respect to the estimated fair values of the Company’s common stock since January 1, 2018. We are providing
this letter in response to the comment below from the Staff received by letter dated November 15, 2019 (the “Comment Letter”) relating to the Registration Statement originally confidentially submitted on October 19,
2019.

 Confidential Treatment Request

 Due to the
commercially sensitive nature of information contained in this letter, the Company hereby requests, pursuant to 17 C.F.R. §200.83, that certain portions of this letter be maintained in confidence, not be made part of any public record and not
be disclosed to any person. The Company has filed a separate copy of this letter, marked to show the portions redacted from the version filed via EDGAR and for which the Company is requesting confidential treatment. In accordance with 17 C.F.R.
§200.83(d)(1), if any person (including any governmental employee who is not an employee of the Commission) should request access to or an opportunity to inspect this letter, we request that we be immediately notified of any such request, be
furnished with a copy of all written materials pertaining to such request (including, but not limited to, the request itself) and be given at least ten business days’ advance notice of any intended release so that the Company may, if it deems
it to be necessary or appropriate, pursue any remedies available to it. In such event, we request that you telephone the undersigned at (650) 843-5062 rather than rely on the U.S. mail for such
notice.

 1Life Healthcare,
Inc. requests that the information contained in this letter, marked by brackets, be

 treated as confidential information pursuant to
17 C.F.R. §200.83.

 Cooley LLP 3175 Hanover Street Palo Alto, CA 94304-1130

t: (650) 843-5000 f: (650) 849-7400 cooley.com

 U.S. Securities and Exchange Commission

January 8, 2020

 Page Two

 For the convenience of the Staff, we have recited the prior comment from the Comment Letter from the Staff in
italicized type and have followed the comment with the Company’s response.

11.
 Once you have an estimated offering price range, please provide us an analysis explaining the reasons for
the differences between recent valuations of your common stock leading up to your offering and the estimated offering price. In your response tell us for each equity award granted since January 1, 2018 the following:

•

 The date of the award;

•

 The number of awards granted;

•

 The exercise price of the award;

•

 The deemed fair value of common stock on the grant date; and

•

 The grant date fair value of the award.

Also tell us how the your estimate of the redeemable convertible preferred stock for purposes of estimating the fair value of your
outstanding warrants relates to your estimates of common stock fair value.

 IPO Price Range

The Company advises the Staff that it preliminarily estimates a price range of $[***] to $[***] per share (the “Price Range”) for its
IPO, with a midpoint of $[***] per share. This range implies a pre-money equity valuation for the Company of approximately $[***] million to $[***] million.

As is typical in IPOs, the Price Range was not derived using a formal determination of fair value, but was determined by discussions between the Company and
the underwriters. Among the factors that were considered in setting the Price Range were the following:

•

 the general conditions of the securities market and the recent market prices of, and the demand for,
publicly-traded common stock of comparable companies;

•

 the Company’s financial condition and prospects;

•

 estimates of business potential and earnings prospects for the Company and the industry in which it operates;

•

 recent performance of IPOs of generally comparable companies;

•

 business developments impacting the Company; and

•

 input received from the lead underwriters, including discussions that took place on January 2, 2020 among
senior management of the Company, the Company’s Board of Directors (the “Board”) and representatives of the lead underwriters.

In determining the Price Range, the underwriters focused on a number of valuation methodologies to triangulate the valuation, including a discounted cash flow
analysis and relevant trading multiples.

 1Life Healthcare,
Inc. requests that the information contained in this letter, marked by brackets, be

 treated as confidential information pursuant to
17 C.F.R. §200.83.

 Cooley LLP 3175 Hanover Street Palo Alto, CA 94304-1130

t: (650) 843-5000 f: (650) 849-7400 cooley.com

 U.S. Securities and Exchange Commission

January 8, 2020

 Page Three

 The Price Range does not take into account the current lack of liquidity for the Company’s common stock
and assumes a successful IPO with no weighting attributed to any other outcome for the Company’s business, such as remaining a privately held company or being sold in an acquisition transaction.

