LANGFORD MOSS & CRANE LLP 1717 Pennsylvania Avenue NW, Suite 850 Washington, DC 20006
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MEMORANDUM
ATTORNEY-CLIENT PRIVILEGED & CONFIDENTIAL — ATTORNEY WORK PRODUCT
This memorandum and the information contained herein are protected by the attorney-client privilege and constitute attorney work product. This memorandum is intended solely for the use of the addressees and those persons identified as receiving copies. Any distribution, copying, or disclosure of this memorandum or its contents to any other person is strictly prohibited. If you have received this memorandum in error, please notify the sender immediately and destroy all copies.
I. Purpose and Scope
This memorandum summarizes the healthcare facility license transfer and Certificate of Need ("CON") reissuance applications that have been filed, or are being filed concurrently with the delivery of this memorandum, with the relevant state regulatory agencies in connection with the change of control of MedVance Health Systems, Inc. (the "Company," the "Target," or "MedVance") resulting from the acquisition of one hundred percent (100%) of the outstanding equity of MedVance by Ardent Healthcare Holdings Inc. (the "Purchaser"), a newly formed acquisition vehicle of Ardent Capital Partners III LP (the "Fund"). Throughout this memorandum, the acquisition of the Company by the Purchaser is referred to as the "Transaction."
The Stock Purchase Agreement governing the Transaction (the "SPA") was executed on February 10, 2025, by and among the Purchaser, the Company, and the equity holders of the Company identified therein. Langford Moss & Crane LLP ("LMC") is serving as healthcare regulatory counsel to the Purchaser in connection with all state healthcare licensure, Certificate of Need, and related regulatory filings necessitated by the Transaction. LMC is coordinating with Calderwood & Harkness LLP ("Calderwood & Harkness"), which serves as the Purchaser's principal transaction counsel, on all licensure and regulatory filings to ensure that the regulatory approval closing conditions set forth in the SPA are satisfied in advance of the targeted closing date.
Applications for change of control approval, licensure transfer, or CON reissuance (as applicable) are required in the following four states in which MedVance operates licensed healthcare facilities:
1. Tennessee
2. Alabama
3. Georgia
4. Kentucky
Each of these states' applicable statutes and regulations requires prior approval of, or notification regarding, a change of control before the Transaction may close with respect to the licensed healthcare facilities operating in that state. The phrase "change of control" as used herein has the meaning ascribed to it under each respective state's healthcare licensure statutes and regulations, and, for purposes of this memorandum, corresponds to the acquisition of one hundred percent (100%) of the outstanding equity of the Company by the Purchaser. As discussed in greater detail below, the specific definitions and thresholds triggering a "change of control" vary by state, but the Transaction unambiguously constitutes a change of control under each applicable state's regulatory framework.
This memorandum is intended to provide the Purchaser and its advisors with a comprehensive overview of: (a) the licensure transfer and CON reissuance applications filed in each state; (b) the supporting documentation submitted; (c) the applicable review timelines; (d) the status of each application as of the date hereof or as updated subsequent to the initial date of this memorandum; and (e) any conditions, undertakings, or post-closing obligations arising from the state approval process. This memorandum will be updated as approvals are received and is intended to serve as the definitive record of the licensure transfer process for inclusion in the closing documentation.
II. Background — Transaction Summary
Ardent Healthcare Holdings Inc. will acquire all issued and outstanding shares of common stock of MedVance Health Systems, Inc. for an aggregate purchase price of Six Hundred Twenty Million Dollars ($620,000,000), subject to customary purchase price adjustments for working capital, indebtedness, transaction expenses, and cash on hand as of the closing date, all as more particularly described in the SPA.
The Target. MedVance Health Systems, Inc. was founded in 2009 and is headquartered at 4200 West End Avenue, Suite 1100, Nashville, Tennessee 37205. MedVance is incorporated under the laws of the State of Delaware (Delaware Division of Corporations File No. 4938217; Employer Identification Number 62-7083149) with principal operations in Tennessee. Since its founding, MedVance has grown into a multi-state healthcare services platform operating a diversified portfolio of ambulatory surgical centers, outpatient clinics, behavioral health facilities, and ancillary healthcare operations across the southeastern United States. As of the date of this memorandum, MedVance employs approximately 2,800 full-time and part-time employees and holds active healthcare facility licenses in Tennessee, Alabama, Georgia, and Kentucky.
Current Equity Holders. The following parties currently hold the issued and outstanding equity of MedVance and are the selling parties under the SPA:
• Crestline Growth Equity Fund II LP — 68.2% of the outstanding equity of MedVance. Crestline Growth Equity Fund II LP is a Delaware limited partnership and middle-market growth equity fund that acquired its interest in MedVance in a 2016 recapitalization transaction.
• Ryland Family Holdings LLC — 19.5% of the outstanding equity of MedVance. Ryland Family Holdings LLC is a Tennessee limited liability company and the family investment vehicle of the Ryland family, including co-founders Dr. James R. Ryland and Catherine M. Ryland.
• Management Holders — 12.3% of the outstanding equity of MedVance, held by certain members of the Company's senior management team pursuant to equity incentive plans. A portion of the management equity (representing approximately 4.1% of the outstanding equity) will be rolled into the Purchaser in exchange for equity interests in Ardent Healthcare Holdings Inc. on terms set forth in the Management Rollover Agreements dated February 10, 2025.
