1001-00001 · Ardent Capital Partners · Client Updates

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PRIVILEGED & CONFIDENTIAL — ATTORNEY-CLIENT COMMUNICATION

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

Fax: (212) 558-3588

www.calderwoodharkness.com

March 14, 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 #2 — HSR Filing & Antitrust Workstream — Acquisition of Pinnacle Health Systems, Inc. by Ardent Capital Partners III LP

Matter No.: 1001-00001

Dear Julian and Priya:

We are pleased to submit this second bi-weekly status report covering the antitrust and HSR workstream in connection with the proposed acquisition of Pinnacle Health Systems, Inc. ("Pinnacle" or the "Target") by Ardent Capital Partners III LP (the "Acquirer" or "Fund III"), pursuant to the Equity Purchase Agreement dated February 2, 2024 (the "EPA"). This report covers the period from March 1, 2024 through March 14, 2024.

1. Executive Summary

This report is the second in a series of bi-weekly status reports being furnished to Ardent Capital Management LLC ("Ardent") to keep the deal team apprised of all developments in the HSR filing and antitrust workstream. We are pleased to report highly favorable developments since the issuance of our first bi-weekly report dated February 29, 2024.

The principal headline of this reporting period is that early termination of the HSR Act waiting period was granted by the Federal Trade Commission ("FTC") on March 8, 2024. Early Termination Notice No. 20240683 was published in the Federal Register on March 12, 2024, confirming the FTC's decision. No Second Request for additional information or documentary material pursuant to 15 U.S.C. § 18a(e)(1)(A) was issued at any point during the waiting period.

As a consequence of the grant of early termination, the antitrust closing condition set forth in Section 6.1(c) of the EPA — which conditions the obligations of both parties to close upon the expiration or early termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act") — has been fully and unconditionally satisfied.

With the satisfaction of Section 6.1(c), the antitrust workstream is substantially complete. The sole remaining deliverable within our scope of engagement is the preparation of the HSR clearance certificate for execution by Julian Desmond, which will be delivered as part of the closing deliverables package. We anticipate minimal additional activity on this matter between now and the transaction closing, which, per the current timeline communicated by Whitfield & Crane LLP, is expected to occur on or before June 30, 2024 (the EPA outside date).

2. HSR Waiting Period — Status Update

As reported in our first bi-weekly status report, the HSR Notification and Report Forms for both the acquiring person (Ardent Capital Partners III LP) and the acquired person (Pinnacle Health Systems, Inc.) were filed simultaneously with the FTC and the Antitrust Division of the United States Department of Justice ("DOJ") on February 16, 2024. The FTC assigned Transaction Number 20241487 to the filing. The filing fee of $280,000, reflecting the applicable tier for the reported transaction value, was remitted concurrently via wire transfer to the FTC.

Under the HSR Act's standard 30-day waiting period, the initial waiting period was set to expire at 11:59 p.m. Eastern Time on March 17, 2024 (the thirtieth day following the date on which both persons' filings were accepted). However, nine days prior to the expiration of the initial waiting period, on March 8, 2024, the FTC granted early termination of the waiting period. The grant of early termination was reflected in Early Termination Notice No. 20240683.

The FTC published the early termination notice in the Federal Register on March 12, 2024, in the routine batch publication of early termination grants. We have obtained and retained for our files the published notice, and a copy has been transmitted to David Ostrander at Whitfield & Crane LLP for inclusion in the transaction closing files.

We confirm that at no point during the waiting period did the FTC or the DOJ issue a Second Request for additional information or documentary material. As a procedural matter, the DOJ Antitrust Division had cleared the transaction to the FTC pursuant to the interagency clearance process that governs the allocation of merger review responsibilities between the two agencies. Accordingly, no separate DOJ action was required or anticipated, and the DOJ took no independent action with respect to this transaction.

The grant of early termination is a final agency action and is not subject to any further review period, appeal, or reconsideration. The parties are now free to consummate the transaction at any time, subject to the satisfaction or waiver of all other conditions precedent to closing as set forth in Article VI of the EPA.

3. FTC Staff Communications

As discussed in our first bi-weekly status report, in conjunction with the filing of the HSR Notification Forms on February 16, 2024, we submitted on a voluntary basis a comprehensive white paper (the "Voluntary Submission") to the FTC Bureau of Competition providing a detailed competitive analysis of the proposed transaction. The Voluntary Submission addressed the relevant product markets, relevant geographic markets, competitive conditions, the absence of horizontal overlaps, and the competitively insignificant nature of any vertical relationships. The purpose of the Voluntary Submission was to facilitate an efficient staff review and to reduce the likelihood of a Second Request.

We can now confirm that the Voluntary Submission achieved its intended purpose. During the entire pendency of the HSR waiting period — from the filing date of February 16, 2024 through the grant of early termination on March 8, 2024 — we received no substantive questions, requests for additional information, or informal inquiries from FTC staff. The staff attorney assigned to the transaction was Sarah Whitman, Attorney, Bureau of Competition, Mergers IV Division. Ms. Whitman's contact information was provided to us through the standard FTC acknowledgment process.