The Company will include the Price Range in an amendment to the Registration Statement that will be filed shortly before the commencement of the
Company’s road show. However, due to the recent volatility in the financial markets and the volatilities evident in the market for recent IPO issuers, the Price Range of the common stock may change. The Company confirms to the Staff that in
accordance with Item 501(b)(3) of Regulation S-K and Question 134.04 of the Regulation S-K Compliance and Disclosure Interpretations, the difference between the high and
low end of the bona fide price range will be no more than $2.00, if the maximum price is $10.00 per share or less, or 20%, if the maximum price is greater than $10.00 per share. The parameters of the Price Range will be subject to then-current
market conditions, continuing discussions with the underwriters and any business developments impacting the Company.

 Historical Determinations of Fair
Value and Methodology

 As stated in the Registration Statement, stock-based compensation expense related to stock options granted to employees,
consultants and directors of the Company is measured at the date of grant based on the fair value of the award. The Registration Statement describes the Company’s use of the Black-Scholes option-pricing model for these purposes and describes
and quantifies the significant assumptions used.

 The Board intended all options granted to be exercisable at a price per share not less than the per
share fair value of the common stock underlying those options on the date of grant. The estimated fair value of the common stock underlying the Company’s stock options was initially determined at each grant date by the Board and was supported
by periodic independent third-party valuations. In the absence of a public trading market for the Company’s common stock, on each grant date, the Board exercised significant judgment and considered numerous objective and subjective factors,
including the factors described on page 102 of the Registration Statement, to make a reasonable determination of the fair value of the common stock based on the information known to the Company and the Board on the date of grant.

The valuations of common stock were determined in accordance with the guidelines outlined in the American Institute of Certified Public Accountants Accounting
and Valuation Guide, Valuation of Privately-Held-Company Equity Securities Issued as Compensation, as described herein and on pages 102 through 104 of the Registration Statement. As discussed below, the methodologies used by the
Company and a third-party valuation firm to determine the total equity value of the Company included the income approach and market approach. The Company and the third-party valuation firm then used the option pricing method (the
“OPM”) to allocate total equity value to the Company’s common stock.

 1Life Healthcare,
Inc. requests that the information contained in this letter, marked by brackets, be

 treated as confidential information pursuant to
17 C.F.R. §200.83.

 Cooley LLP 3175 Hanover Street Palo Alto, CA 94304-1130

t: (650) 843-5000 f: (650) 849-7400 cooley.com

 U.S. Securities and Exchange Commission

January 8, 2020

 Page Four

 The following table summarizes the valuation dates and resulting valuations used for stock option grants and
the accounting for stock-based payments since January 1, 2018:

 Valuation Date

Estimated Fair Value per
Share of Common Stock

 December 31, 2017

$
4.36

 March 31, 2018

4.47

 June 30, 2018

7.16

 August 21, 2018

7.77

 December 31, 2018

7.77

 March 31, 2019

7.93

 June 30, 2019

10.04

 August 31, 2019

11.47

 October 31, 2019

11.56

 The assumptions used in each valuation to determine the fair value of the Company’s common stock as of the grant date of
each option are based on numerous objective and subjective factors, combined with management judgment, including the following:

•

 external market conditions affecting the Company’s industry and trends within the Company’s industry;

•

 equity market conditions affecting comparable public companies, as reflected in comparable companies’ market
multiples and other metrics;

•

 the Company’s financial position, including cash on hand and the magnitude and timing of required payments
to third-party lenders, and the Company’s historical and forecasted performance and operating results;

•

 recent issuances of the Company’s preferred stock to new investors and arms’-length, third-party
secondary transactions in the Company’s common stock;

•

 the likelihood of achieving a liquidation event, such as an initial public offering or a sale of the Company in
light of prevailing market conditions;

•

 the terms of the Company’s preferred stock relative to the terms of the Company’s common stock; and

•

 the lack of an active public market for the Company’s common stock and preferred stock.

