NOTIFICATION AND REPORT FORM FOR CERTAIN MERGERS AND ACQUISITIONS
Pursuant to Section 7A of the Clayton Act (15 U.S.C. § 18a) and the Hart-Scott-Rodino Antitrust Improvements Act of 1976 16 C.F.R. Parts 801–803
ACQUIRING PERSON NOTIFICATION
Prepared by:
Calderwood & Harkness LLP 600 Lexington Avenue New York, NY 10022
Contact: Howard Bellamy, Partner Antitrust & Competition Practice Group Telephone: (212) 558-4000 Facsimile: (212) 558-3588
Email: hbellamy@calderwoodharkness.com
Matter No.: 1001-00001
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ITEM 1 — IDENTIFICATION OF THE TRANSACTION
Item 1(a) — Type of Filing
This Notification and Report Form (the "Notification") is being filed on behalf of the acquiring person in connection with a proposed acquisition. Specifically, this is the notification of the Ultimate Parent Entity ("UPE") of the acquiring person, filed in accordance with the requirements of Section 7A of the Clayton Act, 15 U.S.C. § 18a, and the rules and regulations promulgated thereunder at 16 C.F.R. Parts 801 through 803.
The filing is being submitted by Ardent Capital Management LLC, as the Ultimate Parent Entity of the acquiring person, Ardent Capital Partners III LP. No other person or entity within the acquiring person's organizational structure is required to file a separate notification in connection with this transaction.
Item 1(b) — Description of the Transaction
The proposed transaction involves the acquisition by Ardent Capital Partners III LP (the "Buyer" or the "Acquiring Entity") of one hundred percent (100%) of the outstanding shares of capital stock of Pinnacle Health Systems, Inc. ("Pinnacle" or the "Acquired Person"), a corporation organized and existing under the laws of the State of Delaware. The acquisition is being effected through a stock purchase in which all outstanding voting securities of Pinnacle will be acquired by the Buyer.
The transaction is being consummated pursuant to that certain Equity Purchase Agreement, dated as of January 31, 2024 (the "EPA"), by and among Ardent Capital Partners III LP, as purchaser, Veltrano Equity Holdings LLC (acting through its controlled investment vehicle, Veltrano Equity Partners Fund V LP), as representative of the selling stockholders, certain other selling stockholders party thereto, and Pinnacle Health Systems, Inc., as the target company. A complete execution copy of the EPA is attached hereto as Exhibit A.
The transaction constitutes an acquisition of voting securities within the meaning of 16 C.F.R. § 801.2, resulting in the Buyer holding one hundred percent (100%) of the outstanding voting securities of Pinnacle upon closing of the transaction. The acquisition will result in a change of control of Pinnacle from Veltrano Equity Holdings LLC (the current UPE of the acquired person) to Ardent Capital Management LLC (the UPE of the acquiring person).
The financial terms of the transaction are as follows:
The transaction value, calculated as the aggregate total value of all voting securities and assets to be acquired, is $952,000,000 (based on enterprise value). This amount exceeds the applicable size-of-transaction threshold for the calendar year 2024 of $111.4 million, as adjusted by the Federal Trade Commission pursuant to Section 7A(a)(2) of the Clayton Act.
Accordingly, the applicable filing fee tier for this transaction is the $500,000,000 to $999,999,999 tier, requiring payment of a filing fee in the amount of $280,000. Confirmation of the filing fee payment is attached hereto as Exhibit F.
Item 1(c) — Request for Early Termination
Early termination of the thirty (30) day statutory waiting period under 15 U.S.C. § 18a(b)(1)(A) is hereby respectfully requested pursuant to 15 U.S.C. § 18a(b)(2) and 16 C.F.R. § 803.11. The acquiring person has filed, concurrently with this Notification, a separate formal letter requesting early termination, addressed to both the Federal Trade Commission and the Antitrust Division of the United States Department of Justice. A copy of this letter is referenced in Exhibit E hereto.
The acquiring person submits that the proposed transaction presents no competitive concerns warranting investigation or further review. As set forth in greater detail in the competitive overlap analysis provided under Item 6 below, no horizontal overlaps exist between the business operations of the entities controlled by the acquiring person's Ultimate Parent Entity and the business operations of the acquired person, Pinnacle Health Systems, Inc. The acquiring person's UPE, Ardent Capital Management LLC, does not currently control any entities that operate ambulatory surgical centers or physician practice management organizations. The portfolio companies controlled by the UPE operate in distinct healthcare subsectors — specifically, outpatient physical therapy rehabilitation services and independent clinical laboratory services — that do not compete with Pinnacle's core business lines. Accordingly, the transaction does not give rise to any horizontal competitive concerns, and early termination of the waiting period is warranted.