The Purchaser. Ardent Healthcare Holdings Inc. (Delaware Division of Corporations File No. 7201548; Employer Identification Number 93-2047861) was incorporated under the laws of the State of Delaware on January 8, 2025, as a wholly owned acquisition subsidiary of Ardent Capital Partners III LP. The Fund is managed by Ardent Capital Management III LLC, a Delaware limited liability company. The ultimate beneficial owners and key principals of the Purchaser for purposes of the state licensure transfer applications are Graham Whitfield, Managing Partner and Co-Founder; Priya Ranganathan, Partner, Healthcare Investing; and Thomas Kearney, Operating Partner, Healthcare Services.
Hart-Scott-Rodino Compliance. A pre-merger notification filing under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), was made on December 18, 2024 (Reference No. HSR-2024-7231). Early termination of the applicable waiting period was granted by the Federal Trade Commission on January 22, 2025. No federal antitrust impediment to the consummation of the Transaction remains.
Targeted Closing Date. The targeted closing date set forth in the SPA is April 15, 2025, subject to the satisfaction or waiver of all conditions precedent to closing, including without limitation the receipt of all required state healthcare licensure approvals that are the subject of this memorandum.
III. Overview of MedVance Licensed Facilities by State
The following table summarizes all MedVance facilities that are subject to state healthcare licensure or CON requirements in the four states in which applications have been filed. The facility names, addresses, facility types, and applicable license numbers set forth below are cross-referenced to Schedule 3.14 (Healthcare Licenses and Permits) and Schedule 3.15 (Certificates of Need) of the SPA Disclosure Schedules, and are described in greater detail in the respective state application appendices.
A. Tennessee Facilities
Licensing Authority: Tennessee Department of Health, Health Care Facilities Division, 665 Mainstream Drive, Nashville, Tennessee 37243.
Tennessee represents the largest concentration of MedVance facilities, with seven licensed healthcare facilities operating across the state. These facilities include the Company's flagship ambulatory surgery centers in Nashville and Murfreesboro, its two behavioral health centers, and three outpatient clinics in Brentwood, Chattanooga, and Memphis.
B. Alabama Facilities
Licensing Authority: Alabama State Board of Health, Bureau of Health Provider Standards, RSA Tower, 201 Monroe Street, Montgomery, Alabama 36104.
MedVance operates three licensed healthcare facilities in Alabama, consisting of one ambulatory surgery center located in Birmingham and two outpatient clinics in Huntsville and Mobile. The Birmingham ambulatory surgery center also holds a CON issued by the Alabama State Health Planning and Development Agency, as discussed in Section IV.B below.
C. Georgia Facilities
Licensing Authority: Georgia Department of Community Health, Healthcare Facility Regulation Division, 2 Peachtree Street NW, Suite 31-447, Atlanta, Georgia 30303.
MedVance operates four licensed healthcare facilities in Georgia, including one ambulatory surgery center in Atlanta, one behavioral health facility in Savannah, and two outpatient clinics in Augusta and Marietta. Two of the Georgia facilities — the Atlanta ambulatory surgery center and the Savannah behavioral health facility — hold Certificates of Need that are subject to reissuance in connection with the Transaction, as discussed in Section IV.C below.
D. Kentucky Facilities
Licensing Authority: Kentucky Cabinet for Health and Family Services, Office of Inspector General, Division of Health Care, 275 East Main Street, Frankfort, Kentucky 40621.
MedVance operates two licensed healthcare facilities in Kentucky: one ambulatory surgery center in Louisville and one outpatient clinic in Lexington.
All facility-specific details, including precise street addresses, current administrators of record, license expiration dates, and applicable license numbers, are set forth in the application appendices filed with each state agency and are cross-referenced to the Disclosure Schedules of the SPA. A complete inventory of all licenses and permits is maintained in the LMC files.
IV. State-by-State Filing Requirements and Application Status
A. Tennessee — Department of Health
Governing Authority and Statutory Framework. The licensure of healthcare facilities in Tennessee is governed by the Tennessee Health Care Facilities Licensure Act, Tennessee Code Annotated §§ 68-11-201 et seq., and the rules promulgated thereunder by the Board for Licensing Health Care Facilities, Tennessee Compilation Rules & Regulations ("Tenn. Comp. R. & Regs.") §§ 1200-08-01-.01 et seq. (general licensure standards), 1200-08-10-.01 et seq. (ambulatory surgical treatment centers), and 1200-08-26-.01 et seq. (outpatient diagnostic centers and clinics). Under Tenn. Code Ann. § 68-11-210 and Tenn. Comp. R. & Regs. § 1200-08-01-.02, a change of ownership of a licensed healthcare facility requires the filing of a new license application or a transfer application with the Tennessee Department of Health, Health Care Facilities Division. A "change of ownership" under Tennessee regulations includes any transaction that results in a change in the person, entity, or entities that exercise control over the licensee, which encompasses the acquisition of a controlling equity interest in a licensed entity or its parent.
Application Filed. LMC has prepared and filed a Change of Ownership / Transfer of License Application (Form HC-0417, Rev. 09/2024) with the Tennessee Department of Health on behalf of the Purchaser for each of the seven licensed MedVance facilities in Tennessee. Separate applications were submitted for each facility, as required by the Department, together with a consolidated cover letter identifying the common transaction and requesting coordinated review.
Supporting Documentation. The following supporting documentation was submitted in connection with the Tennessee applications:
1. Completed Change of Ownership Application (Form HC-0417) for each of the seven Tennessee facilities.
2. Certified copies of the Certificate of Incorporation and Bylaws of Ardent Healthcare Holdings Inc.
3. Certified copy of the Certificate of Formation and Limited Partnership Agreement of Ardent Capital Partners III LP (redacted for commercially sensitive terms as permitted by the Department).
4. Certificate of Good Standing for Ardent Healthcare Holdings Inc. issued by the Delaware Secretary of State, dated February 3, 2025.
