References in this report (the "Quarterly Report") to "we," "us" or the
"Company" refer to USHG Acquisition Corp. References to our "management" or our
"management team" refer to our officers and directors, references to the
"Sponsor" refer to USHG Investments, LLC. The following discussion and analysis
of the Company's financial condition and results of operations should be read in
conjunction with the unaudited condensed financial statements and the notes
thereto contained elsewhere in this Quarterly Report. Certain information
contained in the discussion and analysis set forth below includes
forward-looking statements that involve risks and uncertainties.
Special Note Regarding Forward-Looking Statements
This Quarterly Report 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") that are not historical facts and involve risks and
uncertainties that could cause actual results to differ materially from those
expected and projected. All statements, other than statements of historical fact
included in this Quarterly Report including, without limitation, statements in
this "Management's Discussion and Analysis of Financial Condition and Results of
Operations" regarding the Company's financial position, business strategy and
the plans and objectives of management for future operations, are
forward-looking statements. Words such as "expect," "believe," "anticipate,"
"intend," "estimate," "seek" and variations and similar words and expressions
are intended to identify such forward-looking statements. Such forward-looking
statements relate to future events or future performance, but reflect
management's current beliefs, based on information currently available. A number
of factors could cause actual events, performance, or results to differ
materially from the events, performance and results discussed in the
forward-looking statements. For information identifying important factors that
could cause actual results to differ materially from those anticipated in the
forward- looking statements, please refer to the Risk Factors section of the
Company's Quarterly Report on Form
10-Q
for the three months ended March 31, 2021 filed with the U.S. Securities and
Exchange Commission (the "SEC") on May 24, 2021 and the Company's final
prospectus for its initial public offering (the "Initial Public Offering"). The
Company's securities filings can be accessed on the EDGAR section of the SEC's
website at www.sec.gov. Except as expressly required by applicable securities
law, the Company disclaims any intention or obligation to update or revise any
forward-looking statements whether as a result of new information, future events
or otherwise.
Overview
We are a blank check company incorporated on December 4, 2020 as a Delaware
corporation and formed for the purpose of effecting a merger, capital stock
exchange, asset acquisition, stock purchase, reorganization, or similar business
combination with one or more businesses or entities ("Business Combination"). We
intend to effectuate our Business Combination using cash from the proceeds of
the Initial Public Offering and the sale of the Private Placement Warrants (as
defined below), our shares, debt, or a combination of cash, equity, and debt. 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 USHG Investments, LLC, a Delaware limited liability company. The
registration statement for the Initial Public Offering was declared effective on
February 24, 2021. On March 1, 2021, we consummated the Initial Public Offering
of 28,750,000 units ("Units" and, with respect to the Class A common stock
included in the units being offered, the "public shares"), including 3,750,000
over-allotment Units, at $10.00 per Unit, generating gross proceeds of
$287.5 million, and incurring offering costs of approximately $784,282,
inclusive of approximately $15.8 million in deferred underwriting commissions.
Simultaneously with the closing of the Initial Public Offering, we consummated
the private placement (the "Private Placement") of 1,333,333 warrants (each, a
"Private Placement Warrant" and collectively, the "Private Placement Warrants")
at a price of $1.50 per Private Placement Warrant to the Sponsor, generating
proceeds of $2.0 million.