On February 20, 2024, my colleague Howard Bellamy sent an email to Ms. Whitman affirmatively offering our availability to discuss the transaction, answer any questions, or provide supplemental materials at the staff's convenience. That email did not result in any follow-up inquiries from the FTC. No telephone calls, emails, or other communications of any nature were received from Ms. Whitman or any other member of the FTC staff during the review period.

The absence of FTC engagement throughout the waiting period is entirely consistent with, and confirmatory of, the low antitrust risk profile of the transaction as we anticipated in our preliminary antitrust risk assessment dated February 5, 2024. In that assessment, we assigned the transaction an overall risk rating of "Low" based on the absence of horizontal overlaps, the limited and competitively insignificant nature of vertical relationships, and the fragmented competitive landscape in each relevant geographic market. The smooth passage through the HSR review process without any staff inquiries validates that assessment.

4. Satisfaction of EPA Regulatory Closing Condition

Section 6.1(c) of the EPA provides, in relevant part, that the obligation of each of the Acquirer and the Target to consummate the transactions contemplated by the EPA is subject to the satisfaction (or waiver by mutual written consent) of the following condition:

"All waiting periods (and any extensions thereof) applicable to the consummation of the Transactions under the HSR Act shall have expired or been terminated, and no Governmental Authority shall have enacted, issued, promulgated, enforced, or entered any Law or Governmental Order that is then in effect and that enjoins, restrains, conditions, makes illegal, or otherwise prohibits consummation of the Transactions."

With the grant of early termination on March 8, 2024, the first clause of this condition — the expiration or termination of the HSR waiting period — has been fully and unconditionally satisfied. We are not aware of, and have no reason to anticipate, any Law or Governmental Order that would enjoin, restrain, condition, make illegal, or otherwise prohibit consummation of the Transactions. Accordingly, the condition set forth in Section 6.1(c) of the EPA has been satisfied in its entirety.

We took the following actions to memorialize the satisfaction of this condition and to notify the relevant parties:

(a) On March 8, 2024, immediately upon receipt of confirmation of the grant of early termination, an email notification was sent by Howard Bellamy to David Ostrander at Whitfield & Crane LLP, the Acquirer's transaction counsel, advising of the HSR clearance and confirming satisfaction of Section 6.1(c).

(b) On March 11, 2024, a formal letter was sent by Calderwood & Harkness LLP to Catherine "Kate" Yardley at Fendowell Thornton LLP, the Target's transaction counsel, confirming that the HSR waiting period had been terminated early, referencing Early Termination Notice No. 20240683, and confirming the satisfaction of the mutual closing condition set forth in Section 6.1(c) of the EPA.

As a consequence of the timely grant of early termination, the EPA outside date of June 30, 2024 (the "Outside Date"), as set forth in Section 7.1(b) of the EPA, is no longer implicated with respect to antitrust clearance. The antitrust clearance was obtained approximately three months and twenty-two days in advance of the Outside Date, providing the transaction parties with ample flexibility to complete the remaining closing conditions and deliverables without time pressure attributable to the antitrust workstream.

Additionally, we note that the reverse termination fee of $28,560,000 payable by the Acquirer pursuant to Section 7.3(b) of the EPA — which would have been triggered in the event that the EPA was terminated due to the failure to obtain antitrust regulatory clearance by the Outside Date, or due to an antitrust-related Legal Restraint preventing consummation — will not be triggered. This contingent liability has been effectively eliminated as a result of the favorable HSR outcome.

5. Summary of Antitrust Analysis — Key Conclusions Reconfirmed

The grant of early termination confirms and validates the key substantive conclusions of our antitrust analysis as set forth in the Voluntary Submission, the preliminary antitrust risk assessment, and our prior reports. For completeness, we briefly restate the principal conclusions below:

5.1 No Horizontal Overlaps. The proposed acquisition does not give rise to any horizontal overlaps in any relevant product market across any of the nine relevant geographic markets analyzed. The relevant product markets identified in our analysis were: (i) ambulatory surgical center ("ASC") services; and (ii) physician practice management ("PPM") services. The relevant geographic markets, each defined by reference to the applicable Metropolitan Statistical Area ("MSA"), were:

1. Charlotte-Concord-Gastonia, NC-SC MSA

2. Raleigh-Cary, NC MSA

3. Richmond, VA MSA

4. Nashville-Davidson-Murfreesboro-Franklin, TN MSA

5. Atlanta-Sandy Springs-Alpharetta, GA MSA

6. Tampa-St. Petersburg-Clearwater, FL MSA

7. Birmingham-Hoover, AL MSA

8. Columbus, OH MSA

9. Dallas-Fort Worth-Arlington, TX MSA

Ardent Capital does not currently own, operate, or hold a controlling interest in any ambulatory surgical center or physician practice management platform in any of the foregoing geographic markets. Accordingly, the transaction is a pure financial acquisition that does not combine competing operations.

