1001-00001 · Ardent Capital Partners · Client Updates

biweekly-status-report-1.docx DOCUMENT Antitrust

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PRIVILEGED AND CONFIDENTIAL ATTORNEY-CLIENT COMMUNICATION

CALDERWOOD & HARKNESS LLP 600 Lexington Avenue New York, NY 10022 Tel: (212) 558-4000

Fax: (212) 558-3588

www.calderwoodharkness.com

February 29, 2024

VIA EMAIL (ENCRYPTED) AND HAND DELIVERY

Julian Desmond, Esq. Co-Founder & Managing Partner Ardent Capital Management LLC 399 Park Avenue, 41st Floor New York, NY 10022

Priya Chandrasekar Co-Founder & Managing Partner Ardent Capital Management LLC 399 Park Avenue, 41st Floor New York, NY 10022

Re: Bi-Weekly Status Report #1 — HSR Filing & Antitrust Workstream Acquisition of Pinnacle Health Systems, Inc. by Ardent Capital Partners III LP Matter No.: 1001-00001 FTC Transaction No.: 20241487

Dear Julian and Priya:

We are pleased to provide you with Bi-Weekly Status Report #1 regarding the Hart-Scott-Rodino ("HSR") premerger notification filing and antitrust regulatory workstream in connection with the proposed acquisition of Pinnacle Health Systems, Inc. ("Pinnacle" or the "Target") by Ardent Capital Partners III LP ("Buyer" or "Fund III"). This report covers the period from February 16, 2024 (the date of the HSR filing) through February 29, 2024. Set forth below is a detailed summary of all activities undertaken, communications with the Federal Trade Commission ("FTC") and counterparty counsel, substantive work product completed, and our outlook for the remainder of the statutory waiting period.

This communication is protected by the attorney-client privilege and the work product doctrine. Please treat this report as strictly confidential and do not distribute it beyond the addressees and those individuals within Ardent Capital Management LLC and its affiliates who have a need to know in connection with the Transaction.

1. Executive Summary

This is the first in a series of bi-weekly status reports that Calderwood & Harkness LLP ("C&H" or the "Firm") will provide to Ardent Capital Management LLC ("Ardent" or the "Client") during the pendency of the HSR review process. This report covers the initial two-week period from the date of the HSR filing, February 16, 2024, through February 29, 2024.

Overall assessment: The HSR filing process is proceeding as expected, and we have encountered no complications or unexpected developments during this initial reporting period. As of the date of this report, no inquiries, informal requests for information, or formal requests for additional information (commonly referred to as a "Second Request") have been received from FTC staff or from the Department of Justice ("DOJ") Antitrust Division. This is a positive development, consistent with our initial assessment that the Transaction presents minimal antitrust risk.

Our antitrust risk assessment for the Transaction remains low. The Transaction involves the acquisition of a specialty healthcare services platform by a private equity sponsor that does not currently own or operate any ambulatory surgical center ("ASC") or physician practice management ("PPM") businesses. Ardent's existing portfolio companies operate in distinct product markets from Pinnacle, and the limited areas of geographic co-location between Ardent portfolio company facilities and Pinnacle facilities do not present competitively significant overlaps. The voluntary submission (white paper) filed concurrently with the HSR Notification and Report Forms presented a comprehensive competitive analysis supporting these conclusions.

We continue to believe that the prospects for early termination of the initial waiting period are strong. The initial 30-day statutory waiting period commenced on February 16, 2024, and will expire at 11:59 p.m. Eastern Time on March 17, 2024, absent either (a) earlier termination by the FTC, or (b) the issuance of a Second Request, which would extend the waiting period. Based on the current trajectory—including the absence of any FTC contact during the first two weeks—we expect that early termination will likely be granted prior to the March 17, 2024 expiration date, or alternatively, that the waiting period will expire without incident.

2. Transaction Overview (For Reference)

For the convenience of the reader, we set forth below a summary of the key transaction parameters. This summary is provided for reference purposes and is drawn from the Equity Purchase Agreement dated January 31, 2024 (the "EPA"), the HSR Notification and Report Forms, and related transaction documentation.

Transaction Structure: 100% equity acquisition (stock purchase) of all outstanding shares of common stock of Pinnacle Health Systems, Inc. by Ardent Capital Partners III LP.

Transaction Value: Enterprise Value of approximately $952 million; Equity Value of approximately $534 million.

Equity Purchase Agreement: Executed on January 31, 2024 (the "EPA"). The EPA governs the terms and conditions of the Transaction, including the regulatory approval conditions described in Section 10 below.

The Target — Pinnacle Health Systems, Inc.:

• Pinnacle is a Delaware corporation with its principal office located at 2200 Lakeshore Boulevard, Suite 500, Charlotte, North Carolina 28202.

• Pinnacle is a specialty healthcare services platform that owns and operates 42 ambulatory surgical centers and manages 31 affiliated physician practice management entities across nine states: North Carolina, South Carolina, Virginia, Tennessee, Georgia, Florida, Alabama, Ohio, and Texas.

• For the fiscal year ended December 31, 2023 ("FY2023"), Pinnacle reported total net revenue of approximately $637.4 million and adjusted EBITDA of approximately $98.2 million.

• Pinnacle employs approximately 4,700 individuals across its platform, including employed physicians, clinical staff, and administrative personnel.

Selling Sponsor: Veltrano Equity Holdings LLC ("Veltrano"), which holds approximately 62.3% of the pre-transaction equity of Pinnacle. The remaining equity is held by management shareholders and other minority investors.

Management Rollover: Dr. Marcus Ellsworth, Chief Executive Officer of Pinnacle, will roll over approximately $28.5 million of equity value into Fund III's acquisition vehicle, representing approximately 3.0% of post-closing equity. Dr. Ellsworth's continued involvement is a key component of the transaction thesis.

EPA Outside Date: June 30, 2024. The EPA provides that either party may terminate the agreement if the closing has not occurred on or prior to this date, subject to certain exceptions described in Section 10 below.

3. HSR Filing — Status and Details

3.1 Filing Completion

Both the acquiring person's and the acquired person's HSR Notification and Report Forms (the "Forms") were prepared, finalized, and filed simultaneously with the FTC Premerger Notification Office and the DOJ Antitrust Division on February 16, 2024. The filing was completed electronically through the FTC's e-filing system in accordance with the applicable rules and procedures promulgated under the HSR Act, 15 U.S.C. § 18a, and the implementing regulations at 16 C.F.R. Parts 801–803.

The filing was completed six calendar days ahead of the deadline established under the EPA. Specifically, Section 5.4(a) of the EPA requires that the HSR filings be made no later than fifteen (15) business days after the date of execution of the EPA, which was January 31, 2024. The EPA-mandated filing deadline was therefore February 22, 2024. By filing on February 16, 2024, we ensured that the statutory waiting period commenced promptly, maximizing the runway for early termination and minimizing the risk of any scheduling delays that could affect the Transaction timeline.

