POPULATION HEALTH INVESTMENT CO., INC. Discussion and analysis by management of the financial position and operating results. (form 10-Q / R)


References to "we," "us," "our" or the "Company" are to Population Health
Investment Co., Inc., except where the context requires otherwise. The following
discussion should be read in conjunction with our unaudited condensed financial
statements and related notes thereto included elsewhere in this report.
In this Amendment No. 1 ("Amendment No. 1") to the Quarterly Report on Form 10-Q
of Population Health Investment Co., Inc. (the "Company") for the quarter ended
September 30, 2021, we are restating our unaudited interim financial statements
as of March 31, 2021, and June 30, 2021, see Note 2 for additional information.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form
10-Q/A
includes forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Our
forward-looking statements include, but are not limited to, statements regarding
our or our management team's expectations, hopes, beliefs, intentions or
strategies regarding the future. In addition, any statements that refer to
projections, forecasts or other characterizations of future events or
circumstances, including any underlying assumptions, are forward-looking
statements. The words "anticipate," "believe," "continue," "could," "estimate,"
"expect," "intend," "may," "might," "plan," "possible," "potential," "predict,"
"project," "should," "would" and similar expressions may identify
forward-looking statements, but the absence of these words does not mean that a
statement is not forward-looking. Forward-looking statements in this Quarterly
Report on
Form 10-Q/A
may include, for example, statements about:

  •   our ability to select an appropriate target business or businesses;



  •   our ability to complete our initial business combination;



    •     our expectations around the performance of the prospective target
          business or businesses;



    •     our success in retaining or recruiting, or changes required in, our
          officers, key employees or directors following our initial business
          combination;



    •     our officers and directors allocating their time to other businesses and
          potentially having conflicts of interest with our business or in
          approving our initial business combination;



    •     our potential ability to obtain additional financing to complete our
          initial business combination;



  •   our pool of prospective target businesses;



    •     our ability to consummate our initial business combination due to the
          uncertainty resulting from the ongoing COVID-19 pandemic and other events
          (such as terrorist attacks, natural disasters or other significant
          outbreaks of infectious diseases);



    •     the ability of our officers and directors to generate a number of
          potential acquisition opportunities;



  •   our public securities' potential liquidity and trading;



  •   the lack of a market for our securities;



    •     the use of proceeds not held in the trust account or available to us from
          interest income on the trust account balance;



    •     the proceeds from the sale of the Forward Purchase Units (as defined
          below) being available to us;



  •   the trust account not being subject to claims of third parties; or



  •   our financial performance in the future.


The forward-looking statements contained in this Quarterly Report on Form
10-Q/A
are based on our current expectations and beliefs concerning future developments
and their potential effects on us. There can be no assurance that future
developments affecting us will be those that we have anticipated. These
forward-looking statements involve a number of risks, uncertainties (some of
which are beyond our control) or other assumptions that may cause actual results
or performance to be materially different from those expressed or implied by
these forward-looking statements. Factors that might cause or contribute to such
a discrepancy include, but are not limited to, those described under the heading
"Risk Factors" in our other U.S. Securities and Exchange Commission (the "SEC")
filings. Should one or more of these risks or uncertainties materialize, or
should any of our assumptions prove incorrect, actual results may vary in
material respects from those projected in these forward-looking statements. We
undertake no obligation to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise, except as
may be required under applicable securities laws.
Overview
We are a blank check company incorporated on September 11, 2020 as a Cayman
Islands exempted company for the purpose of effecting a merger, share exchange,
asset acquisition, share purchase, reorganization or similar business
combination with one or more businesses or entities. We are an emerging growth
company and, as such, we are subject to all of the risks associated with
emerging growth companies.
Our Sponsor is Population Health Investment Holding, Inc., a Cayman Islands
exempted company. Our registration statement for the Initial Public Offering
became effective on October 21, 2020. On November 20, 2020, we consummated the
Initial Public Offering of 17,250,000 units (the "Units" and, with respect to
the Class A ordinary shares included in the Units, the "Public Shares"),
including 2,250,000 additional Units to cover over-allotments (the
"Over-Allotment Units"), at $10.00 per Unit, generating gross proceeds of
$172.5 million, and incurring offering costs of approximately $10.2 million,
inclusive of approximately $6.0 million in deferred underwriting commissions.