5.2 Existing Portfolio Company Analysis. Ardent Capital's existing portfolio companies within the healthcare sector — specifically, Marlowe Asset Management Rehabilitation Holdings LLC ("Marlowe Asset Management") and Clearpath Diagnostics Inc. ("Clearpath") — operate in separate product markets and/or separate geographic markets from Pinnacle, as follows:

(a) Marlowe Asset Management Rehabilitation Holdings LLC. Marlowe Asset Management operates 74 outpatient physical therapy clinics located in Texas, Florida, and Georgia. Outpatient physical therapy services constitute a distinct product market from ambulatory surgical center services and physician practice management services. Although there is geographic overlap between certain Marlowe Asset Management clinic locations and certain Pinnacle ASC locations in the Texas, Florida, and Georgia MSAs, the absence of product market overlap means that the transaction does not create any horizontal competitive concern.

(b) Clearpath Diagnostics Inc. Clearpath provides clinical laboratory services in Pennsylvania, New Jersey, and New York, with approximately $218 million in annual revenue. Clinical laboratory services constitute a separate product market from ASC services and PPM services. Moreover, Clearpath does not operate in any of the nine geographic markets in which Pinnacle maintains operations. There is, accordingly, neither product market overlap nor geographic overlap between Clearpath and Pinnacle.

5.3 Vertical Relationship Analysis. Our analysis identified a limited vertical relationship consisting of referral patterns between twelve (12) Marlowe Asset Management physical therapy clinics that are co-located with or adjacent to Pinnacle ASCs in the Texas, Florida, and Georgia markets. We analyzed this relationship under the FTC and DOJ Merger Guidelines and concluded that it is competitively insignificant. The referral volume represents a de minimis share of both Marlowe Asset Management's total patient referrals and Pinnacle's total post-surgical rehabilitation referrals in the affected markets. There is no evidence of exclusionary referral arrangements, and the post-transaction entity would lack both the ability and the incentive to foreclose rival physical therapy providers or rival ASCs from access to patients or referrals.

5.4 HHI and Market Concentration Analysis. Our Herfindahl-Hirschman Index ("HHI") analysis confirmed that the proposed transaction produces no change in post-transaction market concentration in any MSA. By way of example, in the Charlotte-Concord-Gastonia, NC-SC MSA — the geographic market in which Pinnacle holds its largest facility share — the relevant metrics are as follows:

• Pre-transaction HHI: approximately 1,280

• Post-transaction HHI: approximately 1,280

• Delta HHI: zero (0)

• Pinnacle operates 14 of 67 licensed ASCs in the MSA

• Pinnacle's approximate facility share: 20.9%

• Pinnacle's approximate net patient revenue share: 18.3%

The zero delta in HHI is attributable to the fact that Ardent Capital has no existing ASC operations in any of the relevant geographic markets. Under the DOJ/FTC Horizontal Merger Guidelines, transactions resulting in no increase in HHI are presumptively unlikely to enhance market power, regardless of the absolute level of post-transaction concentration. The same zero-delta result obtained in each of the remaining eight MSAs analyzed.

6. Item 4(c)/4(d) Document Production — Status

As part of the HSR filing process, both the acquiring person and the acquired person were required to produce, pursuant to 16 C.F.R. § 803.1, all documents falling within the scope of Items 4(c) and 4(d) of the HSR Notification Form. Item 4(c) requires the production of documents prepared by or for officers or directors that analyze the proposed transaction with respect to competition, competitors, markets, market shares, or potential for sales growth. Item 4(d) requires the production of certain confidential information memoranda, synergy analyses, and similar studies.

The document production for both persons was completed and filed concurrently with the HSR Notification Forms on February 16, 2024, as follows:

(a) Acquiring Person Production. Seven (7) responsive documents were identified, collected, reviewed, and produced on behalf of Ardent Capital Partners III LP. These documents consisted primarily of internal investment committee memoranda and due diligence reports prepared by the Ardent deal team that referenced competitive dynamics in certain geographic markets.

(b) Acquired Person Production. Eleven (11) responsive documents were identified, collected, reviewed, and produced on behalf of Pinnacle Health Systems, Inc. The identification and collection of these documents was coordinated by Calderwood & Harkness with Jonathan Felder at Greenvale Durneval LLP, Pinnacle's regular outside counsel, who facilitated access to Pinnacle's document management systems and assisted in confirming the completeness of the search.

Both productions were made in full compliance with the FTC's specifications for document format, Bates numbering, and electronic submission protocols. No supplemental document requests were received from the FTC at any point during the waiting period, confirming that the staff considered the initial productions to be complete and sufficient for their review. Additionally, no privilege log disputes arose during the production process; no documents were withheld on the basis of attorney-client privilege, attorney work product, or any other applicable privilege.

7. Pending Deliverables and Next Steps

Although the antitrust workstream is now substantially complete, a limited number of deliverables and activities remain within the scope of our engagement. These are summarized below.

7.1 HSR Clearance Certificate

Calderwood & Harkness will prepare an officer's certificate (the "HSR Clearance Certificate") certifying that the HSR Act waiting period applicable to the transactions contemplated by the EPA has been terminated early and that the condition set forth in Section 6.1(c) of the EPA has been satisfied. The HSR Clearance Certificate will be prepared for execution by Julian Desmond in his capacity on behalf of Ardent Capital Management LLC, acting as general partner of Ardent Capital GP III LLC, which in turn serves as general partner of the Acquirer, Ardent Capital Partners III LP.

The HSR Clearance Certificate will reference Early Termination Notice No. 20240683 dated March 8, 2024 and will confirm satisfaction of EPA Section 6.1(c). A draft of the certificate will be circulated to Julian Desmond and David Ostrander for review in advance of the anticipated closing date.

The HSR Clearance Certificate is to be delivered as a closing deliverable pursuant to EPA Section 6.2 (Conditions to the Obligations of the Seller). Per the current transaction timeline communicated by Whitfield & Crane LLP, the expected closing date is on or before June 30, 2024, the Outside Date set forth in Section 7.1(b) of the EPA. We will coordinate with David Ostrander's team on the timing for circulation of the draft certificate and execution logistics.

7.2 Continued Availability Through Closing

Calderwood & Harkness will remain available to Ardent Capital through the closing of the transaction for any follow-up matters that may arise within the scope of our antitrust engagement, including but not limited to:

(a) Responding to any post-filing FTC inquiries or investigations, although we do not anticipate any such inquiries in light of the grant of early termination and the absence of any staff engagement during the waiting period;

(b) Advising on any state-level antitrust or regulatory issues that may emerge between now and closing, including any inquiries from state attorneys general or state antitrust enforcement authorities; and

(c) Coordinating with Whitfield & Crane LLP (David Ostrander) as needed in connection with closing mechanics, including the delivery of the HSR Clearance Certificate and any other antitrust-related closing deliverables.

7.3 Matter Closing

Upon the consummation of the closing, Calderwood & Harkness will take the following administrative steps to formally conclude the engagement:

(a) Prepare and deliver a closing memorandum summarizing the entire antitrust workstream from engagement through closing, including a chronology of key events, a summary of substantive analysis, and copies of all material correspondence and filings;

(b) Transmit the final invoice for professional services rendered in connection with Matter No. 1001-00001; and

(c) Formally close Matter No. 1001-00001 in Calderwood & Harkness's matter management system and arrange for the archival of all matter files in accordance with the firm's document retention policies.

8. Fee and Billing Update

As set forth in the engagement letter between Calderwood & Harkness LLP and Ardent Capital Management LLC dated January 29, 2024, the firm's professional services in connection with this matter are billed on an hourly basis at the following standard rates for the professionals assigned to this engagement:

We note that activity levels on the antitrust workstream have decreased significantly following the grant of early termination on March 8, 2024. The principal remaining billable activity is expected to consist of the preparation and finalization of the HSR Clearance Certificate and any ad hoc advisory work that may arise between now and closing. We anticipate that the total remaining fees for this engagement will be modest relative to the pre-filing and filing phases.

A detailed invoice covering professional services rendered through March 14, 2024 will follow under separate cover in accordance with the billing cycle established in the engagement letter. As always, we are happy to discuss any questions regarding fees, billing, or the scope of the engagement at your convenience.

We are very pleased with the outcome of the HSR review process and the efficient clearance of the antitrust workstream. The grant of early termination without any Second Request or staff engagement represents an optimal result for Ardent Capital and removes a significant contingency from the transaction timeline. We look forward to continuing to support the deal team through closing.

Please do not hesitate to contact me or any member of the Calderwood & Harkness team with questions regarding this report or any aspect of the antitrust workstream.

Very truly yours,

CALDERWOOD & HARKNESS LLP

By: ________

Howard Bellamy Partner, Antitrust & Competition Practice Group 600 Lexington Avenue New York, NY 10022 Tel: (212) 558-4127

Email: hbellamy@calderwoodharkness.com

cc: (via email)

Monica Reyes, Senior Associate, Calderwood & Harkness LLP Elliot Nguyen, Associate, Calderwood & Harkness LLP David Ostrander, Partner, Whitfield & Crane LLP

PRIVILEGED & CONFIDENTIAL — ATTORNEY-CLIENT COMMUNICATION This document and all attachments hereto are protected by the attorney-client privilege and/or the work product doctrine. This communication is intended solely for the use of the individual(s) to whom it is addressed. Any unauthorized review, use, disclosure, or distribution is strictly prohibited. If you have received this communication in error, please notify the sender immediately and destroy all copies of the original message.

Professional	Title	Hourly Rate
Howard Bellamy	Partner, Antitrust & Competition Practice Group	$1,650/hr
Monica Reyes	Senior Associate, Antitrust & Competition Practice Group	$875/hr
Elliot Nguyen	Associate, Antitrust & Competition Practice Group	$725/hr

PRIVILEGED & CONFIDENTIAL — ATTORNEY-CLIENT COMMUNICATION
CALDERWOOD & HARKNESS LLP Counselors at Law 600 Lexington Avenue New York, NY 10022 Tel: (212) 558-4000
Fax: (212) 558-3588
www.calderwoodharkness.com
March 14, 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 #2 — HSR Filing & Antitrust Workstream — Acquisition of Pinnacle Health Systems, Inc. by Ardent Capital Partners III LP
Matter No.: 1001-00001
Dear Julian and Priya:
We are pleased to submit this second bi-weekly status report covering the antitrust and HSR workstream in connection with the proposed acquisition of Pinnacle Health Systems, Inc. ("Pinnacle" or the "Target") by Ardent Capital Partners III LP (the "Acquirer" or "Fund III"), pursuant to the Equity Purchase Agreement dated February 2, 2024 (the "EPA"). This report covers the period from March 1, 2024 through March 14, 2024.
1. Executive Summary
This report is the second in a series of bi-weekly status reports being furnished to Ardent Capital Management LLC ("Ardent") to keep the deal team apprised of all developments in the HSR filing and antitrust workstream. We are pleased to report highly favorable developments since the issuance of our first bi-weekly report dated February 29, 2024.
The principal headline of this reporting period is that early termination of the HSR Act waiting period was granted by the Federal Trade Commission ("FTC") on March 8, 2024. Early Termination Notice No. 20240683 was published in the Federal Register on March 12, 2024, confirming the FTC's decision. No Second Request for additional information or documentary material pursuant to 15 U.S.C. § 18a(e)(1)(A) was issued at any point during the waiting period.
As a consequence of the grant of early termination, the antitrust closing condition set forth in Section 6.1(c) of the EPA — which conditions the obligations of both parties to close upon the expiration or early termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act") — has been fully and unconditionally satisfied.
With the satisfaction of Section 6.1(c), the antitrust workstream is substantially complete. The sole remaining deliverable within our scope of engagement is the preparation of the HSR clearance certificate for execution by Julian Desmond, which will be delivered as part of the closing deliverables package. We anticipate minimal additional activity on this matter between now and the transaction closing, which, per the current timeline communicated by Whitfield & Crane LLP, is expected to occur on or before June 30, 2024 (the EPA outside date).
2. HSR Waiting Period — Status Update
As reported in our first bi-weekly status report, the HSR Notification and Report Forms for both the acquiring person (Ardent Capital Partners III LP) and the acquired person (Pinnacle Health Systems, Inc.) were filed simultaneously with the FTC and the Antitrust Division of the United States Department of Justice ("DOJ") on February 16, 2024. The FTC assigned Transaction Number 20241487 to the filing. The filing fee of $280,000, reflecting the applicable tier for the reported transaction value, was remitted concurrently via wire transfer to the FTC.
Under the HSR Act's standard 30-day waiting period, the initial waiting period was set to expire at 11:59 p.m. Eastern Time on March 17, 2024 (the thirtieth day following the date on which both persons' filings were accepted). However, nine days prior to the expiration of the initial waiting period, on March 8, 2024, the FTC granted early termination of the waiting period. The grant of early termination was reflected in Early Termination Notice No. 20240683.
The FTC published the early termination notice in the Federal Register on March 12, 2024, in the routine batch publication of early termination grants. We have obtained and retained for our files the published notice, and a copy has been transmitted to David Ostrander at Whitfield & Crane LLP for inclusion in the transaction closing files.
We confirm that at no point during the waiting period did the FTC or the DOJ issue a Second Request for additional information or documentary material. As a procedural matter, the DOJ Antitrust Division had cleared the transaction to the FTC pursuant to the interagency clearance process that governs the allocation of merger review responsibilities between the two agencies. Accordingly, no separate DOJ action was required or anticipated, and the DOJ took no independent action with respect to this transaction.
The grant of early termination is a final agency action and is not subject to any further review period, appeal, or reconsideration. The parties are now free to consummate the transaction at any time, subject to the satisfaction or waiver of all other conditions precedent to closing as set forth in Article VI of the EPA.
3. FTC Staff Communications
As discussed in our first bi-weekly status report, in conjunction with the filing of the HSR Notification Forms on February 16, 2024, we submitted on a voluntary basis a comprehensive white paper (the "Voluntary Submission") to the FTC Bureau of Competition providing a detailed competitive analysis of the proposed transaction. The Voluntary Submission addressed the relevant product markets, relevant geographic markets, competitive conditions, the absence of horizontal overlaps, and the competitively insignificant nature of any vertical relationships. The purpose of the Voluntary Submission was to facilitate an efficient staff review and to reduce the likelihood of a Second Request.
We can now confirm that the Voluntary Submission achieved its intended purpose. During the entire pendency of the HSR waiting period — from the filing date of February 16, 2024 through the grant of early termination on March 8, 2024 — we received no substantive questions, requests for additional information, or informal inquiries from FTC staff. The staff attorney assigned to the transaction was Sarah Whitman, Attorney, Bureau of Competition, Mergers IV Division. Ms. Whitman's contact information was provided to us through the standard FTC acknowledgment process.
On February 20, 2024, my colleague Howard Bellamy sent an email to Ms. Whitman affirmatively offering our availability to discuss the transaction, answer any questions, or provide supplemental materials at the staff's convenience. That email did not result in any follow-up inquiries from the FTC. No telephone calls, emails, or other communications of any nature were received from Ms. Whitman or any other member of the FTC staff during the review period.
The absence of FTC engagement throughout the waiting period is entirely consistent with, and confirmatory of, the low antitrust risk profile of the transaction as we anticipated in our preliminary antitrust risk assessment dated February 5, 2024. In that assessment, we assigned the transaction an overall risk rating of "Low" based on the absence of horizontal overlaps, the limited and competitively insignificant nature of vertical relationships, and the fragmented competitive landscape in each relevant geographic market. The smooth passage through the HSR review process without any staff inquiries validates that assessment.
4. Satisfaction of EPA Regulatory Closing Condition
Section 6.1(c) of the EPA provides, in relevant part, that the obligation of each of the Acquirer and the Target to consummate the transactions contemplated by the EPA is subject to the satisfaction (or waiver by mutual written consent) of the following condition:
"All waiting periods (and any extensions thereof) applicable to the consummation of the Transactions under the HSR Act shall have expired or been terminated, and no Governmental Authority shall have enacted, issued, promulgated, enforced, or entered any Law or Governmental Order that is then in effect and that enjoins, restrains, conditions, makes illegal, or otherwise prohibits consummation of the Transactions."
With the grant of early termination on March 8, 2024, the first clause of this condition — the expiration or termination of the HSR waiting period — has been fully and unconditionally satisfied. We are not aware of, and have no reason to anticipate, any Law or Governmental Order that would enjoin, restrain, condition, make illegal, or otherwise prohibit consummation of the Transactions. Accordingly, the condition set forth in Section 6.1(c) of the EPA has been satisfied in its entirety.
We took the following actions to memorialize the satisfaction of this condition and to notify the relevant parties:
(a) On March 8, 2024, immediately upon receipt of confirmation of the grant of early termination, an email notification was sent by Howard Bellamy to David Ostrander at Whitfield & Crane LLP, the Acquirer's transaction counsel, advising of the HSR clearance and confirming satisfaction of Section 6.1(c).
(b) On March 11, 2024, a formal letter was sent by Calderwood & Harkness LLP to Catherine "Kate" Yardley at Fendowell Thornton LLP, the Target's transaction counsel, confirming that the HSR waiting period had been terminated early, referencing Early Termination Notice No. 20240683, and confirming the satisfaction of the mutual closing condition set forth in Section 6.1(c) of the EPA.
As a consequence of the timely grant of early termination, the EPA outside date of June 30, 2024 (the "Outside Date"), as set forth in Section 7.1(b) of the EPA, is no longer implicated with respect to antitrust clearance. The antitrust clearance was obtained approximately three months and twenty-two days in advance of the Outside Date, providing the transaction parties with ample flexibility to complete the remaining closing conditions and deliverables without time pressure attributable to the antitrust workstream.
Additionally, we note that the reverse termination fee of $28,560,000 payable by the Acquirer pursuant to Section 7.3(b) of the EPA — which would have been triggered in the event that the EPA was terminated due to the failure to obtain antitrust regulatory clearance by the Outside Date, or due to an antitrust-related Legal Restraint preventing consummation — will not be triggered. This contingent liability has been effectively eliminated as a result of the favorable HSR outcome.
5. Summary of Antitrust Analysis — Key Conclusions Reconfirmed
The grant of early termination confirms and validates the key substantive conclusions of our antitrust analysis as set forth in the Voluntary Submission, the preliminary antitrust risk assessment, and our prior reports. For completeness, we briefly restate the principal conclusions below:
5.1 No Horizontal Overlaps. The proposed acquisition does not give rise to any horizontal overlaps in any relevant product market across any of the nine relevant geographic markets analyzed. The relevant product markets identified in our analysis were: (i) ambulatory surgical center ("ASC") services; and (ii) physician practice management ("PPM") services. The relevant geographic markets, each defined by reference to the applicable Metropolitan Statistical Area ("MSA"), were:
1. Charlotte-Concord-Gastonia, NC-SC MSA
2. Raleigh-Cary, NC MSA
3. Richmond, VA MSA
4. Nashville-Davidson-Murfreesboro-Franklin, TN MSA
5. Atlanta-Sandy Springs-Alpharetta, GA MSA
6. Tampa-St. Petersburg-Clearwater, FL MSA
7. Birmingham-Hoover, AL MSA
8. Columbus, OH MSA
9. Dallas-Fort Worth-Arlington, TX MSA
Ardent Capital does not currently own, operate, or hold a controlling interest in any ambulatory surgical center or physician practice management platform in any of the foregoing geographic markets. Accordingly, the transaction is a pure financial acquisition that does not combine competing operations.
5.2 Existing Portfolio Company Analysis. Ardent Capital's existing portfolio companies within the healthcare sector — specifically, Marlowe Asset Management Rehabilitation Holdings LLC ("Marlowe Asset Management") and Clearpath Diagnostics Inc. ("Clearpath") — operate in separate product markets and/or separate geographic markets from Pinnacle, as follows:
(a) Marlowe Asset Management Rehabilitation Holdings LLC. Marlowe Asset Management operates 74 outpatient physical therapy clinics located in Texas, Florida, and Georgia. Outpatient physical therapy services constitute a distinct product market from ambulatory surgical center services and physician practice management services. Although there is geographic overlap between certain Marlowe Asset Management clinic locations and certain Pinnacle ASC locations in the Texas, Florida, and Georgia MSAs, the absence of product market overlap means that the transaction does not create any horizontal competitive concern.
(b) Clearpath Diagnostics Inc. Clearpath provides clinical laboratory services in Pennsylvania, New Jersey, and New York, with approximately $218 million in annual revenue. Clinical laboratory services constitute a separate product market from ASC services and PPM services. Moreover, Clearpath does not operate in any of the nine geographic markets in which Pinnacle maintains operations. There is, accordingly, neither product market overlap nor geographic overlap between Clearpath and Pinnacle.
5.3 Vertical Relationship Analysis. Our analysis identified a limited vertical relationship consisting of referral patterns between twelve (12) Marlowe Asset Management physical therapy clinics that are co-located with or adjacent to Pinnacle ASCs in the Texas, Florida, and Georgia markets. We analyzed this relationship under the FTC and DOJ Merger Guidelines and concluded that it is competitively insignificant. The referral volume represents a de minimis share of both Marlowe Asset Management's total patient referrals and Pinnacle's total post-surgical rehabilitation referrals in the affected markets. There is no evidence of exclusionary referral arrangements, and the post-transaction entity would lack both the ability and the incentive to foreclose rival physical therapy providers or rival ASCs from access to patients or referrals.
5.4 HHI and Market Concentration Analysis. Our Herfindahl-Hirschman Index ("HHI") analysis confirmed that the proposed transaction produces no change in post-transaction market concentration in any MSA. By way of example, in the Charlotte-Concord-Gastonia, NC-SC MSA — the geographic market in which Pinnacle holds its largest facility share — the relevant metrics are as follows:
• Pre-transaction HHI: approximately 1,280
• Post-transaction HHI: approximately 1,280
• Delta HHI: zero (0)
• Pinnacle operates 14 of 67 licensed ASCs in the MSA
• Pinnacle's approximate facility share: 20.9%
• Pinnacle's approximate net patient revenue share: 18.3%
The zero delta in HHI is attributable to the fact that Ardent Capital has no existing ASC operations in any of the relevant geographic markets. Under the DOJ/FTC Horizontal Merger Guidelines, transactions resulting in no increase in HHI are presumptively unlikely to enhance market power, regardless of the absolute level of post-transaction concentration. The same zero-delta result obtained in each of the remaining eight MSAs analyzed.
6. Item 4(c)/4(d) Document Production — Status
As part of the HSR filing process, both the acquiring person and the acquired person were required to produce, pursuant to 16 C.F.R. § 803.1, all documents falling within the scope of Items 4(c) and 4(d) of the HSR Notification Form. Item 4(c) requires the production of documents prepared by or for officers or directors that analyze the proposed transaction with respect to competition, competitors, markets, market shares, or potential for sales growth. Item 4(d) requires the production of certain confidential information memoranda, synergy analyses, and similar studies.
The document production for both persons was completed and filed concurrently with the HSR Notification Forms on February 16, 2024, as follows:
(a) Acquiring Person Production. Seven (7) responsive documents were identified, collected, reviewed, and produced on behalf of Ardent Capital Partners III LP. These documents consisted primarily of internal investment committee memoranda and due diligence reports prepared by the Ardent deal team that referenced competitive dynamics in certain geographic markets.
(b) Acquired Person Production. Eleven (11) responsive documents were identified, collected, reviewed, and produced on behalf of Pinnacle Health Systems, Inc. The identification and collection of these documents was coordinated by Calderwood & Harkness with Jonathan Felder at Greenvale Durneval LLP, Pinnacle's regular outside counsel, who facilitated access to Pinnacle's document management systems and assisted in confirming the completeness of the search.
Both productions were made in full compliance with the FTC's specifications for document format, Bates numbering, and electronic submission protocols. No supplemental document requests were received from the FTC at any point during the waiting period, confirming that the staff considered the initial productions to be complete and sufficient for their review. Additionally, no privilege log disputes arose during the production process; no documents were withheld on the basis of attorney-client privilege, attorney work product, or any other applicable privilege.
7. Pending Deliverables and Next Steps
Although the antitrust workstream is now substantially complete, a limited number of deliverables and activities remain within the scope of our engagement. These are summarized below.
7.1 HSR Clearance Certificate
Calderwood & Harkness will prepare an officer's certificate (the "HSR Clearance Certificate") certifying that the HSR Act waiting period applicable to the transactions contemplated by the EPA has been terminated early and that the condition set forth in Section 6.1(c) of the EPA has been satisfied. The HSR Clearance Certificate will be prepared for execution by Julian Desmond in his capacity on behalf of Ardent Capital Management LLC, acting as general partner of Ardent Capital GP III LLC, which in turn serves as general partner of the Acquirer, Ardent Capital Partners III LP.
The HSR Clearance Certificate will reference Early Termination Notice No. 20240683 dated March 8, 2024 and will confirm satisfaction of EPA Section 6.1(c). A draft of the certificate will be circulated to Julian Desmond and David Ostrander for review in advance of the anticipated closing date.
The HSR Clearance Certificate is to be delivered as a closing deliverable pursuant to EPA Section 6.2 (Conditions to the Obligations of the Seller). Per the current transaction timeline communicated by Whitfield & Crane LLP, the expected closing date is on or before June 30, 2024, the Outside Date set forth in Section 7.1(b) of the EPA. We will coordinate with David Ostrander's team on the timing for circulation of the draft certificate and execution logistics.
7.2 Continued Availability Through Closing
Calderwood & Harkness will remain available to Ardent Capital through the closing of the transaction for any follow-up matters that may arise within the scope of our antitrust engagement, including but not limited to:
(a) Responding to any post-filing FTC inquiries or investigations, although we do not anticipate any such inquiries in light of the grant of early termination and the absence of any staff engagement during the waiting period;
(b) Advising on any state-level antitrust or regulatory issues that may emerge between now and closing, including any inquiries from state attorneys general or state antitrust enforcement authorities; and
(c) Coordinating with Whitfield & Crane LLP (David Ostrander) as needed in connection with closing mechanics, including the delivery of the HSR Clearance Certificate and any other antitrust-related closing deliverables.
7.3 Matter Closing
Upon the consummation of the closing, Calderwood & Harkness will take the following administrative steps to formally conclude the engagement:
(a) Prepare and deliver a closing memorandum summarizing the entire antitrust workstream from engagement through closing, including a chronology of key events, a summary of substantive analysis, and copies of all material correspondence and filings;
(b) Transmit the final invoice for professional services rendered in connection with Matter No. 1001-00001; and
(c) Formally close Matter No. 1001-00001 in Calderwood & Harkness's matter management system and arrange for the archival of all matter files in accordance with the firm's document retention policies.
8. Fee and Billing Update
As set forth in the engagement letter between Calderwood & Harkness LLP and Ardent Capital Management LLC dated January 29, 2024, the firm's professional services in connection with this matter are billed on an hourly basis at the following standard rates for the professionals assigned to this engagement:
We note that activity levels on the antitrust workstream have decreased significantly following the grant of early termination on March 8, 2024. The principal remaining billable activity is expected to consist of the preparation and finalization of the HSR Clearance Certificate and any ad hoc advisory work that may arise between now and closing. We anticipate that the total remaining fees for this engagement will be modest relative to the pre-filing and filing phases.
A detailed invoice covering professional services rendered through March 14, 2024 will follow under separate cover in accordance with the billing cycle established in the engagement letter. As always, we are happy to discuss any questions regarding fees, billing, or the scope of the engagement at your convenience.
We are very pleased with the outcome of the HSR review process and the efficient clearance of the antitrust workstream. The grant of early termination without any Second Request or staff engagement represents an optimal result for Ardent Capital and removes a significant contingency from the transaction timeline. We look forward to continuing to support the deal team through closing.
Please do not hesitate to contact me or any member of the Calderwood & Harkness team with questions regarding this report or any aspect of the antitrust workstream.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Howard Bellamy Partner, Antitrust & Competition Practice Group 600 Lexington Avenue New York, NY 10022 Tel: (212) 558-4127
Email: hbellamy@calderwoodharkness.com
cc: (via email)
Monica Reyes, Senior Associate, Calderwood & Harkness LLP Elliot Nguyen, Associate, Calderwood & Harkness LLP David Ostrander, Partner, Whitfield & Crane LLP
PRIVILEGED & CONFIDENTIAL — ATTORNEY-CLIENT COMMUNICATION This document and all attachments hereto are protected by the attorney-client privilege and/or the work product doctrine. This communication is intended solely for the use of the individual(s) to whom it is addressed. Any unauthorized review, use, disclosure, or distribution is strictly prohibited. If you have received this communication in error, please notify the sender immediately and destroy all copies of the original message.
Professional | Title | Hourly Rate
Howard Bellamy | Partner, Antitrust & Competition Practice Group | $1,650/hr
Monica Reyes | Senior Associate, Antitrust & Competition Practice Group | $875/hr
Elliot Nguyen | Associate, Antitrust & Competition Practice Group | $725/hr

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