5. Organizational chart depicting the complete ownership structure of the Purchaser, the Fund, and Ardent Capital Management III LLC, from the ultimate beneficial owners through to the licensed facilities.
6. Audited financial statements of MedVance Health Systems, Inc. for the fiscal years ended December 31, 2023 and December 31, 2024 (the latter in draft form, subject to finalization).
7. Evidence of financial capacity of the Purchaser, including a commitment letter from Camberwell Financial the availability of the senior secured credit facility in the aggregate amount of $390,000,000 and confirmation of equity commitment from Ardent Capital Partners III LP in the amount of $248,000,000.
8. Disclosure of new ownership structure, including identification of all persons and entities holding a direct or indirect ownership interest of five percent (5%) or greater in the Purchaser.
9. Background check authorization forms and sworn affidavits for each key principal: Graham Whitfield, Priya Ranganathan, and Thomas Kearney.
10. Curriculum vitae and biographical information for each key principal.
11. Management and operational plans for the Tennessee facilities, including a narrative description of the Purchaser's plans for the continued operation of each facility, staffing plans, and any anticipated changes to the scope of services offered.
12. Facility-specific compliance histories for each Tennessee facility, including the most recent state survey reports and any plans of correction.
13. Evidence of professional liability insurance coverage.
14. Executed Power of Attorney authorizing LMC to act on behalf of the Purchaser in connection with the applications.
15. Filing fee payments (check in the amount of $2,500 per application, totaling $17,500 for the seven Tennessee facilities).
Filing Date and Review Period. The Tennessee applications were filed on February 15, 2025, concurrent with the delivery of this memorandum. The Tennessee Department of Health's standard review period for change of ownership applications is approximately thirty (30) to forty-five (45) days from receipt of a complete application, although the Department may request supplemental information that could extend this timeline.
Primary Contact. LMC is serving as the primary point of contact with the Tennessee Department of Health for all matters related to these applications. Dr. Patricia Langford and senior associate Katherine A. Brennan are managing the Tennessee filings and will participate in any follow-up communications or conferences with the Department.
CON Implications. Tennessee maintains a Certificate of Need program administered by the Tennessee Health Services and Development Agency ("HSDA") under Tenn. Code Ann. §§ 68-11-1601 et seq. Based on our review of the CON inventory for the Tennessee facilities, none of the seven Tennessee MedVance facilities holds a Certificate of Need that requires reissuance or transfer in connection with the Transaction. The ambulatory surgical centers were established during a period when ambulatory surgical centers were exempt from CON requirements under Tennessee law, and the outpatient clinics and behavioral health facilities do not fall within the categories of health care institutions for which CON approval is required under current Tennessee regulations. Accordingly, no CON transfer applications have been filed in Tennessee.
Approval Status. Updated March 5, 2025: The Tennessee Department of Health issued approval letters for all seven Tennessee facility license transfers on March 5, 2025. No supplemental information was requested, and no conditions were imposed beyond the standard post-closing notification requirements described in Section VI below. Copies of the approval letters have been provided to Calderwood & Harkness LLP and to Velthorn Risk Advisors LLC.
B. Alabama — State Board of Health
Governing Authority and Statutory Framework. The licensure of healthcare facilities in Alabama is governed by the Statewide Health Coordinating Council and the Alabama State Board of Health, pursuant to the Code of Alabama § 22-21-20 et seq. (hospital and healthcare facility licensure) and the implementing rules and regulations set forth in the Alabama Administrative Code, Rule 420-5-1-.01 et seq. (general licensure standards for health care facilities) and Rule 420-5-2-.01 et seq. (ambulatory surgery centers). Under Ala. Admin. Code r. 420-5-1-.03, a change of ownership of a licensed health care facility requires prior notification to and approval by the Alabama State Board of Health, Bureau of Health Provider Standards. Alabama regulations define a "change of ownership" to include any transfer, assignment, or other disposition of a controlling interest in the entity holding the license, including the direct or indirect acquisition of more than fifty percent (50%) of the ownership interests in such entity.
Application Filed. LMC has prepared and filed a Change of Ownership Notification and Application (Larkspur SystemsH Form BHPS-104, Rev. 06/2023) with the Alabama State Board of Health, Bureau of Health Provider Standards, on behalf of the Purchaser for each of the three licensed MedVance facilities in Alabama. In accordance with Alabama practice, the applications were submitted as a consolidated package with a single cover letter, while maintaining separate facility-specific application forms and supporting schedules.
Supporting Documentation. The following supporting documentation was submitted in connection with the Alabama applications:
1. Completed Change of Ownership Notification and Application (Larkspur SystemsH Form BHPS-104) for each of the three Alabama facilities.
2. Certified copies of the Certificate of Incorporation and Bylaws of Ardent Healthcare Holdings Inc.
3. Corporate organizational charts for the Purchaser, including identification of all direct and indirect owners holding a five percent (5%) or greater interest.
4. Certificate of Good Standing for Ardent Healthcare Holdings Inc. issued by the Delaware Secretary of State, dated February 3, 2025.
5. Certificate of Authority for Ardent Healthcare Holdings Inc. to transact business in the State of Alabama, dated February 7, 2025.
6. Proof of financial responsibility, including audited financial statements of MedVance Health Systems, Inc. for the fiscal years ended December 31, 2023 and December 31, 2024 (draft), and the Ashbury Trust Bank letter referenced above.
7. Administrator credentials for each Alabama facility, including the qualifications and licensure status of the current administrators of record and confirmation that the Purchaser intends to retain the existing administrators during the transition period.