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Simultaneously with the closing of the Initial Public Offering, we consummated
the private placement ("Private Placement") of 3,633,333 warrants (each, a
"Private Placement Warrant" and collectively, the "Private Placement Warrants"),
at a price of $1.50 per Private Placement Warrant with the Sponsor, generating
gross proceeds of approximately $5.5 million.
Upon the closing of the Initial Public Offering and the Private Placement,
$172.5 million($10.00 per Unit) of the net proceeds of the Initial Public
Offering and certain of the proceeds of the Private Placement were placed in a
Trust Account, located in the United States with Continental Stock Transfer &
Trust Company acting as trustee, and invested only in U.S. "government
securities" within the meaning of Section 2(a)(16) of the Investment Company Act
having a maturity of 185 days or less or in money market funds meeting certain
conditions under Rule
2a-7
promulgated under the Investment Company Act which invest only in direct U.S.
government treasury obligations, as determined by the Company, until the earlier
of: (i) the completion of a Business Combination and (ii) the distribution of
the Trust Account as described below.
Our management has broad discretion with respect to the specific application of
the net proceeds of the Initial Public Offering and the sale of Private
Placement Warrants, although substantially all of the net proceeds are intended
to be applied generally toward consummating a Business Combination.
If we have not completed a Business Combination within 24 months from the
closing of the Initial Public Offering, or November 20, 2022 (the "Combination
Period"), we will (i) cease all operations except for the purpose of winding up;
(ii) as promptly as reasonably possible but not more than ten business days
thereafter, redeem the Public Shares, at a
per-share
price, payable in cash, equal to the aggregate amount then on deposit in the
Trust Account, including interest earned on the funds held in the Trust Account
and not previously released to the Company to pay its income taxes, if any (less
up to $100,000 of interest to pay dissolution expenses), divided by the number
of the then-outstanding Public Shares, which redemption will completely
extinguish Public Shareholders' rights as shareholders (including the right to
receive further liquidation distributions, if any); and (iii) as promptly as
reasonably possible following such redemption, subject to the approval of the
remaining shareholders and the board of directors, liquidate and dissolve,
subject in the case of clauses (ii) and (iii) to the Company's obligations under
Cayman Islands law to provide for claims of creditors and the requirements of
other applicable law.
Results of Operations
We have neither engaged in any significant operations nor generated any
operating revenue to date. Our only activities from inception through the IPO
Closing Date related to our formation and since our Initial Public Offering, our
activity has been limited to the search for a prospective initial Business
Combination. We will not be generating any operating revenues until the closing
and completion of our initial Business Combination, at the earliest.
For the three months ended September 30, 2021, we had net income of
approximately $3.2 million, which consisted of approximately $3.8 million in
change in fair value of derivative warrant liabilities, approximately $15,000 in
net gain from investments held in Trust Account, partially offset by
approximately 525,000 in general and administrative expenses.
For the nine months ended September 30, 2021, we had net income of approximately
$4.0 million, which consisted of approximately $5.2 million in change in fair
value of derivative warrant liabilities, approximately $22,000 in net gain from
investments held in Trust Account, partially offset by approximately
$1.2 million in general and administrative expenses.
For the period from September 11, 2020 (inception) through September 30, 2020,
we had a net loss of approximately $33,000, consisting solely of general and
administrative expenses.
Going Concern Consideration
As of September 30, 2021, we had approximately $373,000 in our operating bank
accounts and working capital of approximately $101,000.
Prior to the completion of the Initial Public Offering, our liquidity needs had
been satisfied through a contribution of $25,000 from our Sponsor to cover for
certain offering costs in exchange for the issuance of the Founder Shares, the
loan of $300,000 from our Sponsor pursuant to the Note (see Note 4), and the
proceeds from the consummation of the Private Placement not held in the Trust
Account. As of September 30, 2021, the Note remains outstanding and is due on
demand. In addition, in order to finance transaction costs in connection with a
Business Combination, our Sponsor or an affiliate of the Sponsor, or certain of
our officers and directors may, but are not obligated to, provide us Working
Capital Loans (see Note 4). As of September 30, 2021, and December 31, 2020,
there were no amounts outstanding under any Working Capital Loan. Based on the
foregoing, our management believes that we will have sufficient working capital
and borrowing capacity to meet its needs through the earlier of the consummation
of a Business Combination or one year from this filing. Over this time period,
we will be using these funds for paying existing accounts payable, identifying
and evaluating prospective initial Business Combination candidates, performing
due diligence on prospective target businesses, paying for travel expenditures,
selecting the target business to merge with or acquire, and structuring,
negotiating and consummating the Business Combination.