The certification on the acquiring person's Form was executed by Julian Desmond on behalf of Ardent Capital Management LLC, in its capacity as the investment manager and indirect general partner of Ardent Capital Partners III LP. The certification was prepared in accordance with the requirements of 16 C.F.R. § 803.5 and confirmed the accuracy and completeness of the information provided in the Form.

The acquired person's filing was prepared and submitted by Greenvale Durneval LLP ("GK"), antitrust counsel to Pinnacle, under the supervision of Jonathan Felder, a partner in GK's antitrust practice. C&H coordinated closely with Mr. Felder and his team to ensure consistency between the acquiring person's and acquired person's filings, alignment of NAICS code classifications and market descriptions, and simultaneous submission of both Forms.

3.2 Filing Fee

The HSR filing fee of $280,000 was paid by Ardent Capital Partners III LP, as required under Section 5.4(a) of the EPA, which allocates the filing fee obligation to the Buyer. The applicable fee tier was $280,000, which corresponds to transactions with a value in excess of $500,000,000 but less than $1,000,000,000, as set forth in the 2024 FTC filing fee schedule published pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and the Merger Filing Fee Modernization Act of 2022.

Payment was made by wire transfer on February 16, 2024, and confirmation of receipt by the FTC was obtained on the same date. A copy of the wire transfer confirmation has been retained in the matter file.

3.3 FTC Confirmation of Receipt

The FTC Premerger Notification Office acknowledged receipt of both the acquiring person's and acquired person's HSR Notification and Report Forms on February 16, 2024. The FTC assigned Transaction Number 20241487 to the filing. A confirmation letter reflecting the filing date, the assigned Transaction Number, and the commencement of the 30-day statutory waiting period was received by C&H and has been filed in the matter record.

3.4 Waiting Period Calculation

The initial 30-day statutory waiting period under the HSR Act commenced on February 16, 2024, the date on which both the acquiring person's and acquired person's filings were received by the FTC and DOJ. Pursuant to Section 7A(b)(1)(B) of the Clayton Act, 15 U.S.C. § 18a(b)(1)(B), and the applicable rules, the waiting period will expire at 11:59 p.m. Eastern Time on March 17, 2024, absent either:

(a) early termination of the waiting period by the FTC, which would allow the Transaction to close immediately upon the grant of early termination; or

(b) the issuance of a Request for Additional Information and Documentary Material (a "Second Request") by the FTC, which would extend the waiting period for an additional 30 days following substantial compliance with such request.

Interagency Clearance: Pursuant to the interagency clearance process between the FTC and the DOJ Antitrust Division, clearance to review this Transaction was granted to the FTC rather than the DOJ Antitrust Division. This outcome is consistent with the established practice under which the FTC has historically exercised primary jurisdiction over transactions in the healthcare services sector, including transactions involving ambulatory surgical centers, physician practice management, and related healthcare platforms. The assignment of the matter to the FTC was confirmed through the FTC staff contact assignment described in Section 6 below.

4. Early Termination Request

A formal request for early termination of the HSR waiting period was submitted as part of both the acquiring person's and acquired person's HSR Notification and Report Forms filed on February 16, 2024, as indicated in the appropriate section of each Form.

In support of the early termination request, C&H prepared and filed a voluntary submission letter (commonly referred to as a "white paper") concurrently with the HSR filings on February 16, 2024. The voluntary submission presented a comprehensive competitive analysis of the Transaction, designed to facilitate the FTC's review and demonstrate the absence of any competitive concerns warranting further investigation or enforcement action.

The key arguments and analyses presented in the voluntary submission are summarized below:

No Horizontal Overlaps. The voluntary submission demonstrated that there are no horizontal overlaps between the operations of Pinnacle and those of Fund III or its affiliates in any of the nine relevant geographic markets (Metropolitan Statistical Areas, or "MSAs") analyzed. Ardent Capital does not currently own or operate any ambulatory surgical centers, physician practice management entities, or other healthcare services businesses that compete directly with Pinnacle's core service lines. Accordingly, the Transaction does not combine competing businesses and does not result in any increase in market concentration in any relevant market.

No Existing ASC or PPM Operations. The voluntary submission confirmed that Ardent Capital, through Fund III or any of its other investment vehicles, has no existing ambulatory surgical center or physician practice management operations anywhere in the United States. The Transaction therefore represents a new entry by Ardent Capital into the ASC and PPM sectors, rather than a consolidation of existing operations.

Portfolio Company Analysis. The voluntary submission analyzed the operations of Ardent Capital's two healthcare-related portfolio companies to assess whether any competitive overlaps or vertical relationships exist with Pinnacle:

• Marlowe Asset Management Rehabilitation Holdings LLC ("Marlowe Asset Management"): Marlowe Asset Management is an outpatient physical therapy services provider operating 74 clinics in Texas, Florida, and Georgia. Marlowe Asset Management operates in the outpatient physical therapy market, which is a separate product market from Pinnacle's ambulatory surgical center and physician practice management operations.

• Clearpath Diagnostics Inc. ("Clearpath"): Clearpath is a clinical laboratory services company operating in Pennsylvania, New Jersey, and New York, with FY2023 revenue of approximately $218 million. Clearpath provides reference laboratory and specialty diagnostic testing services, which constitute a separate product market from Pinnacle's core service lines. Moreover, Clearpath does not operate in any of the nine states in which Pinnacle maintains operations, eliminating any possibility of geographic overlap.

Limited Vertical Relationships. The voluntary submission identified a limited vertical relationship between 12 co-located Marlowe Asset Management outpatient physical therapy clinics and Pinnacle ambulatory surgical centers in certain MSAs in Texas, Florida, and Georgia. Post-surgical physical therapy is a downstream service that may be utilized by patients who undergo surgical procedures at Pinnacle's ASCs. However, the voluntary submission demonstrated that this vertical relationship is competitively insignificant: the 12 co-located Marlowe Asset Management clinics account for less than 2% of Pinnacle's total ASC case volume in the affected MSAs. In addition, patients have broad choice among physical therapy providers, referral patterns are driven by physician preference and patient choice rather than facility ownership, and the Transaction does not create any ability or incentive to foreclose competing physical therapy providers from access to Pinnacle ASC patient referrals.

HHI Concentration Analysis. The voluntary submission included a Herfindahl-Hirschman Index ("HHI") concentration analysis for each of the nine MSAs in which Pinnacle operates. Because Ardent Capital has no existing operations in any relevant market, the Transaction does not result in any change in market concentration in any MSA. By way of example, the Charlotte MSA—Pinnacle's largest market—has a pre-transaction and post-transaction HHI of approximately 1,280, which is below the 1,500 threshold for a "moderately concentrated" market under the 2023 U.S. Department of Justice and Federal Trade Commission Merger Guidelines. In the Charlotte MSA, Pinnacle operates 14 of approximately 67 ambulatory surgical centers, representing an approximately 20.9% facility share and an approximately 18.3% share of net patient revenue. These shares do not change as a result of the Transaction.