8. Background check submissions for the three key principals: Graham Whitfield, Priya Ranganathan, and Thomas Kearney, including Federal Bureau of Investigation Criminal Background Check authorizations (Form FD-258).
9. Sworn affidavits of each key principal attesting that no principal has been convicted of a felony, has been excluded from participation in any federal or state healthcare program, or is currently the subject of any pending investigation or enforcement action by any healthcare regulatory agency.
10. Site-specific submissions for each facility, including current staffing rosters, floor plans, and compliance histories.
11. Evidence of professional liability and general liability insurance coverage for each Alabama facility.
12. Filing fee payments ($1,800 per application, totaling $5,400 for the three Alabama facilities).
CON Transfer Requirements. Alabama maintains a Certificate of Need program administered by the Alabama State Health Planning and Development Agency ("SHPDA") under Code of Alabama § 22-21-260 et seq. The MedVance Ambulatory Surgery Center — Birmingham holds a Certificate of Need (CON No. AL-CON-2017-0062) originally issued by SHPDA in connection with the establishment of the facility in 2017. Under Alabama law, the transfer or assignment of a CON incident to a change of ownership of the CON holder requires prior approval of SHPDA. Accordingly, a CON Transfer Application (SHPDA Form CON-T, Rev. 03/2022) was filed concurrently with the licensure change of ownership application. The CON Transfer Application included a narrative description of the Transaction, evidence that the Purchaser will continue to operate the ambulatory surgery center in accordance with the terms of the original CON, and confirmation that no change in the scope of services, bed complement, or capital expenditure threshold is contemplated.
Filing Date and Review Period. The Alabama applications were filed on February 15, 2025. The Alabama State Board of Health's standard review period for change of ownership applications is approximately thirty (30) to sixty (60) days. The SHPDA CON transfer review typically runs concurrently with the licensure review, and SHPDA has historically coordinated its review with the Bureau of Health Provider Standards in change of ownership situations.
Approval Status. Updated March 18, 2025: The Alabama State Board of Health issued approval letters for all three Alabama facility license transfers on March 18, 2025. Concurrently, the Alabama State Health Planning and Development Agency approved the transfer of CON No. AL-CON-2017-0062 for the Birmingham ambulatory surgery center. The SHPDA approval letter confirmed that the CON will be reissued in the name of the Purchaser (or its designated subsidiary) following closing and upon submission of evidence of the completed ownership transfer. No material conditions were imposed. Copies of all approval letters have been provided to Calderwood & Harkness LLP and to Velthorn Risk Advisors LLC.
C. Georgia — Department of Community Health
Governing Authority and Statutory Framework. The licensure of healthcare facilities in Georgia is governed by the Georgia Department of Community Health ("DCH"), Healthcare Facility Regulation Division, pursuant to the Official Code of Georgia Annotated ("O.C.G.A.") § 31-7-1 et seq. (Rules and Regulations for Hospitals and Related Institutions) and the implementing regulations set forth in the Georgia Compilation of Rules and Regulations ("Ga. Comp. R. & Regs.") §§ 111-8-40-.01 et seq. (general licensure rules for healthcare facilities) and 111-8-40-.13 et seq. (ambulatory surgical centers). Under O.C.G.A. § 31-7-3 and Ga. Comp. R. & Regs. § 111-8-40-.03, a healthcare facility license is not transferable, and any change of ownership of a licensed facility requires the new owner to submit a new license application. Georgia regulations define "change of ownership" broadly to include any change in the form of legal organization of the licensee, any transfer of a majority interest in the licensee, or any transaction in which effective control of the licensee is transferred to a new entity.
Pre-Filing Conference. In accordance with customary Georgia practice and at the recommendation of the DCH Healthcare Facility Regulation Division, LMC participated in a pre-filing conference with DCH staff on February 6, 2025. The pre-filing conference was attended by Dr. Patricia Langford and Katherine A. Brennan of LMC, and by Denise Morales, Unit Manager, Healthcare Facility Regulation Division. During the pre-filing conference, LMC provided an overview of the Transaction, the ownership structure of the Purchaser, and the four Georgia facilities subject to the change of ownership applications. DCH staff confirmed the applicable forms and documentation requirements and indicated that the four Georgia facility applications could be reviewed on a coordinated basis.
Application Filed. LMC has prepared and filed a Change of Ownership / New License Application (DCH Form HFR-200, Rev. 01/2024) with the Georgia Department of Community Health on behalf of the Purchaser for each of the four licensed MedVance facilities in Georgia.
Supporting Documentation. The following supporting documentation was submitted in connection with the Georgia applications:
1. Completed Change of Ownership / New License Application (DCH Form HFR-200) for each of the four Georgia facilities.
2. Detailed ownership disclosure forms (DCH Form HFR-200A) identifying all persons and entities holding a direct or indirect ownership or control interest of five percent (5%) or greater in the Purchaser, including disclosure through each tier of the ownership structure to the ultimate beneficial owners.
3. Certified copies of the Certificate of Incorporation and Bylaws of Ardent Healthcare Holdings Inc.
4. Certificate of Good Standing for Ardent Healthcare Holdings Inc. issued by the Delaware Secretary of State, dated February 3, 2025.
5. Certificate of Authority for Ardent Healthcare Holdings Inc. to transact business in the State of Georgia, dated February 10, 2025.
6. Audited financial statements of MedVance Health Systems, Inc. for the fiscal years ended December 31, 2023 and December 31, 2024 (draft).
7. Pro forma financial projections for the Georgia operations for the twenty-four (24) month period following the anticipated closing date.
8. Compliance history for each Georgia facility, including all state survey reports, statements of deficiencies, and plans of correction for the preceding three (3) years.