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In connection with our assessment of going concern considerations in accordance
with Financial Accounting Standards Board (the "FASB") Accounting Standards
Update ("ASU") 2014-15, "Disclosure of Uncertainties about an Entity's Ability
to Continue as a Going Concern," management has determined that the mandatory
liquidation and subsequent dissolution raises substantial doubt about our
ability to continue as a going concern. No adjustments have been made to the
carrying amounts of assets or liabilities should we be required to liquidate
after November 20, 2022.
Contractual Obligations
Registration and Shareholders' Rights
The holders of Founder Shares, Private Placement Warrants, Class A ordinary
shares underlying the Private Placement Warrants and warrants that may be issued
upon conversion of Working Capital Loans (and any Class A ordinary shares
issuable upon the exercise of the Private Placement Warrants and warrants that
may be issued upon conversion of Working Capital Loans) are entitled to
registration rights pursuant to a registration rights agreement. The holders of
these securities are entitled to make up to three demands, excluding short form
demands, that we register such securities. These holders will be entitled to
certain demand and "piggyback" registration rights. We will bear the expenses
incurred in connection with the filing of any such registration statements.
Underwriting Agreement
We granted the underwriters a
45-day
option from the final prospectus relating to the Initial Public Offering to
purchase up to 2,250,000 additional Units to cover over-allotments, if any, at
the Initial Public Offering price less the underwriting discounts and
commissions. On November 20, 2020, the underwriters fully exercised their
over-allotment option.
The underwriters were entitled to an underwriting discount of $0.20 per Unit, or
$3.5 million in the aggregate, paid upon the closing of the Initial Public
Offering. In addition, $0.35 per unit, or approximately $6.0 million in the
aggregate will be payable to the underwriters for deferred underwriting
commissions. The deferred fee will become payable to the underwriters from the
amounts held in the Trust Account solely in the event that the Company completes
a Business Combination, subject to the terms of the underwriting agreement.
Critical Accounting Policies and Estimates
Investments Held in the Trust Account
Our portfolio of investments held in the trust account is comprised of U.S.
government securities, within the meaning set forth in Section 2(a)(16) of the
Investment Company Act, with a maturity of 185 days or less, or investments in
money market funds that invest in U.S. government securities and generally have
a readily determinable fair value, or a combination thereof. When our
investments held in the Trust Account are comprised of U.S. government
securities, the investments are classified as trading securities and recognized
at fair value. When our investments held in the Trust Account are comprised of
money market funds, the investments are recognized at fair value. Gains and
losses resulting from the change in fair value of these securities is included
in income on investments held in the Trust Account in the accompanying unaudited
condensed statement of operations. The estimated fair values of investments held
in the Trust Account are determined using available market information.
Class A Ordinary Shares Subject to Possible Redemption
Class A ordinary shares subject to mandatory redemption (if any) are classified
as liability instruments and are measured at fair value. Conditionally
redeemable Class A ordinary shares (including Class A ordinary shares that
feature redemption rights that are either within the control of the holder or
subject to redemption upon the occurrence of uncertain events not solely within
our control) are classified as temporary equity. At all other times, Class A
ordinary shares are classified as shareholders' equity. Our Class A ordinary
shares feature certain redemption rights that are considered to be outside of
our control and subject to occurrence of uncertain future events, Accordingly,
at September 30, 2021 and December 31, 2020, 17,250,000 shares of Class A
ordinary shares subject to possible redemption are presented at redemption value
as temporary equity outside of the shareholders' equity section of the Company's
balance sheet.
Under ASC 480-10-S99, we have elected to recognize changes in the redemption
value immediately as they occur and adjust the carrying value of the security to
equal the redemption value at the end of the reporting period. This method would
view the end of the reporting period as if it were also the redemption date of
the security.
Effective with the closing of the Initial Public Offering, we recognized the
accretion from initial book value to redemption amount, which resulted in
charges against additional
paid-in
capital (to the extent available) and accumulated deficit.
Derivative Warrant Liabilities
We do not use derivative instruments to hedge exposures to cash flow, market or
foreign currency risks. We evaluate all of our financial instruments, including
issued stock purchase warrants, to determine if such instruments are derivatives
or contain features that qualify as embedded derivatives, pursuant to ASC 480
FASB ASC Topic 815, "Derivatives and Hedging" ("ASC 815"). The classification of
derivative instruments, including whether such instruments should be recorded as
liabilities or as equity, is reassessed at the end of each reporting period.
The warrants issued in connection with the Initial Public Offering (the "Public
Warrants") and the Private Placement Warrants are recognized as derivative
liabilities in accordance with ASC 815. Accordingly, we recognize the warrant
instruments as liabilities at fair value and adjusts the instruments to fair
value at each reporting period. The liabilities are subject to
re-measurement
at each balance sheet date until exercised, and any change in fair value is
recognized in the Company's statement of operations. The fair value of warrants
issued in connection with our Initial Public Offering and Private Placement was
initially measured at fair value using a Monte Carlo simulation model and
subsequently, the fair value of the Private Placement. The fair value of
warrants issued in connection with the Company's Initial Public Offering has
subsequently been measured based on the listed market price of such warrants. As
of September 30, 2021, the Company determined the fair value of the Private
Placement Warrants by reference to the Public Warrants listed trading price. As
the transfer of Private Placement Warrants to anyone who is not a permitted
transferee would result in the Private Placement Warrants having substantially
the same terms as the Public Warrant, the Company determined that the fair of
each Private Placement Warrants is equivalent to that of each Public Warrant.