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Upon the closing of the Initial Public Offering and the Private Placement,
$287.5 million ($10.00 per Unit) of the net proceeds of the Initial Public
Offering was held in a trust account ("Trust Account") located in the
United States with American Stock Transfer & Trust Company, LLC acting as
trustee, and invested only in United States "government securities" within the
meaning of Section 2(a)(16) of the Investment Company Act of 1940, as amended
(the "Investment Company Act") having a maturity of 180 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 us, until the earlier of:
(i) the completion of a Business Combination and (ii) the distribution of the
Trust Account.
If we are unable to complete a Business Combination within 24 months from the
closing of the Initial Public Offering, or March 1, 2023, 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 us to pay our taxes (less up to $100,000 of
interest to pay dissolution expenses), divided by the number of then outstanding
public shares, which redemption will completely extinguish public stockholders'
rights as stockholders (including the right to receive further liquidating
distributions, if any) and (iii) as promptly as reasonably possible following
such redemption, subject to the approval of our remaining stockholders and our
board of directors, dissolve and liquidate, subject in each case to our
obligations under Delaware law to provide for claims of creditors and the
requirements of other applicable law.
Recent Developments
On November 8, 2021, the Company entered into an Investment Agreement and Plan
of Merger (the "Investment Agreement") with Panera Brands, Inc., a Delaware
corporation ("Panera"), and Rye Merger Sub Inc., a Delaware corporation and
wholly owned subsidiary of Panera ("Merger Sub"), pursuant to which Merger Sub
will merge with and into the Company, with the Company surviving the merger as a
wholly owned subsidiary of Panera (the "Merger").
Upon the terms and subject to the conditions set forth in the Investment
Agreement, at the effective time of the Merger (the "Effective Time"), each
issued and outstanding share of the Company's Class A common stock and each
issued and outstanding share of the Company's Class B common stock will be
converted into the right to receive a number of shares of Panera's common stock,
par value $0.01 per share ("Panera Common Stock") at an exchange ratio of $10.00
divided by the public offering price per share in the Panera IPO (as defined
below). In addition, at the Effective Time, each issued and outstanding warrant
of the Company will be assumed by Panera and will relate to Panera Common Stock
(each, a "Warrant") (with the number of shares of Panera Common Stock underlying
each Warrant adjusted in accordance with the terms of the Investment Agreement).
The consummation of the proposed Transactions (as defined in the Investment
Agreement) is subject to the receipt of the requisite approval of the
stockholders of the Company (such approval, the "HUGS stockholder approval") and
the fulfillment of certain other conditions, including the consummation of
Panera's initial public offering of Panera Common Stock (the "Panera IPO").
Results of Operations
We have neither engaged in any operations (other than searching for a Business
Combination after the Initial Public Offering) nor generated any revenues to
date. We do not expect to generate any operating revenues until after the
completion of our Business Combination. We expect to generate
non-operating
income in the form of interest income on cash and cash equivalents. We incur
expenses as a result of being a public company (for legal, financial reporting,
accounting, and auditing compliance), as well as for due diligence expenses.
For the three months ended September 30, 2021, we had net income of
approximately $1,643,080, which consisted of approximately $238,414 in formation
and operating costs and $50,000 in franchise tax expense, offset by an
$1,927,152 gain from change in fair value of warrant liabilities and by $4,342
in interest income from funds held in the Trust Account.
For the nine months ended September 30, 2021, we had a net income of
approximately $4,194,795, which consisted of approximately $549,959 in formation
and operating costs, $150,000 in franchise tax expense and approximately
$757,984 in offering costs allocated to derivative warrant liabilities, offset
by $5,642,686 gain from change in fair value of warrant liabilities and $10,052
in income from funds held in the Trust Account.
Off-Balance
Sheet Arrangements
We did not have any
off-balance
sheet arrangements as of September 30, 2021.
Contractual Obligations
The underwriters are entitled to a deferred fee of $0.55 per Unit, or
$15,812,500 in the aggregate. The deferred fee will be waived by the
underwriters in the event that the Company does not complete a Business
Combination, subject to the terms of the underwriting agreement.
We have entered into an Administrative Services Agreement pursuant to which the
Company will pay an affiliate of the Sponsor a total of $10,000 per month for
office space, secretarial and administrative services. We will make payments to
the Sponsor until the earlier of the completion of the Initial Business
Combination or the liquidation of the trust assets. We paid $30,000 and $80,000
for the services provided through the Administrative Services Agreement for the
three and nine months ended September 30, 2021, respectively.
Critical Accounting Policies
The preparation of unaudited condensed financial statements and related
disclosures in conformity with accounting principles generally accepted in the
United States of America requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities, disclosure of
contingent assets and liabilities at the date of the unaudited condensed
financial statements, and income and expenses during the periods reported.
Actual results could materially differ from those estimates. We have identified
the following as our critical accounting policies:
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, or a combination
thereof. The investments held in the Trust Account are classified as trading