ITEM 2 — IDENTITY OF ACQUIRING PERSON
Item 2(a) — Ultimate Parent Entity (UPE)
The Ultimate Parent Entity of the acquiring person is identified as follows:
Ardent Capital Management LLC is identified as the Ultimate Parent Entity because it is the entity that, within the meaning of 16 C.F.R. § 801.1(a)(3), ultimately controls the acquiring entity. Specifically, Ardent Capital Management LLC is the sole member of Ardent Capital GP III LLC, a Delaware limited liability company. Ardent Capital GP III LLC, in turn, serves as the sole general partner of Ardent Capital Partners III LP, the Delaware limited partnership that is the direct acquiring entity in this transaction. Through this chain of control, Ardent Capital Management LLC exercises ultimate control over the investment decisions and operations of the Buyer, including the authority to approve and consummate the acquisition of Pinnacle. No other natural person or entity holds the power to direct or control the management and policies of Ardent Capital Management LLC, and accordingly, Ardent Capital Management LLC constitutes the Ultimate Parent Entity for purposes of this filing.
Item 2(b) — Acquiring Entity
The entity directly acquiring the voting securities of Pinnacle Health Systems, Inc. is identified as follows:
Ardent Capital Partners III LP is a private equity investment fund organized as a Delaware limited partnership. The general partner of Ardent Capital Partners III LP is Ardent Capital GP III LLC, a Delaware limited liability company with EIN 86-2198403. The sole member of Ardent Capital GP III LLC is Ardent Capital Management LLC, the Ultimate Parent Entity identified above. The limited partners of Ardent Capital Partners III LP consist of institutional investors, including pension funds, sovereign wealth funds, endowments, foundations, insurance companies, and high-net-worth individuals, none of whom exercises control over the fund's investment decisions, which are made exclusively by the general partner acting through the investment committee of Ardent Capital Management LLC.
Item 2(c) — Name and Address of Person to Contact Regarding This Filing
All communications and correspondence regarding this Notification should be directed to:
Howard Bellamy, Esq. Partner, Antitrust & Competition Practice Group Calderwood & Harkness LLP 600 Lexington Avenue New York, NY 10022 Telephone: (212) 558-4000 Facsimile: (212) 558-3588
Email: hbellamy@calderwoodharkness.com
Mr. Bellamy is authorized to act as the representative of the acquiring person and its Ultimate Parent Entity for all purposes relating to this Notification, including receiving and responding to requests for additional information or documentary material, communicating with staff of the Federal Trade Commission and the Antitrust Division of the Department of Justice, and executing any amendments or supplements to this Notification.
Item 2(d) — Relationship of the Acquiring Entity to the UPE
The acquiring entity, Ardent Capital Partners III LP, is controlled by the Ultimate Parent Entity, Ardent Capital Management LLC, through the following chain of ownership and control:
1. Ardent Capital Management LLC (UPE; Delaware LLC; EIN 84-5567312) is the sole member of —
2. Ardent Capital GP III LLC (Delaware LLC; EIN 86-2198403), which in turn serves as the sole general partner of —
3. Ardent Capital Partners III LP (Acquiring Entity; Delaware LP; EIN 87-3421098).
Ardent Capital Management LLC holds a one hundred percent (100%) membership interest in Ardent Capital GP III LLC. As the sole general partner of Ardent Capital Partners III LP, Ardent Capital GP III LLC exercises exclusive authority over all investment decisions and management functions of the fund, subject to the direction and oversight of Ardent Capital Management LLC. The limited partners of Ardent Capital Partners III LP have no authority to direct or control the management, policies, or investment decisions of the fund and do not constitute "persons" holding or acquiring the voting securities being acquired in this transaction for purposes of the HSR Act.
A full organizational chart depicting the chain of control from the UPE through to the acquiring entity, including related portfolio company holdings, is attached hereto as Exhibit B.
Item 2(e) — Officers and Directors of the UPE
Ardent Capital Management LLC is a manager-managed limited liability company. The individuals who serve as the managing members (equivalent of officers and directors) of the Ultimate Parent Entity are as follows:
Mr. Desmond and Ms. Chandrasekar jointly serve as the managing members of Ardent Capital Management LLC and collectively exercise ultimate authority over the management and investment decisions of the UPE and all entities controlled by the UPE. Both individuals serve as members of the Investment Committee of Ardent Capital Management LLC, which must unanimously approve all investment commitments exceeding $50,000,000 made by any fund managed by Ardent Capital Management LLC, including the proposed acquisition of Pinnacle Health Systems, Inc.
ITEM 3 — IDENTITY OF ACQUIRED PERSON
Item 3(a) — Acquired Entity
The entity whose voting securities are being acquired in this transaction is identified as follows:
Pinnacle Health Systems, Inc. is a healthcare services company that owns and operates a network of ambulatory surgical centers and affiliated physician practice management entities across the southeastern and south-central United States. Founded in 2009, Pinnacle currently operates forty-two (42) ambulatory surgical centers and thirty-one (31) affiliated physician practice management entities across nine (9) states: North Carolina, South Carolina, Virginia, Tennessee, Georgia, Florida, Alabama, Ohio, and Texas. Pinnacle employs approximately 4,700 individuals.
