SEC Comment Letter for Evolent Health, Inc. (EVH) (CIK 0001628908) (EVH) — Feb 27, 2015
Evolent Health, Inc. (EVH) (CIK 0001628908)
Date: Feb. 27, 2015 · CIK: 0001628908 · Accession: 0000000000-15-012427
AI Filing Summary & Sentiment
Referenced dates: January 21, 2015
Letter
February 26, 2015 Via E -mail Jonathan Weinberg , General Counsel Evolent Health, Inc. 800 N. Glebe Road Suite 500 Arlington, VA 22203
Re: Evolent Health, Inc. Amendment No. 1 to Draft Re gistration Statement on Form S -1 Submitted February 6 , 2015 CIK No. 0001628908
Dear Mr. Weinberg :
We have reviewed your amended 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 res pond 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 additio nal comments.
General
1. We note your response to our prior comment 1. Please enhance your discl osure to include a statement, if true, that the financial statements of Evolent Health, Inc . have been omitted because the entity has no operations and nominal assets.
Prospectus Summary, page 1
2. We note your response to comment 5 of our letter dated January 21, 2015. We continue to believe that you should include more detailed d escriptions of the specific risks associated with this offering and yo ur business in the summary to more fully balance the discussion of your competitive strengths and growth opportunities , including , without limitation, quantifying the aggregate portion of revenue from you r largest customers, the
Jonathan Weinberg , General Counsel Evolent Health, Inc. February 26, 2015 Page 2
significant upfront costs with your contracts and your net losses. Please revise accordingly.
Company Overview, page 1
3. We note your response to comment 6 of our letter dated January 21, 2015. We note your disclosure on page 2 that you have nine contracts representing “$650 million in future total contract value.” Please balance this disclosure , as applicable, with the anticipated upfron t costs associated with these contracts . In addition, please clarify , if true, whether the contracts can be terminated without penalty and that this reven ue is not guaranteed.
The Reorganization of Our Corporate Structure, page 50
4. We note the revised disclosure on page 54 that certain distributions cou ld be non -pro rata if Evolent Health LLC does not have sufficient cash to make the distributions on a pro rata basis. Please revise to more specifically describe how distributions would be made if Evolent Health LLC does not have sufficient cash.
Partner Relationships, pages 109
5. We note your response to comment 10 of our letter dated January 21, 2015. Please provide more detailed disclosure regarding the material contract terms that may impact your operations, such as any specific geographic and time limits related to the exclusivity and right of first refusal clauses . In addition, please provide more detailed disclosure regarding the services you provide, h ow you determine the rates and termination fee, the notice period applicable to termination and whether there are any restrictions on you r or your partners ability to terminate a contract, including whether you have a right to rectify any issues .
Managemen t, page 115
6. We note your response to comment 17 of our letter dated January 21, 2015. Please revise the descriptio n of Mr. McGrane to identify him as your principal accounting officer.
Financial Statements
General
7. Please update your financial statements and financial information in an amended filing on Form S -1 in accordance with Rule 3 -01 of Regulation S -X.
Revision of Prior Pe riod Amounts, pages F -7 to F-8
8. We have reviewed your response to our prior comment 21. We may have further comment once we have reviewed your updated financial statements for the year ended
Jonathan Weinberg , General Counsel Evolent Health, Inc. February 26, 2015 Page 3
December 31, 2014.
Reorganization, page F -39
9. We have considered your response to our prior comment 24. Please provide us with a more detailed descripti on of the participating rights granted to TPG as part of the reorganization. In your response, please explain to us how you determined these rights were substantive in accordance with ASC Topic 810 -10-25-13.
You may contact Howard Efron at (202)551 -3439 or Robert Telewicz at (202)551 -3438 if you have questions regarding comments on the financial statements and re lated matters. Please contact Stacie Gorman at (202)551 -3585 or me at (202)551 -3401 with any other questions.
Sincerely,
/s/ Jennifer Gowetski
Show Raw Text
February 26, 2015
Via E -mail
Jonathan Weinberg , General Counsel
Evolent Health, Inc.
800 N. Glebe Road
Suite 500
Arlington, VA 22203
Re: Evolent Health, Inc.
Amendment No. 1 to Draft Re gistration Statement on Form S -1
Submitted February 6 , 2015
CIK No. 0001628908
Dear Mr. Weinberg :
We have reviewed your amended 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 res pond 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 additio nal
comments.
General
1. We note your response to our prior comment 1. Please enhance your discl osure to
include a statement, if true, that the financial statements of Evolent Health, Inc . have been
omitted because the entity has no operations and nominal assets.
Prospectus Summary, page 1
2. We note your response to comment 5 of our letter dated January 21, 2015. We continue
to believe that you should include more detailed d escriptions of the specific risks
associated with this offering and yo ur business in the summary to more fully balance the
discussion of your competitive strengths and growth opportunities , including , without
limitation, quantifying the aggregate portion of revenue from you r largest customers, the
Jonathan Weinberg , General Counsel
Evolent Health, Inc.
February 26, 2015
Page 2
significant upfront costs with your contracts and your net losses. Please revise
accordingly.
Company Overview, page 1
3. We note your response to comment 6 of our letter dated January 21, 2015. We note your
disclosure on page 2 that you have nine contracts representing “$650 million in future
total contract value.” Please balance this disclosure , as applicable, with the anticipated
upfron t costs associated with these contracts . In addition, please clarify , if true, whether
the contracts can be terminated without penalty and that this reven ue is not guaranteed.
The Reorganization of Our Corporate Structure, page 50
4. We note the revised disclosure on page 54 that certain distributions cou ld be non -pro rata
if Evolent Health LLC does not have sufficient cash to make the distributions on a pro
rata basis. Please revise to more specifically describe how distributions would be made if
Evolent Health LLC does not have sufficient cash.
Partner Relationships, pages 109
5. We note your response to comment 10 of our letter dated January 21, 2015. Please
provide more detailed disclosure regarding the material contract terms that may impact
your operations, such as any specific geographic and time limits related to the exclusivity
and right of first refusal clauses . In addition, please provide more detailed disclosure
regarding the services you provide, h ow you determine the rates and termination fee, the
notice period applicable to termination and whether there are any restrictions on you r or
your partners ability to terminate a contract, including whether you have a right to rectify
any issues .
Managemen t, page 115
6. We note your response to comment 17 of our letter dated January 21, 2015. Please revise
the descriptio n of Mr. McGrane to identify him as your principal accounting officer.
Financial Statements
General
7. Please update your financial statements and financial information in an amended filing on
Form S -1 in accordance with Rule 3 -01 of Regulation S -X.
Revision of Prior Pe riod Amounts, pages F -7 to F-8
8. We have reviewed your response to our prior comment 21. We may have further
comment once we have reviewed your updated financial statements for the year ended
Jonathan Weinberg , General Counsel
Evolent Health, Inc.
February 26, 2015
Page 3
December 31, 2014.
Reorganization, page F -39
9. We have considered your response to our prior comment 24. Please provide us with a
more detailed descripti on of the participating rights granted to TPG as part of the
reorganization. In your response, please explain to us how you determined these rights
were substantive in accordance with ASC Topic 810 -10-25-13.
You may contact Howard Efron at (202)551 -3439 or Robert Telewicz at (202)551 -3438
if you have questions regarding comments on the financial statements and re lated matters.
Please contact Stacie Gorman at (202)551 -3585 or me at (202)551 -3401 with any other
questions.
Sincerely,
/s/ Jennifer Gowetski
Jennifer Gowetski
Special Counsel
cc: William V. Fogg, Esq. ( via e -mail)