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United States securities and exchange commission logo
September 21, 2021
Arthur Cohen
Chief Executive Officer
HealthCor Catalio Acquisition Corp.
55 Hudson Yards, 28th Floor
New York, NY 10001
Re: HealthCor Catalio
Acquisition Corp.
Registration
Statement on Form S-4
Filed August 30,
2021
File No. 333-259148
Dear Mr. Cohen:
We have reviewed your 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 amending your registration
statement and providing the
requested information. 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 any amendment to your registration statement and
the information you
provide in response to these comments, we may have additional comments.
Registration Statement on Form S-4 Filed August 30, 2021
The Business Combination Agreement
Background of the Business Combination, page 111
1. We note your response
to prior comment 7 but are unable to locate changes addressing the
comment. As previously
requested, please revise the Background of the Business
Combination section to
identify the representatives of Hyperfine, Liminal and/or
4Catalyzer who were
involved in discussions with HealthCor and/or Jefferies throughout
the course of the
negotiations.
2. We note the revisions
made in response to prior comment 10 and we reissue the comment
in part. Please expand
to clarify why HealthCor's model reflected a materially reduced
valuation ($570
million) of Hyperfine and Liminal as compared to the one initially
Arthur Cohen
FirstName LastNameArthur Cohen
HealthCor Catalio Acquisition Corp.
Comapany 21,
September NameHealthCor
2021 Catalio Acquisition Corp.
September
Page 2 21, 2021 Page 2
FirstName LastName
proposed on April 13 by Hyperfine and Liminal (in excess of $800
million).
3. We note your response to prior comment 13 but are unable to locate
changes addressing
the comment. As previously requested, please revise the April 13 entry
to clarify the
actual combined dollar valuation proposed by Hyperfine and Liminal,
and tell us whether
that proposal provided separate valuations for Hyperfine and Liminal.
Certain Projected Financial Information, page 117
4. We note your response to comment 15. Please address the following:
It appears that one of the material assumptions underlying
projected revenue growth
is the expected recurring revenue from the subscription-based
business. Specifically,
as the base of installed units grows, the cumulative carry-over
effect will result in
increased revenue each successive year as the business continues to
grow. Please
further expand your disclosures to further discuss the assumptions
underlying the
different projected revenue streams, which appear to be unit sales
and subscription-
based services; and
As previously requested, please explain how management and the
Board considered
and relied upon these projections, particularly in light of the
limited historical
commercial operations of Hyperfine, Inc. and Liminal Sciences, Inc.
5. We note your response to prior comments 17, 18 and 19 but are unable
to locate changes
that address the comments. As previously requested, please revise to
address the
following:
Clarify whether the financial projections disclosed here were the
only projections or
material financial information that Hyperfine and Liminal
presented to the HealthCor
board for purposes of negotiating the terms of the Business
Combination Agreement.
If not, please disclose such information, forecasts and/or
projections;
Describe how the parties were able to negotiate what proved to be
the final valuations
and reach agreement on other material terms in May if HealthCor
did not receive
financial projections from Hyperfine and Liminal until June 10;
Disclose what the HealthCor board did with the projections it
received and whether it
used these same projections, or altered ones, in its financial
model(s) and analyses.
Recommendation of HealthCor's Board of Directors, page 124
6. We note your response to prior comment 20 but are unable to locate
changes made in
response. As previously requested, please revise to clarify here
whether HealthCor s
Board conducted any financial analysis or analyses that support its
determination that the
merger is in the best interests of shareholders and its recommendation
to vote for the
business combination, or advise.
U.S. Federal Income Tax Considerations, page 153
7. We note the revisions you made in response to prior comment 21. We
further note that
counsel does not appear to opine on whether or not HealthCor is likely
to be classified as a
Arthur Cohen
HealthCor Catalio Acquisition Corp.
September 21, 2021
Page 3
PFIC and, if so, what the material tax consequences to U.S. Holders
will be. Counsel's
opinion should not assume the tax consequence at issue or any legal
conclusion
underlying the opinion. Please revise the tax opinion and related
sections accordingly.
Refer to Staff Legal Bulletin No. 19, Part III.C.3 for guidance.
Unaudited Pro Forma Condensed Combined Financial Information, page 164
8. We note your response to comment 27. It appears that the pro forma
statements of
operations do not include certain expenses that are not expected to
have a continuing
impact, including nonrecurring management compensation expense
discussed in Notes
3(h) and (i) on page 174 and transaction costs discussed in Note 3(b)
on page 171. We
remind you of the updated pro forma financial information guidance
provided in SEC
Release 33-10786, which amended Article 11 of Regulation S-X, under
which it would
appear these expenses should be reflected in your pro forma statements
of operations.