Item 3(b) — Ultimate Parent Entity of the Acquired Person
The Ultimate Parent Entity of the acquired person is identified as follows:
Veltrano Equity Holdings LLC controls Pinnacle Health Systems, Inc. through its controlled investment vehicle, Veltrano Equity Partners Fund V LP. Veltrano Equity Partners Fund V LP currently holds approximately sixty-two and three-tenths percent (62.3%) of the pre-transaction equity of Pinnacle, constituting a controlling interest. Veltrano Equity Holdings LLC serves as the ultimate controlling entity of the general partner of Veltrano Equity Partners Fund V LP and accordingly is identified as the Ultimate Parent Entity of the acquired person for purposes of this Notification.
Veltrano Equity Holdings LLC is expected to file a corresponding notification on behalf of the acquired person concurrently with, or within a reasonable period following, the filing of this Notification.
Item 3(c) — Acquired Person's Officers and Directors
To the best of the acquiring person's knowledge, the following individuals serve as officers and directors of Pinnacle Health Systems, Inc.:
Additional officers and members of the Board of Directors of Pinnacle may include designees of Veltrano Equity Holdings LLC and independent directors. The acquiring person does not have complete information regarding all officers and directors of the acquired person and relies upon the acquired person's own HSR filing for a complete listing thereof.
Item 3(d) — Contact for Acquired Person's HSR Filing
All communications regarding the acquired person's corresponding HSR notification should be directed to:
Jonathan Felder, Esq. Greenvale Durneval LLP 1800 M Street NW, Suite 1100 Washington, DC 20036
Mr. Felder serves as antitrust counsel to the acquired person, Pinnacle Health Systems, Inc., and its Ultimate Parent Entity, Veltrano Equity Holdings LLC, in connection with this transaction.
ITEM 4 — DESCRIPTION OF THE ACQUISITION AND RELATED AGREEMENTS
Item 4(a) — Description of the Acquisition
The proposed transaction is structured as a one hundred percent (100%) stock purchase of all outstanding shares of capital stock of Pinnacle Health Systems, Inc. The acquisition is being consummated pursuant to the Equity Purchase Agreement dated January 31, 2024 (the "EPA"), a complete execution copy of which is attached hereto as Exhibit A. The principal parties to the EPA are Ardent Capital Partners III LP (as purchaser), Veltrano Equity Holdings LLC (acting through Veltrano Equity Partners Fund V LP, as sellers' representative), certain additional selling stockholders, and Pinnacle Health Systems, Inc. (as the target company).
Current Ownership Structure of Pinnacle Health Systems, Inc.:
The pre-transaction ownership of Pinnacle is held by the following groups:
Post-Closing Ownership:
Upon the closing of the transaction, Ardent Capital Partners III LP will acquire and hold one hundred percent (100%) of the outstanding voting securities of Pinnacle Health Systems, Inc. All existing stockholders — including Veltrano Equity Partners Fund V LP (62.3%), the founder/management holders (23.1%, net of management rollover equity), and the minority physician investors (14.6%) — will sell their equity interests to the Buyer in exchange for cash consideration.
Dr. Marcus Ellsworth, the Chief Executive Officer and Chairman of the Board of Pinnacle, will roll over approximately $28,500,000 of his existing equity interest in Pinnacle into the acquiring entity structure, representing approximately three percent (3.0%) of post-closing equity in the acquiring vehicle. This management rollover equity will be held within a subsidiary or holding entity controlled by Ardent Capital Partners III LP and does not constitute an independent holding in the acquired entity following closing. The management rollover is designed to align incentives between continuing management and the Buyer and does not result in Dr. Ellsworth or any other management holder exercising control over Pinnacle or the acquiring structure.
Financing:
The cash consideration of $505,500,000 will be funded through a combination of equity capital contributed by Ardent Capital Partners III LP (drawn from undrawn commitments of the fund's limited partners) and committed debt financing. The Buyer has obtained committed debt financing from a syndicate of lenders led by Greaves Bancorp, as administrative agent, pursuant to a commitment letter dated January 29, 2024. The existing indebtedness of Pinnacle (approximately $418,000,000 in net debt at signing) will be refinanced at closing with new senior secured credit facilities arranged by the Buyer.
Item 4(b) — Aggregate Total Value of Voting Securities and Assets to Be Acquired
The aggregate total value of the voting securities to be acquired in the transaction is as follows:
The transaction value of $952,000,000 is calculated as the aggregate total value of all voting securities and assets to be held as a result of the acquisition, consistent with 16 C.F.R. § 801.10. The Buyer is acquiring one hundred percent (100%) of the outstanding voting securities of Pinnacle; no separate asset acquisition is contemplated.