 The Company’s most recent round of redeemable convertible preferred stock financing was completed in August 2018, in which the
Company issued and sold approximately 17.7 million shares of Series I preferred stock at a price per share of $12.43 (the “Series I Financing”). The Series I Financing was considered to be an arms’-length
transaction due to participation by Carlyle Partners VII Holdings, L.P. (“Carlyle”), the sole investor in the Series I Financing and a new investor in the Company.

 1Life Healthcare,
Inc. requests that the information contained in this letter, marked by brackets, be

 treated as confidential information pursuant to
17 C.F.R. §200.83.

 Cooley LLP 3175 Hanover Street Palo Alto, CA 94304-1130

t: (650) 843-5000 f: (650) 849-7400 cooley.com

 U.S. Securities and Exchange Commission

January 8, 2020

 Page Five

 Methodology of Determination of Estimated Value

The Company, with the assistance of a third-party valuation firm, estimated the equity value of the Company’s business on a minority, non-marketable basis using income and market approaches as well as recent sales of the Company’s redeemable convertible preferred stock and common stock in arms’-length transactions. The valuation
approaches used at each valuation date were a combination of the income approach and the market approach.

 Under the income approach, the discounted cash
flows method (the “DCF Method”) was used to determine a present value of estimated cash flows over a ten-year forecast period based on management forecasts of net revenues and operating
results, and included a terminal value at the end of year ten.

 Under the market approach, the valuations considered arms’-length transactions in the
Company’s equity securities (both preferred stock and common stock) as well as the guideline public company approach (the “GPCA”) and the guideline transactions approach (the “GTA”).

•

 The transaction price and implied equity value from the Series I Financing were used in valuations since June
2018. For valuations completed following the Series I Financing, the indexing method was used, which reviews recent events in the public markets as well as those specific to the Company to determine if an adjustment to the implied equity value from
the Series I Financing is warranted.

•

 Transaction prices of recent secondary transactions in the Company’s common stock were used in valuations
since December 2018 as they represented arms’-length transactions among sophisticated parties.

•

 The GPCA derived market valuation multiples from trailing-twelve-months (“TTM”) revenue
and EBITDA as well as estimated revenue and EBITDA over a three-year forecast period for comparable public companies. In determining appropriate multiples to apply to the Company, the Company, with the assistance of a third-party valuation firm,
considered the Company’s size, risk and profitability compared to the guideline public companies. The GPCA did not assign any weight to the Company’s EBITDA multiples given the Company has not demonstrated a track record of profitable
operations.

•

 The valuations considered but ultimately did not use estimated equity value under the GTA given the observed
market transactions involved companies with significant differences in size and profitability compared to the Company.

 These valuation
approaches are described in detail under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Significant Judgments and Estimates—Stock-Based
Compensation—Determination of the Fair Value of Common Stock” on pages 102 through 104 of the Registration Statement.

 1Life Healthcare,
Inc. requests that the information contained in this letter, marked by brackets, be

 treated as confidential information pursuant to
17 C.F.R. §200.83.

 Cooley LLP 3175 Hanover Street Palo Alto, CA 94304-1130

t: (650) 843-5000 f: (650) 849-7400 cooley.com

 U.S. Securities and Exchange Commission

January 8, 2020

 Page Six

 Allocation of Estimated Value to Common Stock

The Company, with the assistance of a third-party valuation firm, used the OPM to allocate equity value determined under the valuation methods described above
across the various classes and series of the Company’s capital stock. Under the OPM, shares of the various classes and series of capital stock are valued by creating a series of call options with exercise prices based on their respective claims
to total equity value, accounting for liquidation preferences and conversion terms of each equity class and series. The estimated fair value of the Company’s capital stock is inferred by analyzing these options using a Black-Scholes
option-pricing model, with an assumed option term consistent with management’s expected time to a liquidity event and a volatility assumption based on the estimated stock price volatility of comparable public compan