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Net Income (Loss) Per Ordinary Share
We comply with accounting and disclosure requirements of FASB ASC Topic 260,
"Earnings Per Share." We have two classes of shares, which are referred to as
Class A ordinary shares and Class B ordinary shares. Income and losses are
shared pro rata between the two classes of shares. Net income (loss) per
ordinary share is calculated by dividing the net income (loss) by the weighted
average shares of ordinary shares outstanding for the respective period.
The calculation of diluted net income per ordinary share does not consider the
effect of the warrants underlying the Units sold in the Initial Public Offering
and the private placement warrants to purchase an aggregate of 9,383,333 Class A
ordinary shares in the calculation of diluted income per share, because their
exercise is contingent upon future events. Accretion associated with the
redeemable Class A ordinary shares is excluded from earnings per share as the
redemption value approximates fair value.
Recent Accounting Pronouncements
In August 2020, the FASB issued Accounting Standards Update ("ASU")
No. 2020-06,
Debt -Debt with Conversion and Other Options (Subtopic
470-20)
and Derivatives and Hedging -Contracts in Entity's Own Equity (Subtopic
815-40):
Accounting for Convertible Instruments and Contracts in an Entity's Own Equity
("ASU
2020-06"),
which simplifies accounting for convertible instruments by removing major
separation models required under current GAAP. The ASU also removes certain
settlement conditions that are required for equity-linked contracts to qualify
for the derivative scope exception, and it simplifies the diluted earnings per
share calculation in certain areas. We adopted ASU
2020-06
on January 1, 2021. Adoption of the ASU did not impact the Company's financial
position, results of operations or cash flows.
Our management does not believe that there are any other recently issued, but
not yet effective, accounting pronouncements, if currently adopted, that would
have a material effect on our unaudited condensed financial statements.
Off-Balance
Sheet Arrangements
As of September 30, 2021 and December 31, 2020, we did not have any
off-balance
sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation
S-K.
JOBS Act
The Jumpstart Our Business Startups Act of 2012 (the "JOBS Act") contains
provisions that, among other things, relax certain reporting requirements for
qualifying public companies. We qualify as an "emerging growth company" and
under the JOBS Act will be allowed to comply with new or revised accounting
pronouncements based on the effective date for private (not publicly traded)
companies. We are electing to delay the adoption of new or revised accounting
standards, and as a result, we may not comply with new or revised accounting
standards on the relevant dates on which adoption of such standards is required
for
non-emerging
growth companies. As a result, our unaudited condensed financial statements may
not be comparable to companies that comply with new or revised accounting
pronouncements as of public company effective dates. Additionally, we are in the
process of evaluating the benefits of relying on the other reduced reporting
requirements provided by the JOBS Act. Subject to certain conditions set forth
in the JOBS Act, if, as an "emerging growth company," we choose to rely on such
exemptions we may not be required to, among other things, (a) provide an
auditor's attestation report on our system of internal controls over financial
reporting pursuant to Section 404 of the JOBS Act, (b) provide all of the
compensation disclosure that may be required of
non-emerging
growth public companies under the Dodd-Frank Wall Street Reform and Consumer
Protection Act, (c) comply with any requirement that may be adopted by the
Public Company Accounting and Oversight Board regarding mandatory audit firm
rotation or a supplement to the auditor's report providing additional
information about the audit and the unaudited condensed financial statements
(auditor discussion and analysis) and (d) disclose certain executive
compensation related items such as the correlation between executive
compensation and performance and comparisons of our Chief Executive Officer's
compensation to median employee compensation. These exemptions will apply for a
period of five years following the IPO Closing Date or until we are no longer an
"emerging growth company," whichever is earlier.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are a smaller reporting company as defined by Rule
12b-2
of the Exchange Act and are not required to provide the information otherwise
required under this item.
The net proceeds of the Initial Public Offering and Over-Allotment,
respectively, included in the Trust Account, have been invested in cash and may
be invested in U.S. government securities with a maturity of 185 days or less or
in money market funds that meet certain conditions under Rule
2a-7
under the Investment Company Act of 1940, as amended, that invest only in direct
U.S. government treasury obligations. Due to the short-term nature of these
investments, we believe there will be no associated material exposure to
interest rate risk.