Item 4(c) — Documents Filed with This Notification
Pursuant to 16 C.F.R. § 803.1(b) and Item 4(c) of the Notification and Report Form, the acquiring person has conducted a reasonable and diligent search for all documents that were prepared by or for any officer(s) or director(s) of the acquiring person (or, in the case of unincorporated entities, the individuals exercising similar functions) for the purpose of evaluating or analyzing the proposed acquisition with respect to market shares, competition, competitors, markets, potential for sales growth, or expansion into product or geographic markets, as those terms are used in Section 801.1(c)(1) of the HSR Rules.
As a result of this search, a total of seven (7) responsive documents have been identified and are being produced in full with this Notification. These documents are listed and described below and are produced as attachments under Exhibit C hereto. The acquiring person has submitted confidential treatment requests with respect to certain of these documents, as noted in the Exhibit C index.
Index of Item 4(c) Responsive Documents:
1. Confidential Information Memorandum ("CIM") — Pinnacle Health Systems, Inc. Prepared by Crestline Baird & Co. (financial advisor to the selling stockholders), undated. Received by Ardent Capital Management LLC in approximately the fourth quarter of 2023 in connection with the competitive sale process conducted by the sellers' financial advisor. The CIM contains descriptions of Pinnacle's business operations, financial performance, market position, competitive landscape, and growth opportunities.
2. Teaser / One-Page Summary — Pinnacle Health Systems, Inc. opportunity overview. Prepared by Crestline Baird & Co. This document is a brief, anonymized summary of the investment opportunity that was distributed to prospective bidders during the initial phase of the sale process prior to execution of confidentiality agreements.
3. Supplemental CIM / Management Presentation Materials — Pinnacle Health Systems, Inc. Prepared by Crestline Baird & Co. and Pinnacle management. This document consists of supplemental materials prepared for the management presentation phase of the sale process and includes updated financial data, detailed operational metrics, market analysis, and growth projections.
4. Ardent Capital Investment Committee Memorandum — "Project Summit" — Prepared by the Ardent Capital deal team for the investment committee of Ardent Capital Management LLC (Julian Desmond and Priya Chandrasekar), dated November 2023. "Project Summit" is the internal code name assigned to the proposed acquisition of Pinnacle. This memorandum contains the deal team's preliminary analysis of the investment opportunity, including discussion of Pinnacle's competitive positioning, market share estimates in selected metropolitan statistical areas ("MSAs"), competitive dynamics in the ambulatory surgical center industry, and a preliminary assessment of potential synergies and growth opportunities.
5. Ardent Capital Investment Committee Memorandum — Updated Final IC Memo — Prepared by the Ardent Capital deal team for the investment committee, dated January 2024. This is the updated and final version of the investment committee memorandum, reflecting the results of confirmatory due diligence, finalized valuation analysis, revised financial projections, updated competitive landscape analysis, and the proposed terms of the EPA. This memorandum served as the basis for the investment committee's approval of the transaction.
6. Board Presentation — Ardent Capital Management LLC board/advisory committee presentation regarding the proposed acquisition of Pinnacle Health Systems, Inc., dated January 2024. This presentation was prepared for and delivered to the advisory committee of Ardent Capital Management LLC in connection with the advisory committee's review of the proposed transaction. The presentation includes a transaction overview, strategic rationale, financial analysis, competitive analysis, integration planning considerations, and risk factors.
7. Email Chain — Internal Ardent Capital email discussion among members of the deal team regarding the competitive landscape for ambulatory surgical center services in target MSAs, dated December 2023. This email chain includes discussion among deal team members of the identities and market positions of competitors of Pinnacle in certain geographic markets, as well as observations regarding market dynamics and growth trends in the ASC sector.
The acquiring person certifies that the foregoing list represents the complete production of all documents responsive to Item 4(c) as of the date of this Notification. The acquiring person undertakes to supplement this production if any additional responsive documents are identified following the date of filing.
Item 4(d) — Documents Filed with This Notification (Plans/Reports/Studies)
Pursuant to Item 4(d) of the Notification and Report Form, the acquiring person has also conducted a search for plans, reports, studies, or other documents analyzing the transaction with respect to efficiencies, synergies, or integration plans that relate to competition, markets, or market participants.
All documents responsive to Item 4(d) are encompassed within the Item 4(c) production described above. Specifically, the Ardent Capital Investment Committee Memoranda (Documents 4 and 5) and the Board Presentation (Document 6) contain discussions of potential synergies, operational efficiencies, and integration planning considerations relating to the proposed acquisition. These discussions address anticipated cost savings, revenue enhancement opportunities, and operational integration plans, and to the extent such discussions relate to competition, markets, or market participants, the responsive content is contained within the documents already identified and produced under Item 4(c).