9. Evidence of professional liability insurance coverage, including certificates of insurance and evidence of tail coverage arrangements.
10. Evidence of general liability and property insurance coverage for each Georgia facility.
11. Background check authorizations and sworn disclosures for the three key principals, consistent with the submissions in other states.
12. Management and operational plans for each Georgia facility, including confirmation of the Purchaser's intent to retain existing clinical and administrative leadership during the transition period.
13. Filing fee payments ($3,000 per application, totaling $12,000 for the four Georgia facilities).
CON Transfer Requirements. Georgia maintains a robust Certificate of Need program administered by DCH pursuant to O.C.G.A. § 31-6-40 et seq. and Ga. Comp. R. & Regs. § 111-2-2-.01 et seq. Two of the four Georgia MedVance facilities hold Certificates of Need that must be reissued incident to the change of control:
• MedVance Ambulatory Surgery Center — Atlanta holds CON No. GA-CON-2016-014-ASC, originally issued by DCH on August 22, 2016, authorizing the establishment and operation of a multi-specialty ambulatory surgical center with four operating rooms and two procedure rooms.
• MedVance Behavioral Health Center — Savannah holds CON No. GA-CON-2019-037-BH, originally issued by DCH on March 14, 2019, authorizing the establishment and operation of a twenty-four (24) bed inpatient behavioral health facility.
Under O.C.G.A. § 31-6-44.1, the transfer of a CON in connection with a change of ownership requires the filing of a CON Transfer Application (DCH Form CON-T, Rev. 07/2023) and approval by DCH. CON Transfer Applications were filed concurrently with the licensure change of ownership applications for the Atlanta ambulatory surgery center and the Savannah behavioral health center. Each CON Transfer Application included evidence that the Purchaser will continue to operate the facilities in accordance with the conditions and service parameters established in the original CONs, and that no changes to the approved scope of services, bed capacity, or equipment are contemplated.
Filing Date and Review Period. The Georgia applications were filed on February 15, 2025. The Georgia Department of Community Health's standard review period for change of ownership applications is approximately thirty (30) to sixty (60) days, although the Department has indicated that coordinated review of the four applications may be completed within this general timeframe. CON transfer reviews are typically conducted on a parallel track and are generally completed within the same timeframe as the licensure review.
Approval Status. Updated March 27, 2025: The Georgia Department of Community Health issued approval letters for all four Georgia facility license transfers on March 27, 2025. The DCH also issued CON Transfer Approval letters for CON No. GA-CON-2016-014-ASC (Atlanta ambulatory surgery center) and CON No. GA-CON-2019-037-BH (Savannah behavioral health center) on the same date. The CON transfer approvals confirm that the Certificates of Need will be reissued in the name of the Purchaser (or its designated subsidiary) upon submission of evidence of the completed ownership transfer and payment of the CON reissuance fee ($500 per CON). No material conditions were imposed beyond standard post-closing reporting requirements. Copies of all approval letters have been provided to Calderwood & Harkness LLP and to Velthorn Risk Advisors LLC.
D. Kentucky — Cabinet for Health and Family Services
Governing Authority and Statutory Framework. The licensure of healthcare facilities in Kentucky is governed by the Kentucky Cabinet for Health and Family Services, Office of Inspector General, Division of Health Care, pursuant to Kentucky Revised Statutes ("KRS") § 216B.010 et seq. (licensure of health facilities and health services) and the implementing regulations set forth in the Kentucky Administrative Regulations ("KAR"), 902 KAR 20:008 et seq. (licensure standards). Under KRS § 216B.061 and 902 KAR 20:008, Section 3, a healthcare facility license is not transferable, and any transfer of ownership of a licensed healthcare facility requires the new owner to obtain a new license through a change of ownership application process.
Kentucky regulations draw a distinction between a "transfer of ownership" and a "change of control" that is relevant to the Transaction. Under 902 KAR 20:008, Section 3(2), a "transfer of ownership" includes any change in the person or entity that is the licensee of record, including a change resulting from the acquisition of a controlling interest in the licensee. A "change of control" is defined to encompass any transaction that results in a change in the identity of the person or persons exercising ultimate control over the operational and financial decisions of the licensed facility, regardless of whether the licensee entity itself changes. The Transaction, which involves the acquisition of one hundred percent (100%) of the equity of MedVance by the Purchaser without a change in the licensee entity itself, constitutes both a "transfer of ownership" and a "change of control" under Kentucky regulations, and the more comprehensive transfer of ownership application process applies.
Application Filed. LMC has prepared and filed a Change of Ownership Application (CHFS Form OIG-HC-003, Rev. 11/2023) with the Kentucky Cabinet for Health and Family Services, Office of Inspector General, Division of Health Care, on behalf of the Purchaser for each of the two licensed MedVance facilities in Kentucky.
Supporting Documentation. The following supporting documentation was submitted in connection with the Kentucky applications:
1. Completed Change of Ownership Application (CHFS Form OIG-HC-003) for each of the two Kentucky facilities.
2. Certified copies of the Certificate of Incorporation and Bylaws of Ardent Healthcare Holdings Inc.
3. Corporate organizational charts for the Purchaser, including identification of all direct and indirect owners.
4. Certificate of Good Standing for Ardent Healthcare Holdings Inc. issued by the Delaware Secretary of State, dated February 3, 2025.
5. Certificate of Authority for Ardent Healthcare Holdings Inc. to transact business in the Commonwealth of Kentucky, dated February 12, 2025.
6. Facility inspection compliance history for each Kentucky facility, including all inspection reports, statements of deficiencies, and plans of correction from the Office of Inspector General for the preceding five (5) years, together with a certification that all identified deficiencies have been corrected.