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We have not engaged in any hedging activities since our inception, and we do not
expect to engage in any hedging activities with respect to the market risk to
which we are exposed.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including
our principal executive officer and principal financial officer, we conducted an
evaluation of the effectiveness of our disclosure controls and procedures as of
the end of the fiscal quarter ended September 30, 2021, as such term is defined
in Rules
13a-15(e)
and
15d-15(e)
under the Exchange Act. Based on this evaluation, our principal executive
officer and principal financial officer has concluded that during the period
covered by this report, our disclosure controls and procedures were not
effective as of September 30, 2021, because of a material weakness in our
internal control over financial reporting. A material weakness is a deficiency,
or a combination of deficiencies, in internal control over financial reporting,
such that there is a reasonable possibility that a material misstatement of the
Company's annual or interim financial statements will not be prevented or
detected on a timely basis. Specifically, the Company's management has concluded
that our control around the interpretation and accounting for certain complex
financial instruments issued by the Company was not effectively designed or
maintained. This material weakness resulted in the restatement of the Company's
balance sheet as of December 22, 2020, its annual financial statements for the
period ended December 31, 2020, and its interim financial statements for the
quarters ended March 31, 2021, and June 30, 2021.
Disclosure controls and procedures are designed to ensure that information
required to be disclosed by us in our Exchange Act reports is recorded,
processed, summarized, and reported within the time periods specified in the
SEC's rules and forms, and that such information is accumulated and communicated
to our management, including our principal executive officer and principal
financial officer or persons performing similar functions, as appropriate to
allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
There was no change in our internal control over financial reporting that
occurred during the fiscal quarter ended September 30, 2021 covered by this
Quarterly Report on Form
10-Q
that has materially affected, or is reasonably likely to materially affect, our
internal control over financial reporting as the circumstances that led to the
restatement of our financial statements described in this Quarterly Report on
Form 10-Q had not yet been identified.
Our principal executive officer and principal financial officer performed
additional accounting and financial analyses and other post-closing procedures
including consulting with subject matter experts related to the accounting for
certain complex features of the Class A ordinary shares and warrants. The
Company's management has expended, and will continue to expend, a substantial
amount of effort and resources for the remediation and improvement of our
internal control over financial reporting. While we have processes to properly
identify and evaluate the appropriate accounting technical pronouncements and
other literature for all significant or unusual transactions, we have expanded
and will continue to improve these processes to ensure that the nuances of such
transactions are effectively evaluated in the context of the increasingly
complex accounting standards.

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