No additional standalone documents responsive solely to Item 4(d) that are not already included in the Item 4(c) production have been identified. The acquiring person has not prepared any separate integration plans, synergy analyses, or efficiency studies that are not already reflected in the investment committee materials and board presentation produced above.
ITEM 5 — DOLLAR REVENUE AND OTHER FINANCIAL DATA
Item 5(a) — Total Assets of the UPE
Financial data regarding the total assets of the Ultimate Parent Entity and its controlled entities are provided as follows:
Ardent Capital Management LLC (UPE):
Total asset information for Ardent Capital Management LLC is provided per the UPE's most recent fiscal year-end financial statements (fiscal year ended December 31, 2023). The specific financial data are included in the financial statements attached hereto as Exhibit D. As a registered investment adviser, Ardent Capital Management LLC reports assets under management and firm assets in its Form ADV filed with the Securities and Exchange Commission. As of December 31, 2023, Ardent Capital Management LLC's regulatory assets under management across all fund vehicles exceeded $12,000,000,000.
Ardent Capital Partners III LP (Acquiring Entity):
Ardent Capital Partners III LP is a private equity investment fund that held its final close in November 2021 with total committed capital of $4,800,000,000. As of December 31, 2023, the fund's total assets (reflecting the aggregate net asset value of the fund's portfolio investments, cash, and other assets) substantially exceed the applicable size-of-person threshold of $22.3 million for the 2024 calendar year. Specific total asset figures are reported in the fund's audited annual financial statements, copies of which are included in Exhibit D. As a limited partnership investment fund, the relevant "total assets" figure for HSR purposes reflects the fund's net asset value as reported in its audited financial statements, consistent with the FTC's guidance regarding the treatment of investment funds under the HSR Act.
Item 5(b) — Total Sales/Revenue of the UPE and Controlled Entities
Revenue data for all entities within the control chain of the Ultimate Parent Entity, Ardent Capital Management LLC, are reported below. In accordance with the requirements of the Notification and Report Form, revenue data are provided for each operating entity controlled by the UPE that generated revenues during the most recently completed fiscal year (fiscal year ended December 31, 2023):
Ardent Capital Management LLC:
Ardent Capital Management LLC derives revenue from management fees charged to its managed funds (typically 1.5%–2.0% of committed or invested capital) and from carried interest distributions. Revenue data for Ardent Capital Management LLC are included in its financial statements attached as Exhibit D.
Controlled Portfolio Companies with Healthcare Operations:
Other Controlled Portfolio Companies (Non-Healthcare):
Ardent Capital Management LLC, through its controlled fund vehicles (Funds I, II, and III), also controls a number of non-healthcare portfolio companies operating in sectors including business services, industrial distribution, and specialty chemicals. Revenue data for each such portfolio company are provided in the applicable line items in the financial data attached as Exhibit D. These entities do not operate in healthcare or any sector that overlaps with Pinnacle Health Systems, Inc.
Item 5(c) — Dollar Revenue of the Acquired Entity
Financial data regarding the revenues and total assets of the acquired entity, Pinnacle Health Systems, Inc., are as follows, based on information provided by the acquired person's management and its auditors:
Pinnacle Health Systems, Inc. is a privately held company that does not file public reports with the Securities and Exchange Commission. The revenue and asset figures reported above are derived from Pinnacle's audited consolidated financial statements for the fiscal year ended December 31, 2023, as audited by Harland & Marsh CPAs LLP. These financial statements were made available to the acquiring person during the due diligence process and are reflected in the Confidential Information Memorandum and the investment committee memoranda produced under Item 4(c).
Item 5(d) — Size-of-Transaction / Size-of-Person Analysis
The acquiring person has determined that the proposed transaction meets both the size-of-transaction test and the size-of-person test under Section 7A of the Clayton Act, and accordingly, pre-merger notification is required. The analysis is as follows:
Size-of-Transaction Test (15 U.S.C. § 18a(a)(2); 16 C.F.R. § 801.10):
The aggregate total value of the voting securities to be acquired in the transaction is $952,000,000 (enterprise value), which exceeds the 2024 size-of-transaction threshold of $111.4 million as adjusted by the Federal Trade Commission. Accordingly, the size-of-transaction test is satisfied.
Size-of-Person Test (15 U.S.C. § 18a(a)(2); 16 C.F.R. § 801.11):
Because the transaction value exceeds $111.4 million but does not exceed $445.5 million in voting securities value (the threshold above which the size-of-person test is inapplicable), the size-of-person test must also be satisfied. The analysis confirms that both parties meet the applicable thresholds:
• Acquiring Person (UPE): Ardent Capital Management LLC has total assets substantially exceeding $22.3 million, as reported in its financial statements for the fiscal year ended December 31, 2023.