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securities. Trading securities are presented on the balance sheets at fair value
at the end of each reporting period. Gains and losses resulting from the change
in fair value of these securities is included in income from investments held in
the Trust Account in the accompanying statement of operations. The estimated
fair values of investments held in the Trust Account are determined using
available market information.
Class A Common Stock Subject to Possible Redemption
We account for our Class A common stock subject to possible redemption in
accordance with the guidance in Accounting Standards Codification Topic 480
"Distinguishing Liabilities from Equity." Shares of Class A common stock subject
to mandatory redemption (if any) are classified as liability instruments and are
measured at fair value. Conditionally redeemable shares of Class A common stock
(including shares of Class A common stock 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, shares of Class A common stock are
classified as stockholders' equity. Our shares of Class A common stock feature
certain redemption rights that are considered to be outside of our control and
subject to the occurrence of uncertain future events. Accordingly, as of
September 30, 2021, 28,750,000 shares of Class A common stock subject to
possible redemption were presented as temporary equity, outside of the
stockholders' equity section of the accompanying balance sheet. The Class A
common stock subject to possible redemption reflected on the balance sheet as
September 30, 2021 are reconciled in the following table:

Gross proceeds                                                       $ 287,500,000

Less:


Proceeds allocated to public warrants                                  (13,129,167 )
Class A shares offering costs at closing                               (15,845,671 )

Additional offering costs incurred during the three months ended June 30, 2021

                                                              (42,160 )

Plus:


Total accretion of carrying value to redemption value                   29,016,998

Class A common stock subject to possible redemption                  $ 287,500,000



Net Income Per Share of Common Stock
We comply with accounting and disclosure requirements of FASB ASC Topic 260,
"Earnings Per Share." Net income per common share is computed by dividing net
income by the weighted average number of shares of common stock outstanding
during the period. We have not considered the effect of the warrants sold in the
Initial Public Offering and Private Placement in the calculation of diluted
income per share, because the exercise of the warrants are contingent upon the
occurrence of future events and the inclusion of such warrants would be
anti-dilutive. Accretion associated with the redeemable Class A common stock is
excluded from earnings per share as the redemption value approximates fair
value.
Warrant Liability
The Company accounts for the warrants in accordance with the guidance contained
in ASC
815-40-15-7D
and 7F under which the warrants do not meet the criteria for equity treatment
and must be recorded as liabilities. Accordingly, the Company classifies the
warrants as liabilities at their fair value and adjusts the warrants to fair
value at each reporting period. This liability is 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 Private Placement
Warrants are valued using a Modified Black Scholes Option Pricing Model.
Recent accounting standards
In August 2020, the Financial Accounting Standards Board ("FASB") issued
Accounting Standards Update ("ASU")
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)
("ASU
2020-06")
to simplify accounting for certain financial instruments. ASU
2020-06
eliminates the current models that require separation of beneficial conversion
and cash conversion features from convertible instruments and simplifies the
derivative scope exception guidance pertaining to equity classification of
contracts in an entity's own equity. The new standard also introduces additional
disclosures for convertible debt and freestanding instruments that are indexed
to and settled in an entity's own equity. ASU
2020-06
amends the diluted earnings per share guidance, including the requirement to use
the
if-converted
method for all convertible instruments. ASU
2020-06
is effective January 1, 2024 and should be applied on a full or modified
retrospective basis, with early adoption permitted beginning on January 1, 2021.
Management is currently evaluating the new guidance but does not expect the
adoption of this guidance to have a material impact on the Company's financial
statements.
Management does not believe that any other recently issued, but not yet
effective, accounting standards, if currently adopted, would have a material
effect on our unaudited condensed financial statements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
As of September 30, 2021, we were not subject to any market or interest rate
risk. Following the consummation of the Initial Public Offering, the net
proceeds of the Initial Public Offering, including amounts in the Trust Account,
have been invested in U.S. government treasury bills, notes or bonds with a
maturity of 180 days or less or in certain money market funds that invest solely
in U.S. treasuries. 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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