Based on the foregoing analysis, the voluntary submission concluded that the Transaction does not raise any competitive concerns under Section 7 of the Clayton Act, 15 U.S.C. § 18, or Section 5 of the Federal Trade Commission Act, 15 U.S.C. § 45, and respectfully requested that the FTC grant early termination of the waiting period.

5. Item 4(c) / 4(d) Document Production

Acquiring Person Documents

The acquiring person's HSR filing included the production of seven (7) documents responsive to Item 4(c) and Item 4(d) of the HSR Notification and Report Form. Item 4(c) requires the production of documents prepared by or for officers or directors of the filing person that analyze the Transaction with respect to market shares, competition, competitors, markets, potential for sales growth, or expansion into product or geographic markets. Item 4(d) requires the production of certain studies, surveys, analyses, and reports prepared by investment bankers, consultants, or other third-party advisors relating to the Transaction with respect to similar topics. The seven responsive documents produced were as follows:

1. Three (3) Confidential Information Memoranda / teasers prepared by the sell-side financial advisor in connection with the marketing process for the Transaction;

2. Two (2) internal investment committee memoranda prepared by Ardent Capital's deal team for presentation to Fund III's investment committee;

3. One (1) board presentation prepared for the advisory board of Fund III discussing the investment thesis and competitive positioning of Pinnacle; and

4. One (1) email chain among Ardent Capital deal team members discussing the competitive landscape in certain MSAs in which Pinnacle operates.

All seven documents were reviewed by C&H for attorney-client privilege and work product protection prior to production. Appropriate redactions were applied to two documents to protect privileged communications embedded within otherwise responsive materials. The redaction log was prepared and maintained in the matter file. All responsive documents were produced with the filing on February 16, 2024.

Acquired Person Documents

The acquired person (Pinnacle), through its antitrust counsel at Greenvale Durneval LLP, produced eleven (11) documents responsive to Items 4(c) and 4(d) of the HSR Form. These documents were as follows:

1. Four (4) strategic planning presentations prepared by Pinnacle management for the board of directors;

2. Three (3) sets of board meeting minutes containing discussions of Pinnacle's competitive positioning in certain markets;

3. Two (2) consultant reports (prepared by third-party healthcare industry consultants) analyzing market growth trends in the ambulatory surgical center and physician practice management sectors; and

4. Two (2) internal email chains among Pinnacle senior executives discussing competitor activity in certain MSAs.

C&H reviewed the acquired person's Item 4(c)/4(d) document production in coordination with Greenvale Durneval to ensure consistency with the competitive narrative presented in the voluntary submission. No concerns were identified.

As of the date of this report, no supplementation of either party's Item 4(c)/4(d) document production has been required or requested by FTC staff.

6. FTC Staff Contact and Communications

The FTC staff attorney assigned to review the Transaction is Sarah Whitman, Attorney, Bureau of Competition, Mergers IV Division. Ms. Whitman's contact information has been recorded in the matter file and shared with the engagement team.

On February 20, 2024, Howard Bellamy sent a courtesy email to Ms. Whitman introducing himself as lead antitrust counsel for the acquiring person and offering C&H's availability to answer any questions, provide additional information, or otherwise facilitate the FTC's review of the Transaction. This outreach is consistent with standard practice and is intended to establish a constructive working relationship with FTC staff and to signal the parties' willingness to cooperate fully with the review process.

As of February 29, 2024—thirteen calendar days into the initial 30-day waiting period—no substantive questions, informal requests for information, or formal requests for additional information have been received from FTC staff. Ms. Whitman has not responded to Mr. Bellamy's courtesy email, which is not unusual and does not carry any negative implication. More significantly, no indication of any Second Request investigation has been received, and we have no reason to believe that the FTC is contemplating the issuance of a Second Request in connection with this Transaction.

The absence of any FTC inquiries during the first two weeks of the waiting period is a positive indicator for early termination. In our experience, when the FTC intends to issue a Second Request or to conduct a more detailed investigation, staff typically initiates contact with counsel for the filing parties during the first ten to fourteen days of the waiting period to request supplemental information, identify potential areas of concern, or schedule timing agreement discussions. The absence of any such contact is consistent with our assessment that the Transaction does not raise competitive concerns warranting further investigation.

7. Coordination with Counterparty Counsel

C&H continues to maintain regular contact and coordination with Greenvale Durneval LLP, antitrust counsel to Pinnacle, regarding the target's parallel HSR filing and any FTC follow-up. Our primary point of contact at GK is Jonathan Felder, a partner in GK's antitrust practice group who leads the GK team advising Pinnacle on the antitrust aspects of the Transaction.

On February 27, 2024, Monica Reyes of C&H spoke with Mr. Felder to confirm the status of the target's filing and to inquire whether GK had received any communications from FTC staff. Mr. Felder confirmed that Greenvale Durneval has also received no inquiries from FTC staff as of February 29, 2024. This is consistent with our own experience and further supports our expectation that the FTC does not intend to pursue a detailed investigation of the Transaction.

During the pre-filing coordination process, C&H and GK aligned on the NAICS code classifications to be used in both filings. Both the acquiring person's and acquired person's Forms identified the following primary NAICS codes for Pinnacle's operations:

• 621111 — Offices of Physicians (Except Mental Health Specialists), corresponding to Pinnacle's physician practice management operations; and

• 621493 — Freestanding Ambulatory Surgical and Emergency Centers, corresponding to Pinnacle's ambulatory surgical center operations.

Consistency in NAICS code classification across both filings is important to ensure that the FTC's internal review and clearance processes proceed smoothly and to avoid any confusion or delay that could result from discrepancies between the two filings.

8. Coordination with Transaction Counsel

C&H has maintained regular communication with transaction counsel for both parties to ensure that all stakeholders are fully informed of the status of the antitrust regulatory workstream and that no issues have arisen that could affect the Transaction timeline or closing conditions.

Buyer's Transaction Counsel — Whitfield & Crane LLP: C&H has kept David Ostrander, lead M&A partner at Whitfield & Crane LLP ("W&C"), apprised of the status of the HSR filing, the commencement and expected expiration of the waiting period, and the absence of any FTC inquiries or concerns. Mr. Ostrander has been provided with copies of the FTC confirmation letter and the waiting period calculation. No issues have been flagged by C&H or by W&C that would affect the Transaction timeline, the satisfaction of the closing conditions set forth in Article VI of the EPA, or the parties' ability to close by the outside date.

Target's Transaction Counsel — Fendowell Thornton LLP: Catherine Yardley, M&A counsel to Pinnacle at Fendowell Thornton LLP, has been advised of the filing status through Greenvale Durneval LLP. C&H does not communicate directly with Fendowell Thornton on antitrust matters, consistent with the established communication protocol for the Transaction, under which GK serves as the intermediary for all antitrust-related communications with the target and its advisors.