• Acquired Person: Pinnacle Health Systems, Inc. reported annual net sales of $637,400,000 and total assets of approximately $812,000,000 for the fiscal year ended December 31, 2023. Both figures exceed the $22.3 million size-of-person threshold.
Both the size-of-transaction test and the size-of-person test are satisfied. Notification under Section 7A of the Clayton Act is required, and this Notification is being filed in compliance with that requirement.
ITEM 6 — NAICS CODES / INDUSTRY CODES
Item 6(a) — NAICS Codes of the Acquired Person
The North American Industry Classification System ("NAICS") codes applicable to the business operations of the acquired person, Pinnacle Health Systems, Inc., are as follows:
NAICS Code 621111 reflects the physician practice management operations of Pinnacle, through which Pinnacle provides administrative and management services to affiliated physician practices and, in certain states, employs physicians directly. NAICS Code 621493 reflects Pinnacle's core ambulatory surgical center operations, through which Pinnacle owns and operates freestanding ambulatory surgical centers providing outpatient surgical services across multiple specialties, including orthopedics, ophthalmology, gastroenterology, pain management, and general surgery.
Item 6(b) — Overlap NAICS Codes
The acquiring person has conducted a thorough analysis of the NAICS codes applicable to each entity controlled by the Ultimate Parent Entity, Ardent Capital Management LLC, to determine whether any overlap exists with the NAICS codes of the acquired person.
The analysis is summarized as follows:
Marlowe Asset Management Rehabilitation Holdings LLC operates seventy-four (74) outpatient physical therapy clinics in Texas, Florida, and Georgia under the NAICS Code 621340 (Offices of Physical, Occupational and Speech Therapists, and Audiologists). This NAICS code is distinct from both NAICS 621111 (Offices of Physicians) and NAICS 621493 (Freestanding Ambulatory Surgical and Emergency Centers). Marlowe Asset Management does not operate any ambulatory surgical centers, does not provide surgical services of any kind, and does not provide physician practice management services. There is no overlap between Marlowe Asset Management's NAICS code and Pinnacle's NAICS codes.
Clearpath Diagnostics Inc. operates independent clinical laboratory facilities in Pennsylvania, New Jersey, and New York under NAICS Code 621511 (Medical Laboratories). This NAICS code is distinct from both NAICS 621111 and NAICS 621493. Clearpath provides laboratory testing and diagnostic services and does not operate ambulatory surgical centers, physician practices, or physician practice management entities. There is no overlap between Clearpath's NAICS code and Pinnacle's NAICS codes.
The other portfolio companies controlled by the UPE through its fund vehicles operate exclusively in non-healthcare sectors and do not have any NAICS codes within the 621xxx healthcare subsector or any other subsector that could reasonably be considered overlapping with Pinnacle's operations.
Conclusion: Based on the foregoing analysis, there are no overlapping NAICS codes between any entity controlled by the acquiring person's Ultimate Parent Entity and the acquired person. The proposed transaction does not present any horizontal competitive concerns.
Item 6(c) — Manufacturing NAICS Codes
Not applicable. Neither the acquiring person (nor any entity controlled by the acquiring person's UPE) nor the acquired person is engaged in manufacturing operations. No manufacturing NAICS codes (NAICS Codes 31xxxx–33xxxx) are applicable to any party to this transaction.
ITEM 7 — PRIOR ACQUISITIONS AND EXISTING HOLDINGS
Item 7(a) — Prior Acquisitions
Pursuant to Item 7(a), the acquiring person provides the following information regarding acquisitions made by Ardent Capital Management LLC and its controlled entities within the healthcare services sector during the five-year period preceding this Notification:
Ardent Capital Management LLC, through its managed fund vehicles (Ardent Capital Partners Fund I LP, Ardent Capital Partners Fund II LP, and Ardent Capital Partners III LP), has completed a total of twenty-three (23) platform acquisitions and in excess of sixty (60) add-on acquisitions across all sectors and all fund vintages since the firm's founding. The platform acquisitions and add-on acquisitions span multiple industries, including healthcare services, business services, industrial distribution, and specialty chemicals.
Within the healthcare services sector specifically, the following prior acquisitions are noted:
Marlowe Asset Management Rehabilitation Holdings LLC (Portfolio Company — Fund II):
Ardent Capital Partners Fund II LP acquired the platform known as Marlowe Asset Management Rehabilitation Holdings LLC in 2019. Since the initial platform acquisition, Marlowe Asset Management has completed multiple add-on acquisitions of outpatient physical therapy clinics in Texas, Florida, and Georgia, expanding from an initial base of twenty-two (22) clinics to the current network of seventy-four (74) clinics. The add-on acquisitions were primarily tuck-in acquisitions of single-site or multi-site physical therapy practices. HSR filings were made in connection with those add-on acquisitions that met the applicable size-of-transaction thresholds. The Marlowe Asset Management platform and its add-on acquisitions operate exclusively in the outpatient physical therapy rehabilitation space (NAICS 621340) and do not overlap with Pinnacle's ambulatory surgical center or physician practice management operations.