7. Administrator qualifications for each facility, including copies of the current administrators' licenses, certifications, and evidence of continuing education compliance.
8. Financial capacity evidence, including audited financial statements of MedVance Health Systems, Inc. for the two most recent fiscal years, the Ashbury Trust Bank letter, and the Fund equity commitment letter.
9. Background check authorizations for the three key principals, including Kentucky State Police criminal background check authorization forms and federal FBI background check authorizations.
10. Sworn disclosures from each key principal regarding healthcare program exclusions, sanctions, convictions, and pending investigations.
11. Evidence of professional liability and general liability insurance coverage.
12. Management transition plan for each Kentucky facility, including identification of retained management personnel and a ninety (90) day post-closing transition timeline.
13. Filing fee payments ($2,000 per application, totaling $4,000 for the two Kentucky facilities).
CON Requirements. Kentucky maintains a Certificate of Need program administered by the Kentucky Cabinet for Health and Family Services pursuant to KRS § 216B.040 et seq. Based on our review of the CON inventory, neither of the two Kentucky MedVance facilities currently holds a Certificate of Need. The Louisville ambulatory surgery center was established prior to the current CON threshold levels for ambulatory surgical centers in Kentucky, and the Lexington outpatient clinic does not fall within a category of healthcare facility or service that requires CON approval under current Kentucky regulations. Accordingly, no CON transfer applications were required in Kentucky.
Filing Date and Review Period. The Kentucky applications were filed on February 15, 2025. The Kentucky Cabinet for Health and Family Services' standard review period for change of ownership applications is approximately forty-five (45) to sixty (60) days. Kentucky's review process typically includes a desk review of the application and supporting documentation, followed by a pre-licensure inspection of each facility, which is coordinated with the Office of Inspector General's survey team. LMC has been informed by the Division of Health Care that pre-licensure inspections of the Louisville and Lexington facilities are anticipated to be scheduled during the week of March 17, 2025.
Approval Status. Updated April 10, 2025: The Kentucky Cabinet for Health and Family Services issued approval letters for both Kentucky facility license transfers on April 10, 2025. Pre-licensure inspections of the Louisville ambulatory surgery center and the Lexington outpatient clinic were conducted on March 19, 2025, and March 20, 2025, respectively. Both facilities passed inspection without any statements of deficiency. The approval letters include a condition requiring submission of a post-closing notification within ten (10) business days of the actual closing date, which obligation is described in Section VI below. Copies of all approval letters have been provided to Calderwood & Harkness LLP and to Velthorn Risk Advisors LLC.
V. Summary of Filing Timeline and Approval Status
The following table summarizes the filing dates, anticipated and actual review periods, and approval dates for all state healthcare licensure transfer applications filed in connection with the Transaction:
All four state approvals were received in advance of the actual closing date of April 18, 2025. The licensure transfer condition to closing under the SPA — specifically, the condition precedent set forth in Section 7.01(c) requiring receipt of all healthcare regulatory approvals identified on Schedule 7.01(c) — has been fully satisfied. Kentucky was the final state to issue its approval, on April 10, 2025, providing an eight (8) day cushion prior to the actual closing date.
We note that all state agencies completed their reviews within or ahead of the anticipated review periods, which we attribute in part to the comprehensive nature of the initial application submissions, the pre-filing conference conducted with the Georgia Department of Community Health, and LMC's proactive follow-up communications with each agency throughout the review process.
VI. Key Conditions and Undertakings
This Section summarizes the material conditions imposed by the state regulatory agencies in connection with their change of ownership approvals, as well as the representations and undertakings made to the agencies by or on behalf of the Purchaser during the application process.
A. Conditions Imposed by State Agencies
Tennessee — Department of Health.
The Tennessee approval letters did not impose any conditions beyond the standard post-closing requirements applicable to all change of ownership transactions in Tennessee. Specifically, the Tennessee Department of Health requires that the Purchaser (or its designated subsidiary, as applicable) submit: (i) a completed Post-Closing Ownership Change Confirmation (Form HC-0418) within thirty (30) days of the actual closing date; and (ii) copies of the executed closing documents evidencing the change of ownership, including the final stock certificates or equity transfer documentation.
Alabama — State Board of Health / SHPDA.
The Alabama State Board of Health approval letters require: (i) post-closing notification to the Bureau of Health Provider Standards within fifteen (15) days of the actual closing date; (ii) retention of the current administrator of record at each Alabama facility for a minimum period of ninety (90) days following the closing date, unless the Bureau provides prior written consent to a change; and (iii) submission of an updated staffing plan for each facility within sixty (60) days of the closing date. The SHPDA CON transfer approval for the Birmingham ambulatory surgery center requires submission of evidence of the completed ownership transfer within thirty (30) days of closing for reissuance of the CON certificate.
Georgia — Department of Community Health.
The Georgia approval letters require: (i) post-closing notification to DCH within ten (10) business days of the actual closing date, including submission of evidence of the completed ownership transfer; (ii) completion of a post-closing compliance survey of each Georgia facility within one hundred twenty (120) days of the closing date, to be coordinated with the Healthcare Facility Regulation Division; and (iii) for the two facilities holding CONs, submission of the CON reissuance fee ($500 per CON, totaling $1,000) and evidence of the completed ownership transfer for reissuance of the CON certificates. The Georgia approval letters also include a general condition that the Purchaser maintain the scope and volume of healthcare services at each facility at levels consistent with those provided by the Target during the twelve (12) months preceding the closing date, for a period of not less than twenty-four (24) months following the closing date, absent prior written approval from DCH.