9. Substantive Antitrust Work Product Completed

During the reporting period and in the period leading up to the HSR filing, C&H prepared the following memoranda, analyses, and work product in support of the antitrust workstream. All of the documents listed below are protected by the attorney-client privilege and/or the work product doctrine and have been maintained in the confidential matter file.

The above work product represents the full scope of substantive antitrust analysis that C&H has determined to be necessary in connection with the HSR filing and the FTC's review of the Transaction. No additional substantive memoranda or analyses are anticipated at this time unless the FTC poses questions, requests additional information, or issues a Second Request. In such event, C&H would promptly assess the scope of any such request and advise the Client regarding the appropriate response strategy and timeline.

10. Key EPA Provisions — Regulatory Workstream Status

Set forth below is a summary of the key provisions of the EPA relating to the regulatory workstream, together with the current status of each provision as of the date of this report.

We will continue to monitor compliance with these provisions throughout the pendency of the HSR review and will promptly advise the Client if any issues arise.

11. Outlook and Next Steps

Based on our assessment of the current status of the HSR review, C&H recommends the following course of action for the next reporting period:

1. Continued Monitoring. C&H will continue to monitor for any communications, inquiries, or requests from FTC staff through the remainder of the 30-day statutory waiting period. We will maintain regular contact with Greenvale Durneval LLP to ensure that any communications received by the target's counsel are promptly shared and addressed.

2. Waiting Period Expiration. The initial 30-day waiting period is scheduled to expire at 11:59 p.m. Eastern Time on March 17, 2024, absent earlier termination by the FTC or the issuance of a Second Request.

3. Early Termination Expectation. Based on (a) the absence of any horizontal overlaps between Ardent Capital and Pinnacle, (b) the strong competitive analysis presented in the voluntary submission, and (c) the absence of any FTC inquiries during the first thirteen days of the waiting period, C&H continues to expect that early termination will be granted prior to the March 17, 2024 expiration date. However, we note that the FTC's decision to grant or withhold early termination is within its sole discretion, and the timing of any grant of early termination is not predictable with certainty.

4. Follow-Up with FTC Staff. If early termination is not granted in the coming days, C&H will promptly advise the Client and assess whether any follow-up communication with FTC staff—such as a telephone call to Ms. Whitman to inquire about the status of the review—is advisable. We would seek the Client's authorization before initiating any such outreach.

5. Notification Upon Clearance. In the event that early termination is granted or the waiting period expires, C&H will immediately:

(a) Notify the Client (Julian Desmond and Priya Chandrasekar) by telephone and email;

(b) Notify transaction counsel at Whitfield & Crane LLP (David Ostrander);

(c) Notify target counsel at Fendowell Thornton LLP (Catherine Yardley) and Greenvale Durneval LLP (Jonathan Felder); and

(d) Prepare and deliver the HSR clearance certificate required for delivery at closing under the EPA.

6. Next Status Report. The next bi-weekly status report (Bi-Weekly Status Report #2) will be issued on or about March 14, 2024, three days before the scheduled expiration of the initial waiting period. If material developments occur before that date—including, without limitation, the grant of early termination, the receipt of any FTC inquiry, or any other event requiring the Client's attention—C&H will provide an interim notification promptly.

12. Engagement Team and Contact Information

The following C&H attorneys are assigned to the antitrust workstream for this Transaction. All inquiries should be directed to Howard Bellamy or Monica Reyes.

We remain confident that the HSR review process will be resolved favorably and within the expected timeframe. We appreciate the opportunity to represent Ardent Capital in connection with this important transaction and, as always, we are available to discuss any aspect of this report or the antitrust workstream at your convenience.

Very truly yours,

CALDERWOOD & HARKNESS LLP

By: ________

Howard Bellamy Partner, Antitrust & Competition Practice Group Calderwood & Harkness LLP 600 Lexington Avenue New York, NY 10022 Tel: (212) 558-4112

Email: hbellamy@calderwoodharkness.com

cc: Monica Reyes, Calderwood & Harkness LLP (internal) Elliot Nguyen, Calderwood & Harkness LLP (internal)

PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT COMMUNICATION This document and the information contained herein are protected by the attorney-client privilege and the work product doctrine. This communication is intended solely for the use of the addressees identified above and should not be disclosed to any third party without the prior written consent of Calderwood & Harkness LLP.

Document	Date
Preliminary Antitrust Risk Assessment Memorandum	February 5, 2024
State Regulatory / Certificate of Need Analysis Memorandum (covering Virginia, North Carolina, Tennessee, Georgia, Alabama, and Ohio)	February 7, 2024
Portfolio Company Overlap Analysis Memorandum — Marlowe Asset Management Rehabilitation Holdings LLC and Clearpath Diagnostics Inc.	February 8, 2024
Vertical Relationships Analysis Memorandum — Marlowe Asset Management PT Clinics / Pinnacle ASCs	February 9, 2024
Market Definition & Competitive Analysis Memorandum — Nine MSAs	February 10, 2024
HHI Concentration Analysis Workpaper — All Nine MSAs	February 10, 2024
Competitor Identification and Market Participant Chart — MSA-by-MSA	February 10, 2024
Voluntary Submission White Paper to FTC (filed February 16, 2024)	February 16, 2024
EPA Provision	Requirement	Status
§5.4(a) — Filing Obligation	Parties to file HSR Forms within 15 business days of EPA execution; Buyer to pay filing fee	Satisfied. Forms filed February 16, 2024; filing fee of $280,000 paid by Buyer on February 16, 2024.
§5.4(b) — Cooperation with Governmental Requests	Parties to cooperate with and respond to governmental requests for information	No requests received to date. Obligation remains in effect.
§5.4(c) — Reasonable Best Efforts	Buyer to use "reasonable best efforts" to obtain HSR clearance; no obligation to accept divestitures, hold-separate orders, or behavioral remedies	No efforts beyond the voluntary submission have been required. Standard monitored.
§6.1(c) — Condition to Closing	Closing conditioned upon expiration or early termination of HSR waiting period	Not yet satisfied. Waiting period remains pending; expected to expire or be terminated prior to March 17, 2024.
§7.1(b)(ii) — Termination Right	Either party may terminate EPA if HSR clearance not obtained by Outside Date (June 30, 2024)	Not triggered. Substantial time remains before the Outside Date.
§7.3(b) — Reverse Termination Fee	Buyer to pay reverse termination fee of $28.56 million ($952M × 3.0%) if Transaction fails due to antitrust regulatory block	Not triggered. No indication that antitrust regulatory block will occur.
Name	Role	Address	Telephone	Hourly Rate
Howard Bellamy	Responsible Partner	600 Lexington Avenue, New York, NY 10022	(212) 558-4112	$1,650/hr
Monica Reyes	Lead Associate	600 Lexington Avenue, New York, NY 10022	(212) 558-4287	$875/hr
Elliot Nguyen	Working Associate	600 Lexington Avenue, New York, NY 10022	(212) 558-4359	$725/hr