Clearpath Diagnostics Inc. (Portfolio Company — Fund III):
Ardent Capital Partners III LP acquired Clearpath Diagnostics Inc. as a platform investment in 2022. Since the platform acquisition, Clearpath has completed several add-on acquisitions of independent clinical laboratory operations in the Mid-Atlantic region (Pennsylvania, New Jersey, and New York). The Clearpath platform operates exclusively in the independent clinical laboratory services space (NAICS 621511) and does not overlap with Pinnacle's operations.
No prior acquisitions by Ardent Capital Management LLC or its controlled entities have involved the acquisition of ambulatory surgical centers, physician practice management companies, or any other business that would overlap with the business operations of Pinnacle Health Systems, Inc.
Item 7(b) — Existing Minority Holdings
The acquiring person confirms that, as of the date of this Notification:
• Neither Ardent Capital Management LLC nor any entity within its control chain holds any existing equity interest, voting securities, or other ownership interest in Pinnacle Health Systems, Inc. or any of its subsidiaries.
• Neither Ardent Capital Management LLC nor any entity within its control chain holds any existing equity interest, voting securities, or other ownership interest in any competitor of Pinnacle in the ambulatory surgical center market or the physician practice management market.
• No associate or affiliate of Ardent Capital Management LLC, and no officer, director, or managing member of Ardent Capital Management LLC, holds any personal investment or ownership interest in Pinnacle Health Systems, Inc. or any direct competitor of Pinnacle, to the best of the acquiring person's knowledge after reasonable inquiry.
The transaction represents a de novo entry by the Ardent Capital platform into the ambulatory surgical center and physician practice management sectors.
ITEM 8 — IDENTIFICATION OF PERSONS AND ENTITIES — ADDITIONAL INFORMATION
Item 8(a) — Structure of the Acquiring Person
The complete organizational structure of the acquiring person, from the Ultimate Parent Entity through the acquiring entity, including all controlled healthcare portfolio companies, is depicted below. A full organizational chart is also attached hereto as Exhibit B.
Organizational Chart:
• Ardent Capital Management LLC (UPE; Delaware LLC; EIN 84-5567312; 399 Park Avenue, 41st Floor, New York, NY 10022)
• Ardent Capital GP III LLC (Delaware LLC; EIN 86-2198403; 100% member interest held by Ardent Capital Management LLC)
• Ardent Capital Partners III LP (Delaware LP; EIN 87-3421098; General Partner: Ardent Capital GP III LLC)
• [Post-Closing] Pinnacle Health Systems, Inc. (Delaware corporation; EIN 56-4389201; 100% of outstanding voting securities to be held by Ardent Capital Partners III LP)
In addition to the chain of control relevant to this transaction, Ardent Capital Management LLC also controls the following healthcare-related portfolio companies through its managed fund vehicles:
• Marlowe Asset Management Rehabilitation Holdings LLC (Delaware LLC; headquarters: 8950 Westheimer Road, Suite 600, Houston, TX 77063)
• 74 outpatient physical therapy clinics operating in Texas, Florida, and Georgia
• NAICS Code: 621340 (Offices of Physical, Occupational and Speech Therapists, and Audiologists)
• Held through Ardent Capital Partners Fund II LP
• Clearpath Diagnostics Inc. (Delaware corporation; headquarters: 1700 Market Street, Suite 3400, Philadelphia, PA 19103)
• Independent clinical laboratory services operating in Pennsylvania, New Jersey, and New York
• NAICS Code: 621511 (Medical Laboratories)
• FY 2023 Revenue: $218,000,000
• Held through Ardent Capital Partners III LP
Item 8(b) — Information About the Acquired Entity
The following additional information is provided regarding the acquired entity, Pinnacle Health Systems, Inc., based on information obtained by the acquiring person during the due diligence process and from publicly available sources:
Operations:
Pinnacle owns and operates a network of forty-two (42) ambulatory surgical centers ("ASCs") and thirty-one (31) affiliated physician practice management entities across nine (9) states: North Carolina, South Carolina, Virginia, Tennessee, Georgia, Florida, Alabama, Ohio, and Texas. The ASCs provide outpatient surgical services across a range of medical specialties, including orthopedics, ophthalmology, gastroenterology, pain management, and general surgery. The physician practice management entities provide administrative, billing, revenue cycle management, and operational support services to affiliated physician practices.