Kentucky — Cabinet for Health and Family Services.
The Kentucky approval letters require: (i) post-closing notification to the Division of Health Care within ten (10) business days of the actual closing date; (ii) submission of a final ownership verification form (CHFS Form OIG-HC-004) within thirty (30) days of closing; and (iii) maintenance of staffing levels at each Kentucky facility at no less than the levels in effect as of the date of the pre-licensure inspection for a minimum period of six (6) months following the closing date. No post-closing inspections are required, as the pre-licensure inspections were completed during the application review process.
B. Representations and Undertakings Made to State Agencies
In the course of the application process, the following representations and undertakings were made to state agencies on behalf of the Purchaser:
1. Continuity of Services. The Purchaser represented to all four state agencies that it intends to continue operating each MedVance facility in accordance with its current license and scope of services, and that no closures, service reductions, or material changes to the scope of services are contemplated at any facility.
2. Capital Expenditure Commitments. In the Georgia and Alabama applications, the Purchaser described its plans to invest approximately $18,000,000 in capital improvements across the MedVance facility portfolio over the twenty-four (24) months following closing, including approximately $4,200,000 in the Georgia facilities and approximately $3,100,000 in the Alabama facilities. These capital expenditure plans were presented as part of the management and operational plan submissions and are consistent with the capital expenditure budget incorporated into the Purchaser's acquisition model.
3. Retention of Clinical Staff. The Purchaser represented to all four state agencies that it intends to retain the existing clinical staff at each facility, including physicians, nurses, and other licensed healthcare professionals, and that no reductions in clinical staffing are contemplated in connection with the Transaction.
4. Administrator Retention. Consistent with the Alabama condition described above, the Purchaser represented to all four state agencies that the current administrators of record at each facility will be retained for a minimum transition period following closing.
5. Compliance Commitment. The Purchaser represented that it will maintain full compliance with all applicable federal and state healthcare laws and regulations, including the conditions of participation for Medicare and Medicaid (where applicable), and that the Purchaser has implemented compliance policies and procedures consistent with the standards set forth in the U.S. Department of Health and Human Services, Office of Inspector General's compliance program guidance for healthcare entities.
C. Time-Limited Conditions and Applicable Deadlines
The following is a summary of all time-limited conditions and their applicable deadlines, assuming a closing date of April 18, 2025:
LMC will prepare and circulate a detailed post-closing compliance calendar to the Purchaser and Calderwood & Harkness LLP promptly following the closing.
VII. Coordination with SPA Closing Conditions
The receipt of all required state healthcare licensure approvals constitutes satisfaction of the regulatory approval condition to closing set forth in Section 7.01(c) of the SPA, which provides that it shall be a condition precedent to the obligations of the Purchaser and the Company to consummate the Transaction that "all Regulatory Approvals identified on Schedule 7.01(c) shall have been duly obtained and shall be in full force and effect, and no such Regulatory Approval shall have been conditioned on any requirement that would constitute a Burdensome Condition (as defined in Section 6.04(b))." Schedule 7.01(c) of the SPA identifies the state healthcare licensure transfer approvals in Tennessee, Alabama, Georgia, and Kentucky, and the CON transfer approvals in Alabama and Georgia, as the required Regulatory Approvals for purposes of this closing condition.
LMC has reviewed the conditions imposed by each state agency (as summarized in Section VI above) and has concluded that none of such conditions constitutes a "Burdensome Condition" within the meaning of Section 6.04(b) of the SPA, which defines a "Burdensome Condition" as any condition, requirement, or obligation that would, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on the Target or require the Purchaser or any of its affiliates to divest, dispose of, hold separate, or otherwise restrict the operation of any material portion of the business, assets, or operations of the Target or the Purchaser.
LMC has coordinated with Calderwood & Harkness LLP on the preparation of the closing condition certificate to be delivered by the Purchaser at closing, including the certification that all Regulatory Approvals identified on Schedule 7.01(c) have been obtained and are in full force and effect. LMC has also coordinated with Calderwood & Harkness LLP on the bring-down of representations and warranties regarding regulatory compliance, including the representations set forth in Section 3.14 (Healthcare Licenses and Permits), Section 3.15 (Certificates of Need), and Section 3.16 (Healthcare Regulatory Compliance) of the SPA.
Based on our review of the licensure transfer application process and the approvals received, no updates to the Disclosure Schedules of the SPA were required as a result of the licensure transfer application process. Specifically, no new information came to light during the application process or the state agencies' reviews that would require an update to Schedule 3.14, Schedule 3.15, or Schedule 3.16, or that would give rise to a breach of any of the healthcare regulatory representations and warranties contained in the SPA.
VIII. Post-Closing Licensure Obligations
The following post-closing obligations arise from the change of control approvals issued by the four state agencies and from the applicable state healthcare licensure statutes and regulations:
1. Filing of Final Ownership Change Confirmations. Within the time periods specified by each state agency (as summarized in the deadline table in Section VI.C above), the Purchaser must file a post-closing ownership change confirmation with each state agency confirming the completion of the Transaction and providing evidence of the actual closing, including copies of the executed closing documents, final stock certificates or equity transfer documentation, and any other documentation required by the respective state forms. LMC will prepare the post-closing confirmation filings for all four states promptly following the closing date of April 18, 2025, and will coordinate with Calderwood & Harkness LLP to obtain the necessary closing documentation.
2. Updating Facility License Certificates. Following the filing of the post-closing ownership change confirmations and the processing thereof by each state agency, the state agencies will reissue the physical facility license certificates to reflect the new ownership structure. Based on prior experience with each agency, the reissuance of physical license certificates typically requires the following timeframes:
• Tennessee: Approximately fifteen (15) to thirty (30) days following receipt of the post-closing confirmation.