PRIVILEGED AND CONFIDENTIAL ATTORNEY-CLIENT COMMUNICATION
CALDERWOOD & HARKNESS LLP 600 Lexington Avenue New York, NY 10022 Tel: (212) 558-4000
Fax: (212) 558-3588
www.calderwoodharkness.com
February 29, 2024
VIA EMAIL (ENCRYPTED) AND HAND DELIVERY
Julian Desmond, Esq. Co-Founder & Managing Partner Ardent Capital Management LLC 399 Park Avenue, 41st Floor New York, NY 10022
Priya Chandrasekar Co-Founder & Managing Partner Ardent Capital Management LLC 399 Park Avenue, 41st Floor New York, NY 10022
Re: Bi-Weekly Status Report #1 — HSR Filing & Antitrust Workstream Acquisition of Pinnacle Health Systems, Inc. by Ardent Capital Partners III LP Matter No.: 1001-00001 FTC Transaction No.: 20241487
Dear Julian and Priya:
We are pleased to provide you with Bi-Weekly Status Report #1 regarding the Hart-Scott-Rodino ("HSR") premerger notification filing and antitrust regulatory workstream in connection with the proposed acquisition of Pinnacle Health Systems, Inc. ("Pinnacle" or the "Target") by Ardent Capital Partners III LP ("Buyer" or "Fund III"). This report covers the period from February 16, 2024 (the date of the HSR filing) through February 29, 2024. Set forth below is a detailed summary of all activities undertaken, communications with the Federal Trade Commission ("FTC") and counterparty counsel, substantive work product completed, and our outlook for the remainder of the statutory waiting period.
This communication is protected by the attorney-client privilege and the work product doctrine. Please treat this report as strictly confidential and do not distribute it beyond the addressees and those individuals within Ardent Capital Management LLC and its affiliates who have a need to know in connection with the Transaction.
1. Executive Summary
This is the first in a series of bi-weekly status reports that Calderwood & Harkness LLP ("C&H" or the "Firm") will provide to Ardent Capital Management LLC ("Ardent" or the "Client") during the pendency of the HSR review process. This report covers the initial two-week period from the date of the HSR filing, February 16, 2024, through February 29, 2024.
Overall assessment: The HSR filing process is proceeding as expected, and we have encountered no complications or unexpected developments during this initial reporting period. As of the date of this report, no inquiries, informal requests for information, or formal requests for additional information (commonly referred to as a "Second Request") have been received from FTC staff or from the Department of Justice ("DOJ") Antitrust Division. This is a positive development, consistent with our initial assessment that the Transaction presents minimal antitrust risk.
Our antitrust risk assessment for the Transaction remains low. The Transaction involves the acquisition of a specialty healthcare services platform by a private equity sponsor that does not currently own or operate any ambulatory surgical center ("ASC") or physician practice management ("PPM") businesses. Ardent's existing portfolio companies operate in distinct product markets from Pinnacle, and the limited areas of geographic co-location between Ardent portfolio company facilities and Pinnacle facilities do not present competitively significant overlaps. The voluntary submission (white paper) filed concurrently with the HSR Notification and Report Forms presented a comprehensive competitive analysis supporting these conclusions.
We continue to believe that the prospects for early termination of the initial waiting period are strong. The initial 30-day statutory waiting period commenced on February 16, 2024, and will expire at 11:59 p.m. Eastern Time on March 17, 2024, absent either (a) earlier termination by the FTC, or (b) the issuance of a Second Request, which would extend the waiting period. Based on the current trajectory—including the absence of any FTC contact during the first two weeks—we expect that early termination will likely be granted prior to the March 17, 2024 expiration date, or alternatively, that the waiting period will expire without incident.
2. Transaction Overview (For Reference)
For the convenience of the reader, we set forth below a summary of the key transaction parameters. This summary is provided for reference purposes and is drawn from the Equity Purchase Agreement dated January 31, 2024 (the "EPA"), the HSR Notification and Report Forms, and related transaction documentation.
Transaction Structure: 100% equity acquisition (stock purchase) of all outstanding shares of common stock of Pinnacle Health Systems, Inc. by Ardent Capital Partners III LP.
Transaction Value: Enterprise Value of approximately $952 million; Equity Value of approximately $534 million.
Equity Purchase Agreement: Executed on January 31, 2024 (the "EPA"). The EPA governs the terms and conditions of the Transaction, including the regulatory approval conditions described in Section 10 below.
The Target — Pinnacle Health Systems, Inc.:
• Pinnacle is a Delaware corporation with its principal office located at 2200 Lakeshore Boulevard, Suite 500, Charlotte, North Carolina 28202.
• Pinnacle is a specialty healthcare services platform that owns and operates 42 ambulatory surgical centers and manages 31 affiliated physician practice management entities across nine states: North Carolina, South Carolina, Virginia, Tennessee, Georgia, Florida, Alabama, Ohio, and Texas.
• For the fiscal year ended December 31, 2023 ("FY2023"), Pinnacle reported total net revenue of approximately $637.4 million and adjusted EBITDA of approximately $98.2 million.
• Pinnacle employs approximately 4,700 individuals across its platform, including employed physicians, clinical staff, and administrative personnel.
Selling Sponsor: Veltrano Equity Holdings LLC ("Veltrano"), which holds approximately 62.3% of the pre-transaction equity of Pinnacle. The remaining equity is held by management shareholders and other minority investors.
Management Rollover: Dr. Marcus Ellsworth, Chief Executive Officer of Pinnacle, will roll over approximately $28.5 million of equity value into Fund III's acquisition vehicle, representing approximately 3.0% of post-closing equity. Dr. Ellsworth's continued involvement is a key component of the transaction thesis.
EPA Outside Date: June 30, 2024. The EPA provides that either party may terminate the agreement if the closing has not occurred on or prior to this date, subject to certain exceptions described in Section 10 below.
3. HSR Filing — Status and Details
3.1 Filing Completion
Both the acquiring person's and the acquired person's HSR Notification and Report Forms (the "Forms") were prepared, finalized, and filed simultaneously with the FTC Premerger Notification Office and the DOJ Antitrust Division on February 16, 2024. The filing was completed electronically through the FTC's e-filing system in accordance with the applicable rules and procedures promulgated under the HSR Act, 15 U.S.C. § 18a, and the implementing regulations at 16 C.F.R. Parts 801–803.
The filing was completed six calendar days ahead of the deadline established under the EPA. Specifically, Section 5.4(a) of the EPA requires that the HSR filings be made no later than fifteen (15) business days after the date of execution of the EPA, which was January 31, 2024. The EPA-mandated filing deadline was therefore February 22, 2024. By filing on February 16, 2024, we ensured that the statutory waiting period commenced promptly, maximizing the runway for early termination and minimizing the risk of any scheduling delays that could affect the Transaction timeline.
The certification on the acquiring person's Form was executed by Julian Desmond on behalf of Ardent Capital Management LLC, in its capacity as the investment manager and indirect general partner of Ardent Capital Partners III LP. The certification was prepared in accordance with the requirements of 16 C.F.R. § 803.5 and confirmed the accuracy and completeness of the information provided in the Form.
The acquired person's filing was prepared and submitted by Greenvale Durneval LLP ("GK"), antitrust counsel to Pinnacle, under the supervision of Jonathan Felder, a partner in GK's antitrust practice. C&H coordinated closely with Mr. Felder and his team to ensure consistency between the acquiring person's and acquired person's filings, alignment of NAICS code classifications and market descriptions, and simultaneous submission of both Forms.
3.2 Filing Fee
The HSR filing fee of $280,000 was paid by Ardent Capital Partners III LP, as required under Section 5.4(a) of the EPA, which allocates the filing fee obligation to the Buyer. The applicable fee tier was $280,000, which corresponds to transactions with a value in excess of $500,000,000 but less than $1,000,000,000, as set forth in the 2024 FTC filing fee schedule published pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and the Merger Filing Fee Modernization Act of 2022.
Payment was made by wire transfer on February 16, 2024, and confirmation of receipt by the FTC was obtained on the same date. A copy of the wire transfer confirmation has been retained in the matter file.
3.3 FTC Confirmation of Receipt
The FTC Premerger Notification Office acknowledged receipt of both the acquiring person's and acquired person's HSR Notification and Report Forms on February 16, 2024. The FTC assigned Transaction Number 20241487 to the filing. A confirmation letter reflecting the filing date, the assigned Transaction Number, and the commencement of the 30-day statutory waiting period was received by C&H and has been filed in the matter record.
3.4 Waiting Period Calculation
The initial 30-day statutory waiting period under the HSR Act commenced on February 16, 2024, the date on which both the acquiring person's and acquired person's filings were received by the FTC and DOJ. Pursuant to Section 7A(b)(1)(B) of the Clayton Act, 15 U.S.C. § 18a(b)(1)(B), and the applicable rules, the waiting period will expire at 11:59 p.m. Eastern Time on March 17, 2024, absent either:
(a) early termination of the waiting period by the FTC, which would allow the Transaction to close immediately upon the grant of early termination; or
(b) the issuance of a Request for Additional Information and Documentary Material (a "Second Request") by the FTC, which would extend the waiting period for an additional 30 days following substantial compliance with such request.
Interagency Clearance: Pursuant to the interagency clearance process between the FTC and the DOJ Antitrust Division, clearance to review this Transaction was granted to the FTC rather than the DOJ Antitrust Division. This outcome is consistent with the established practice under which the FTC has historically exercised primary jurisdiction over transactions in the healthcare services sector, including transactions involving ambulatory surgical centers, physician practice management, and related healthcare platforms. The assignment of the matter to the FTC was confirmed through the FTC staff contact assignment described in Section 6 below.
4. Early Termination Request
A formal request for early termination of the HSR waiting period was submitted as part of both the acquiring person's and acquired person's HSR Notification and Report Forms filed on February 16, 2024, as indicated in the appropriate section of each Form.
In support of the early termination request, C&H prepared and filed a voluntary submission letter (commonly referred to as a "white paper") concurrently with the HSR filings on February 16, 2024. The voluntary submission presented a comprehensive competitive analysis of the Transaction, designed to facilitate the FTC's review and demonstrate the absence of any competitive concerns warranting further investigation or enforcement action.
The key arguments and analyses presented in the voluntary submission are summarized below:
No Horizontal Overlaps. The voluntary submission demonstrated that there are no horizontal overlaps between the operations of Pinnacle and those of Fund III or its affiliates in any of the nine relevant geographic markets (Metropolitan Statistical Areas, or "MSAs") analyzed. Ardent Capital does not currently own or operate any ambulatory surgical centers, physician practice management entities, or other healthcare services businesses that compete directly with Pinnacle's core service lines. Accordingly, the Transaction does not combine competing businesses and does not result in any increase in market concentration in any relevant market.
No Existing ASC or PPM Operations. The voluntary submission confirmed that Ardent Capital, through Fund III or any of its other investment vehicles, has no existing ambulatory surgical center or physician practice management operations anywhere in the United States. The Transaction therefore represents a new entry by Ardent Capital into the ASC and PPM sectors, rather than a consolidation of existing operations.
Portfolio Company Analysis. The voluntary submission analyzed the operations of Ardent Capital's two healthcare-related portfolio companies to assess whether any competitive overlaps or vertical relationships exist with Pinnacle:
• Marlowe Asset Management Rehabilitation Holdings LLC ("Marlowe Asset Management"): Marlowe Asset Management is an outpatient physical therapy services provider operating 74 clinics in Texas, Florida, and Georgia. Marlowe Asset Management operates in the outpatient physical therapy market, which is a separate product market from Pinnacle's ambulatory surgical center and physician practice management operations.
• Clearpath Diagnostics Inc. ("Clearpath"): Clearpath is a clinical laboratory services company operating in Pennsylvania, New Jersey, and New York, with FY2023 revenue of approximately $218 million. Clearpath provides reference laboratory and specialty diagnostic testing services, which constitute a separate product market from Pinnacle's core service lines. Moreover, Clearpath does not operate in any of the nine states in which Pinnacle maintains operations, eliminating any possibility of geographic overlap.
Limited Vertical Relationships. The voluntary submission identified a limited vertical relationship between 12 co-located Marlowe Asset Management outpatient physical therapy clinics and Pinnacle ambulatory surgical centers in certain MSAs in Texas, Florida, and Georgia. Post-surgical physical therapy is a downstream service that may be utilized by patients who undergo surgical procedures at Pinnacle's ASCs. However, the voluntary submission demonstrated that this vertical relationship is competitively insignificant: the 12 co-located Marlowe Asset Management clinics account for less than 2% of Pinnacle's total ASC case volume in the affected MSAs. In addition, patients have broad choice among physical therapy providers, referral patterns are driven by physician preference and patient choice rather than facility ownership, and the Transaction does not create any ability or incentive to foreclose competing physical therapy providers from access to Pinnacle ASC patient referrals.
HHI Concentration Analysis. The voluntary submission included a Herfindahl-Hirschman Index ("HHI") concentration analysis for each of the nine MSAs in which Pinnacle operates. Because Ardent Capital has no existing operations in any relevant market, the Transaction does not result in any change in market concentration in any MSA. By way of example, the Charlotte MSA—Pinnacle's largest market—has a pre-transaction and post-transaction HHI of approximately 1,280, which is below the 1,500 threshold for a "moderately concentrated" market under the 2023 U.S. Department of Justice and Federal Trade Commission Merger Guidelines. In the Charlotte MSA, Pinnacle operates 14 of approximately 67 ambulatory surgical centers, representing an approximately 20.9% facility share and an approximately 18.3% share of net patient revenue. These shares do not change as a result of the Transaction.
Based on the foregoing analysis, the voluntary submission concluded that the Transaction does not raise any competitive concerns under Section 7 of the Clayton Act, 15 U.S.C. § 18, or Section 5 of the Federal Trade Commission Act, 15 U.S.C. § 45, and respectfully requested that the FTC grant early termination of the waiting period.
5. Item 4(c) / 4(d) Document Production
Acquiring Person Documents
The acquiring person's HSR filing included the production of seven (7) documents responsive to Item 4(c) and Item 4(d) of the HSR Notification and Report Form. Item 4(c) requires the production of documents prepared by or for officers or directors of the filing person that analyze the Transaction with respect to market shares, competition, competitors, markets, potential for sales growth, or expansion into product or geographic markets. Item 4(d) requires the production of certain studies, surveys, analyses, and reports prepared by investment bankers, consultants, or other third-party advisors relating to the Transaction with respect to similar topics. The seven responsive documents produced were as follows:
1. Three (3) Confidential Information Memoranda / teasers prepared by the sell-side financial advisor in connection with the marketing process for the Transaction;
2. Two (2) internal investment committee memoranda prepared by Ardent Capital's deal team for presentation to Fund III's investment committee;
3. One (1) board presentation prepared for the advisory board of Fund III discussing the investment thesis and competitive positioning of Pinnacle; and
4. One (1) email chain among Ardent Capital deal team members discussing the competitive landscape in certain MSAs in which Pinnacle operates.
All seven documents were reviewed by C&H for attorney-client privilege and work product protection prior to production. Appropriate redactions were applied to two documents to protect privileged communications embedded within otherwise responsive materials. The redaction log was prepared and maintained in the matter file. All responsive documents were produced with the filing on February 16, 2024.
Acquired Person Documents
The acquired person (Pinnacle), through its antitrust counsel at Greenvale Durneval LLP, produced eleven (11) documents responsive to Items 4(c) and 4(d) of the HSR Form. These documents were as follows:
1. Four (4) strategic planning presentations prepared by Pinnacle management for the board of directors;
2. Three (3) sets of board meeting minutes containing discussions of Pinnacle's competitive positioning in certain markets;
3. Two (2) consultant reports (prepared by third-party healthcare industry consultants) analyzing market growth trends in the ambulatory surgical center and physician practice management sectors; and
4. Two (2) internal email chains among Pinnacle senior executives discussing competitor activity in certain MSAs.
C&H reviewed the acquired person's Item 4(c)/4(d) document production in coordination with Greenvale Durneval to ensure consistency with the competitive narrative presented in the voluntary submission. No concerns were identified.
As of the date of this report, no supplementation of either party's Item 4(c)/4(d) document production has been required or requested by FTC staff.
6. FTC Staff Contact and Communications
The FTC staff attorney assigned to review the Transaction is Sarah Whitman, Attorney, Bureau of Competition, Mergers IV Division. Ms. Whitman's contact information has been recorded in the matter file and shared with the engagement team.
On February 20, 2024, Howard Bellamy sent a courtesy email to Ms. Whitman introducing himself as lead antitrust counsel for the acquiring person and offering C&H's availability to answer any questions, provide additional information, or otherwise facilitate the FTC's review of the Transaction. This outreach is consistent with standard practice and is intended to establish a constructive working relationship with FTC staff and to signal the parties' willingness to cooperate fully with the review process.
As of February 29, 2024—thirteen calendar days into the initial 30-day waiting period—no substantive questions, informal requests for information, or formal requests for additional information have been received from FTC staff. Ms. Whitman has not responded to Mr. Bellamy's courtesy email, which is not unusual and does not carry any negative implication. More significantly, no indication of any Second Request investigation has been received, and we have no reason to believe that the FTC is contemplating the issuance of a Second Request in connection with this Transaction.
The absence of any FTC inquiries during the first two weeks of the waiting period is a positive indicator for early termination. In our experience, when the FTC intends to issue a Second Request or to conduct a more detailed investigation, staff typically initiates contact with counsel for the filing parties during the first ten to fourteen days of the waiting period to request supplemental information, identify potential areas of concern, or schedule timing agreement discussions. The absence of any such contact is consistent with our assessment that the Transaction does not raise competitive concerns warranting further investigation.
7. Coordination with Counterparty Counsel
C&H continues to maintain regular contact and coordination with Greenvale Durneval LLP, antitrust counsel to Pinnacle, regarding the target's parallel HSR filing and any FTC follow-up. Our primary point of contact at GK is Jonathan Felder, a partner in GK's antitrust practice group who leads the GK team advising Pinnacle on the antitrust aspects of the Transaction.
On February 27, 2024, Monica Reyes of C&H spoke with Mr. Felder to confirm the status of the target's filing and to inquire whether GK had received any communications from FTC staff. Mr. Felder confirmed that Greenvale Durneval has also received no inquiries from FTC staff as of February 29, 2024. This is consistent with our own experience and further supports our expectation that the FTC does not intend to pursue a detailed investigation of the Transaction.
During the pre-filing coordination process, C&H and GK aligned on the NAICS code classifications to be used in both filings. Both the acquiring person's and acquired person's Forms identified the following primary NAICS codes for Pinnacle's operations:
• 621111 — Offices of Physicians (Except Mental Health Specialists), corresponding to Pinnacle's physician practice management operations; and
• 621493 — Freestanding Ambulatory Surgical and Emergency Centers, corresponding to Pinnacle's ambulatory surgical center operations.
Consistency in NAICS code classification across both filings is important to ensure that the FTC's internal review and clearance processes proceed smoothly and to avoid any confusion or delay that could result from discrepancies between the two filings.
8. Coordination with Transaction Counsel
C&H has maintained regular communication with transaction counsel for both parties to ensure that all stakeholders are fully informed of the status of the antitrust regulatory workstream and that no issues have arisen that could affect the Transaction timeline or closing conditions.
Buyer's Transaction Counsel — Whitfield & Crane LLP: C&H has kept David Ostrander, lead M&A partner at Whitfield & Crane LLP ("W&C"), apprised of the status of the HSR filing, the commencement and expected expiration of the waiting period, and the absence of any FTC inquiries or concerns. Mr. Ostrander has been provided with copies of the FTC confirmation letter and the waiting period calculation. No issues have been flagged by C&H or by W&C that would affect the Transaction timeline, the satisfaction of the closing conditions set forth in Article VI of the EPA, or the parties' ability to close by the outside date.
Target's Transaction Counsel — Fendowell Thornton LLP: Catherine Yardley, M&A counsel to Pinnacle at Fendowell Thornton LLP, has been advised of the filing status through Greenvale Durneval LLP. C&H does not communicate directly with Fendowell Thornton on antitrust matters, consistent with the established communication protocol for the Transaction, under which GK serves as the intermediary for all antitrust-related communications with the target and its advisors.
9. Substantive Antitrust Work Product Completed
During the reporting period and in the period leading up to the HSR filing, C&H prepared the following memoranda, analyses, and work product in support of the antitrust workstream. All of the documents listed below are protected by the attorney-client privilege and/or the work product doctrine and have been maintained in the confidential matter file.
The above work product represents the full scope of substantive antitrust analysis that C&H has determined to be necessary in connection with the HSR filing and the FTC's review of the Transaction. No additional substantive memoranda or analyses are anticipated at this time unless the FTC poses questions, requests additional information, or issues a Second Request. In such event, C&H would promptly assess the scope of any such request and advise the Client regarding the appropriate response strategy and timeline.
10. Key EPA Provisions — Regulatory Workstream Status
Set forth below is a summary of the key provisions of the EPA relating to the regulatory workstream, together with the current status of each provision as of the date of this report.
We will continue to monitor compliance with these provisions throughout the pendency of the HSR review and will promptly advise the Client if any issues arise.
11. Outlook and Next Steps
Based on our assessment of the current status of the HSR review, C&H recommends the following course of action for the next reporting period:
1. Continued Monitoring. C&H will continue to monitor for any communications, inquiries, or requests from FTC staff through the remainder of the 30-day statutory waiting period. We will maintain regular contact with Greenvale Durneval LLP to ensure that any communications received by the target's counsel are promptly shared and addressed.
2. Waiting Period Expiration. The initial 30-day waiting period is scheduled to expire at 11:59 p.m. Eastern Time on March 17, 2024, absent earlier termination by the FTC or the issuance of a Second Request.
3. Early Termination Expectation. Based on (a) the absence of any horizontal overlaps between Ardent Capital and Pinnacle, (b) the strong competitive analysis presented in the voluntary submission, and (c) the absence of any FTC inquiries during the first thirteen days of the waiting period, C&H continues to expect that early termination will be granted prior to the March 17, 2024 expiration date. However, we note that the FTC's decision to grant or withhold early termination is within its sole discretion, and the timing of any grant of early termination is not predictable with certainty.
4. Follow-Up with FTC Staff. If early termination is not granted in the coming days, C&H will promptly advise the Client and assess whether any follow-up communication with FTC staff—such as a telephone call to Ms. Whitman to inquire about the status of the review—is advisable. We would seek the Client's authorization before initiating any such outreach.
5. Notification Upon Clearance. In the event that early termination is granted or the waiting period expires, C&H will immediately:
(a) Notify the Client (Julian Desmond and Priya Chandrasekar) by telephone and email;
(b) Notify transaction counsel at Whitfield & Crane LLP (David Ostrander);
(c) Notify target counsel at Fendowell Thornton LLP (Catherine Yardley) and Greenvale Durneval LLP (Jonathan Felder); and
(d) Prepare and deliver the HSR clearance certificate required for delivery at closing under the EPA.
6. Next Status Report. The next bi-weekly status report (Bi-Weekly Status Report #2) will be issued on or about March 14, 2024, three days before the scheduled expiration of the initial waiting period. If material developments occur before that date—including, without limitation, the grant of early termination, the receipt of any FTC inquiry, or any other event requiring the Client's attention—C&H will provide an interim notification promptly.
12. Engagement Team and Contact Information
The following C&H attorneys are assigned to the antitrust workstream for this Transaction. All inquiries should be directed to Howard Bellamy or Monica Reyes.
We remain confident that the HSR review process will be resolved favorably and within the expected timeframe. We appreciate the opportunity to represent Ardent Capital in connection with this important transaction and, as always, we are available to discuss any aspect of this report or the antitrust workstream at your convenience.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Howard Bellamy Partner, Antitrust & Competition Practice Group Calderwood & Harkness LLP 600 Lexington Avenue New York, NY 10022 Tel: (212) 558-4112
Email: hbellamy@calderwoodharkness.com
cc: Monica Reyes, Calderwood & Harkness LLP (internal) Elliot Nguyen, Calderwood & Harkness LLP (internal)
PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT COMMUNICATION This document and the information contained herein are protected by the attorney-client privilege and the work product doctrine. This communication is intended solely for the use of the addressees identified above and should not be disclosed to any third party without the prior written consent of Calderwood & Harkness LLP.
Document | Date
Preliminary Antitrust Risk Assessment Memorandum | February 5, 2024
State Regulatory / Certificate of Need Analysis Memorandum (covering Virginia, North Carolina, Tennessee, Georgia, Alabama, and Ohio) | February 7, 2024
Portfolio Company Overlap Analysis Memorandum — Marlowe Asset Management Rehabilitation Holdings LLC and Clearpath Diagnostics Inc. | February 8, 2024
Vertical Relationships Analysis Memorandum — Marlowe Asset Management PT Clinics / Pinnacle ASCs | February 9, 2024
Market Definition & Competitive Analysis Memorandum — Nine MSAs | February 10, 2024
HHI Concentration Analysis Workpaper — All Nine MSAs | February 10, 2024
Competitor Identification and Market Participant Chart — MSA-by-MSA | February 10, 2024
Voluntary Submission White Paper to FTC (filed February 16, 2024) | February 16, 2024
EPA Provision | Requirement | Status
§5.4(a) — Filing Obligation | Parties to file HSR Forms within 15 business days of EPA execution; Buyer to pay filing fee | Satisfied. Forms filed February 16, 2024; filing fee of $280,000 paid by Buyer on February 16, 2024.
§5.4(b) — Cooperation with Governmental Requests | Parties to cooperate with and respond to governmental requests for information | No requests received to date. Obligation remains in effect.
§5.4(c) — Reasonable Best Efforts | Buyer to use "reasonable best efforts" to obtain HSR clearance; no obligation to accept divestitures, hold-separate orders, or behavioral remedies | No efforts beyond the voluntary submission have been required. Standard monitored.
§6.1(c) — Condition to Closing | Closing conditioned upon expiration or early termination of HSR waiting period | Not yet satisfied. Waiting period remains pending; expected to expire or be terminated prior to March 17, 2024.
§7.1(b)(ii) — Termination Right | Either party may terminate EPA if HSR clearance not obtained by Outside Date (June 30, 2024) | Not triggered. Substantial time remains before the Outside Date.
§7.3(b) — Reverse Termination Fee | Buyer to pay reverse termination fee of $28.56 million ($952M × 3.0%) if Transaction fails due to antitrust regulatory block | Not triggered. No indication that antitrust regulatory block will occur.
Name | Role | Address | Telephone | Hourly Rate
Howard Bellamy | Responsible Partner | 600 Lexington Avenue, New York, NY 10022 | (212) 558-4112 | $1,650/hr
Monica Reyes | Lead Associate | 600 Lexington Avenue, New York, NY 10022 | (212) 558-4287 | $875/hr
Elliot Nguyen | Working Associate | 600 Lexington Avenue, New York, NY 10022 | (212) 558-4359 | $725/hr

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