Please revise your pro forma statements of operations or further
advise. Refer to 11-02
(a)(6)(i)(B) of Regulation S-X.
9. We note your response to comment 28. The most significant adjustments
on your pro
forma statements of operations are for compensation expense related to
various equity
awards. In this regard, please address the following:
We continue to believe additional disclosures should be provided
to discuss the most
significant underlying assumptions used to determine the
compensation expense in
Note 3(f), 3(g), and 3(h)(2). For example in Note 3(f), you note
that the grant date
fair value of the awards were estimated using the Monte Carlo
simulation; however it
is not clear what significant assumptions were used in the
simulation to arrive at the
grant date fair value; and
It appears that adjustment 3(f) only reflects certain Earn-Out
shares discussed on
page 168. Please further clarify in your disclosures the amount of
shares included in
this adjustment as well as how you determined which shares to
include.
10. We note your response to comment 36. Your response indicates that the
only recent
equity issuances were Hyperfine options granted in April 2021 and
Liminal options
granted in May 2021. As previously requested, please help us better
understand how the
fair value of the common stock of Hyperfine and Liminal which was used
to to value
these issuances reconciles to the valuations as indicated based on the
terms of the
Business Combination. Please also clarify whether these are the
options discussed in Note
3(h)(2) to the pro forma statements of operations.
Business of Hyperfine and Liminal, page 183
FirstName LastNameArthur Cohen
11. We note your response to prior comment 31 related to the principal
purposes for the
Comapany NameHealthCor
business combinationCatalio Acquisition
and PIPE proceeds.Corp.
Please expand your disclosure
to describe the
approximate
September 21, 2021 amount
Page 3 intended for each such purpose.
FirstName LastName
Arthur Cohen
FirstName LastNameArthur Cohen
HealthCor Catalio Acquisition Corp.
Comapany 21,
September NameHealthCor
2021 Catalio Acquisition Corp.
September
Page 4 21, 2021 Page 4
FirstName LastName
Potential market expansion, page 190
12. We note the revisions you made in response to prior comment 32 on
pages 195 and 196,
in particular the disclosure in the second paragraph on page 196 that
"Liminal has not
commercialized or obtained regulatory authorization for any of its
products and its
operations to date have been limited to developing its technology and
products." Please
expand your disclosure to provide potential investors an adequate
basis for assessing
where you believe you are in the development and regulatory approval
process with
respect to your expansion opportunities in the area of a brain sensing
platform and MRI
robotic guided intervention.
Exclusive License Agreements with The General Hospital Corporation (d/b/a
Massachusetts
General Hospital), page 207
13. We note your response to prior comment 34 that Hyperfine will be
obligated to pay MGH
a percentage "in the low double digits." Please revise to disclose the
rate Hyperfine will
be obligated to pay within a ten percentage point range.
Management Following the Business Combination, page 241
14. We note your response to prior comment 30. Please revise to clarify
whether any of the
executive officers or directors following the business combination
have worked with the
Liminal business and how many current Liminal executive officers and
directors will join
the combined company.
Basis of Presentation and Principles of Combination, page F-38
15. We note your response to comment 38. Please also confirm that
Hyperfine and Liminal
were under common control for the entire periods for which combined
financial
statements have been presented.
Note 2. Summary of Signficant Accounting Policies
Inventories, page F-41
16. We note your response to comment 39. Please address the following:
Your disclosures on page F-49 indicate that manufacturing overhead
costs primarily
include the allocation of labor costs incurred related to
inventory acquired or
produced but not sold during the respective period. Please better
clarify the nature of
these labor costs; and
Please help us better understand why charges associated with
writing inventory down
to lower of cost or net realizable value are also included in
overheads rather than
being recorded directly in cost of sales.
As previously requested, please explain herein or within
Management s Discussion
and Analysis, why you had $213,000 write down in inventory during
the year ended
December 31, 2020 as this inventory was purchased during the same
period.
Refer to ASC 330-10-30.
Arthur Cohen
HealthCor Catalio Acquisition Corp.
September 21, 2021
Page 5
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.
Refer to Rules 460 and 461 regarding requests for acceleration. Please
allow adequate
time for us to review any amendment prior to the requested effective date of
the registration
statement.
You may contact Nudrat Salik at 202-551-3692 or Jeanne Baker at
202-551-3691 if you
have questions regarding comments on the financial statements and related
matters. Please
contact David Gessert at 202-551-2326 or Joe McCann at 202-551-6262 with any
other
questions.
Sincerely,
FirstName LastNameArthur Cohen
Division of
Corporation Finance
Comapany NameHealthCor Catalio Acquisition Corp.
Office of Life
Sciences
September 21, 2021 Page 5
cc: Debbie P. Yee, P.C.
FirstName LastName