• Alabama: Approximately thirty (30) to forty-five (45) days following receipt of the post-closing confirmation, plus an additional fifteen (15) to twenty (20) days for the SHPDA to reissue the CON certificate for the Birmingham ambulatory surgery center.
• Georgia: Approximately twenty (20) to thirty (30) days following receipt of the post-closing confirmation and payment of the CON reissuance fees for the Atlanta ambulatory surgery center and the Savannah behavioral health center.
• Kentucky: Approximately thirty (30) to forty-five (45) days following receipt of the post-closing confirmation and ownership verification form.
During the period between closing and the reissuance of the physical license certificates, the existing MedVance licenses will remain in effect by operation of the change of ownership approvals issued by each state agency.
3. Post-Closing Inspections and Compliance Audits. As noted in Section VI.A above, the Georgia Department of Community Health requires a post-closing compliance survey of each of the four Georgia facilities within one hundred twenty (120) days of the closing date. LMC will coordinate with the Purchaser's operations team and with DCH to schedule these surveys. No post-closing inspections are required in Tennessee, Alabama, or Kentucky.
4. Ongoing Reporting Obligations During Transition Period. The Alabama State Board of Health requires submission of an updated staffing plan for each Alabama facility within sixty (60) days of closing. The Kentucky Cabinet for Health and Family Services requires that the Purchaser maintain staffing levels at no less than pre-closing levels for six (6) months post-closing and may conduct unannounced compliance checks during this period. The Georgia Department of Community Health requires the Purchaser to maintain the scope and volume of services at pre-closing levels for twenty-four (24) months, as described above.
5. Timeline for Reissuance of Physical License Certificates. LMC anticipates that all physical license certificates across the four states will be reissued and received by the Purchaser no later than July 31, 2025, based on the estimated processing timeframes described above. LMC will track the status of each reissuance and will notify the Purchaser and Calderwood & Harkness LLP upon receipt of each reissued certificate.
LMC will continue to assist with post-closing licensure compliance matters as requested by the Purchaser, including the preparation and filing of all post-closing notifications and confirmations, coordination with state agencies regarding facility inspections and compliance surveys, and monitoring of all time-limited conditions and deadlines.
IX. R&W Insurance Coordination
In connection with the Transaction, the Purchaser has obtained a representations and warranties insurance policy (the "R&W Policy") issued by Northbridge Specialty Insurance Company (Policy No. NSI-POLI-2025-04418), providing coverage with a policy limit of Sixty-Two Million Dollars ($62,000,000). The R&W Policy covers, among other things, breaches of the healthcare regulatory representations and warranties set forth in Sections 3.14, 3.15, and 3.16 of the SPA, subject to the terms, conditions, and exclusions of the policy.
In coordination with Velthorn Risk Advisors LLC, the Purchaser's insurance broker, LMC has provided copies of all state approval letters to Velthorn Risk Advisors for inclusion in the R&W insurer's file. Specifically, the following documents have been transmitted:
• Tennessee Department of Health approval letters dated March 5, 2025 (seven letters, one per facility).
• Alabama State Board of Health approval letters dated March 18, 2025 (three letters, one per facility), together with the SHPDA CON Transfer Approval letter of the same date.
• Georgia Department of Community Health approval letters dated March 27, 2025 (four letters, one per facility), together with the two CON Transfer Approval letters of the same date.
• Kentucky Cabinet for Health and Family Services approval letters dated April 10, 2025 (two letters, one per facility).
Velthorn Risk Advisors has confirmed receipt of all approval letters and has confirmed that no additional documentation is required by the R&W insurer with respect to the state healthcare licensure transfer process at this time. LMC will provide any additional documentation that may be requested by Northbridge Specialty Insurance Company or Velthorn Risk Advisors in connection with the R&W Policy.
X. Document Index — Applications and Supporting Materials
The following is a comprehensive index of the documents filed with each state regulatory agency in connection with the change of ownership applications. Complete copies of all filed applications and supporting materials are maintained in the LMC files (LMC Matter No. 1001-00007) and have been provided to Calderwood & Harkness LLP for inclusion in the closing set.
A. Tennessee — Department of Health
1. Completed Change of Ownership Application (Form HC-0417), filed for each of seven (7) Tennessee facilities.
2. Cover letter to TN Department of Health, dated February 15, 2025.
3. Certificate of Incorporation of Ardent Healthcare Holdings Inc. (certified copy).
4. Bylaws of Ardent Healthcare Holdings Inc.
5. Certificate of Good Standing — Ardent Healthcare Holdings Inc. (Delaware), dated February 3, 2025.
6. Organizational chart — Purchaser ownership structure.
7. Audited financial statements — MedVance Health Systems, Inc., FY 2023 and FY 2024 (draft).
8. Camberwell Financial letter (redacted).
9. Ardent Capital Partners III LP equity commitment letter (redacted).
10. Background check authorization forms — G. Whitfield, P. Ranganathan, T. Kearney.
11. Sworn affidavits — G. Whitfield, P. Ranganathan, T. Kearney.
12. Curriculum vitae — G. Whitfield, P. Ranganathan, T. Kearney.
13. Management and operational plans — Tennessee facilities.
14. Facility compliance histories — seven Tennessee facilities.
15. Evidence of professional liability insurance coverage.
16. Power of Attorney — Ardent Healthcare Holdings Inc. to LMC.
17. Filing fee receipts — $17,500 total ($2,500 × 7).
B. Alabama — State Board of Health / SHPDA