Financial Overview:
Pinnacle generated total revenue of $637,400,000 for the fiscal year ended December 31, 2023, as reported in its audited financial statements prepared by Harland & Marsh CPAs LLP. Pinnacle's total assets as of December 31, 2023 were approximately $812,000,000.
Current Ownership:
Pinnacle's current pre-transaction equity ownership is held as follows:
Acquisition History:
Veltrano Equity Holdings LLC (through Veltrano Equity Partners Fund V LP) acquired Pinnacle Health Systems, Inc. in 2017 at an enterprise value of $340,000,000. Under Veltrano's ownership, Pinnacle has completed nineteen (19) add-on acquisitions of additional ASCs and physician practice management entities, significantly expanding its geographic footprint and operational scale.
Item 8(c) — Sellers
The selling stockholders in the proposed transaction are identified as follows:
1. Veltrano Equity Holdings LLC (through Veltrano Equity Partners Fund V LP)
Veltrano Equity Holdings LLC is selling its entire interest in Pinnacle through the disposition of the equity held by its controlled fund vehicle, Veltrano Equity Partners Fund V LP. The sale represents a full exit of Veltrano's investment in Pinnacle.
2. Founder/Management Rollover Holders
The founder and management holders collectively hold approximately 23.1% of Pinnacle's pre-transaction equity. The majority of this equity will be sold for cash consideration in the transaction. Dr. Marcus Ellsworth, the CEO and Chairman, will roll over approximately $28,500,000 of his existing equity (representing approximately 3.0% of post-closing equity) into the acquiring entity structure. The remaining founder/management equity holders will sell their interests for cash consideration.
3. Minority Physician Investors
Various physician investors hold, in the aggregate, approximately 14.6% of Pinnacle's pre-transaction equity. These minority holders are selling their entire equity interests for cash consideration in the transaction and are not expected to retain any ownership interest in Pinnacle or the acquiring structure following closing.
All selling stockholders are parties to the Equity Purchase Agreement or have executed joinder agreements obligating them to sell their equity interests on the terms set forth in the EPA.
CERTIFICATION AND SIGNATURE PAGE
CERTIFICATION
The undersigned hereby certifies that this Notification and Report Form, together with any and all documentary attachments and any and all amendments thereto, is true, correct, and complete to the best of my knowledge and belief, in accordance with the requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (15 U.S.C. § 18a) and the rules and regulations promulgated thereunder (16 C.F.R. Parts 801–803).
The undersigned further certifies that he has been duly authorized to execute this Notification on behalf of Ardent Capital Management LLC, as the Ultimate Parent Entity of the acquiring person, Ardent Capital Partners III LP. The undersigned makes this certification in his capacity as Co-Founder and Managing Partner of Ardent Capital Management LLC, which serves as the sole member of Ardent Capital GP III LLC, the general partner of Ardent Capital Partners III LP.
The undersigned acknowledges that 15 U.S.C. § 18a(g)(2) provides that any person, or any officer, director, or partner thereof, who files a notification pursuant to Section 7A of the Clayton Act containing a material statement which was false, or who omits a material fact which is required to be stated therein, shall be liable for a civil penalty of not more than the applicable daily penalty amount for each day during which such person is in violation.
ARDENT CAPITAL MANAGEMENT LLC (as Ultimate Parent Entity of the Acquiring Person)
By: ________
Name: Julian Desmond
Title: Co-Founder & Managing Partner
Date: February 16, 2024
EXHIBITS AND ATTACHMENTS INDEX
The following exhibits and attachments are filed concurrently with this Notification and Report Form and are incorporated herein by reference:
Exhibit A — Equity Purchase Agreement (Execution Version, January 31, 2024)
This Exhibit consists of the complete execution version of the Equity Purchase Agreement, dated as of January 31, 2024 (the "EPA"), by and among Ardent Capital Partners III LP, Veltrano Equity Holdings LLC (acting through Veltrano Equity Partners Fund V LP), certain additional selling stockholders, and Pinnacle Health Systems, Inc.
Key provisions of the EPA that are relevant to this Notification include the following:
Exhibit B — Organizational Chart of the Ultimate Parent Entity
This Exhibit consists of a full entity structure diagram depicting the organizational chain of control from Ardent Capital Management LLC (UPE) through to the acquiring entity, Ardent Capital Partners III LP, and including all controlled healthcare portfolio companies, as described in Item 2(d) and Item 8(a) of this Notification. The organizational chart also depicts the post-closing structure, showing Pinnacle Health Systems, Inc. as a wholly owned subsidiary of Ardent Capital Partners III LP.
Exhibit C — Item 4(c) and 4(d) Document Production
This Exhibit consists of the complete production of all documents responsive to Item 4(c) and Item 4(d) of this Notification. The production comprises seven (7) responsive documents, as identified and described in the index set forth in Item 4(c) above. Each document is produced in full, with the following confidential treatment designations: