Ardent Health, Inc 8-K, filed Jan 13, 2025
Ardent Health, Inc. (ARDT)
8-K
2025-01-13
For: 2025-01-13
View Original
Added on
April 12, 2026
About this 8-K
Ardent Health, Inc filed this 8-K on January 13, 2025.
Items reported
- Item 2.02: Financial results
- Item 5.02: Director or officer change, or executive pay
- Item 7.01: Regulation FD disclosure
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________________________________________________
FORM 8-K
_______________________________________________________
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): January 13, 2025
___________________
(Exact Name of Registrant as Specified in its Charter)
___________________
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) | ||||||
| (Address of Principal Executive Offices) | (Zip Code) | |||||||
(615 ) 296-3000
(Registrant’s Telephone Number, including Area Code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
___________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||||
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |||||
Securities registered pursuant to Section 12(b) of the Act:
| Title of each Class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Item 2.02. Results of Operations and Financial Condition.
To the extent applicable, the information set forth in Item 7.01 of this Form 8-K is incorporated herein by reference.
Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Effective January 10, 2025, AHS Management Company, Inc. (the “Employer”), a wholly-owned subsidiary of Ardent Health Partners, Inc. (the “Company”), entered into an amended and restated employment agreement with each of Martin Bonick, the Company’s President and Chief Executive Officer, and Alfred Lumsdaine, the Company’s Executive Vice President, Chief Financial Officer. The general terms of the amended and restated agreements were discussed and considered by the Company’s board of directors (the “Board”) in connection with the Company’s initial public offering and the agreements are intended to reflect terms more consistent with employments agreements for senior executives of a publicly traded company.
Bonick Amended and Restated Employment Agreement
Mr. Bonick’s amended and restated employment agreement became effective on January 10, 2025 and the initial term ends on December 31, 2027, with automatic one-year term renewals unless either party gives timely written notice of non-renewal. Under the terms of the agreement, Mr. Bonick’s base salary is set at $1,076,000, which base salary may be increased to such other amount as approved by the Board from time to time. Under the terms of the agreement, Mr. Bonick is eligible to participate in the Employer’s annual bonus program with a target annual bonus opportunity established by the Board each year during the term of the agreement and is eligible to participate in and receive annual grants under the Ardent Health Partners, Inc. 2024 Omnibus Incentive Award Plan. In addition, pursuant to the terms of the agreement, Mr. Bonick is eligible to participate in any fringe benefit and employee benefit programs available to other similarly situated senior officers of the Employer.
Mr. Bonick is eligible to receive severance benefits pursuant to his employment agreement in the event of his termination of employment under certain circumstances. In the event of a termination of Mr. Bonick’s employment by Mr. Bonick for Good Reason or by the Employer without Cause, Mr. Bonick is entitled to severance benefits equal to two times the sum of (a) the annual salary rate in effect immediately prior to the termination date (or, if a greater amount, immediately prior to the occurrence of a Good Reason event) and (b) the target bonus in effect immediately prior to the termination date (or, if a greater amount, immediately prior to the occurrence of a Good Reason event), regardless of actual achievement. A termination without Cause for these purposes includes non-renewal of the employment agreement by the Employer, and a termination for Good Reason for these purposes includes non-renewal of the employment agreement by Mr. Bonick.
During the period beginning six months prior to a Change in Control and ending 18 months following a Change in Control, in the event of a termination of Mr. Bonick’s employment by Mr. Bonick for Good Reason or by the Employer for any reason (other than for Cause or due to Disability), Mr. Bonick is entitled to severance benefits equal to three times the sum of (a) the annual salary rate in effect immediately prior to the termination date (or, if a greater amount, immediately prior to the occurrence of a Good Reason event) and (b) the target bonus in effect immediately prior to the termination date (or, if a greater amount, immediately prior to the occurrence of a Good Reason event), regardless of actual achievement.
The cash severance payments will be paid in equal installments over the 24-month period (or, in the case of a Change in Control in a lump sum within three business days) following Mr. Bonick’s delivery and non-revocation of a separation and release that has become effective and irrevocable on or before the 60th day following the termination date, subject to acceleration in the event the executive dies post-termination.
In addition to any other required payments, in the event Mr. Bonick’s employment is terminated as a result of a Disability, he is entitled to continued base salary payments during the six-month period following his termination of employment.
Mr. Bonick is bound by a perpetual confidentiality restriction, as well as post-employment non-competition and employee non-solicitation restrictions. The post-employment non-competition and non-solicitation restricted period is the 12-month period following Mr. Bonick’s termination of employment.
Lumsdaine Amended and Restated Employment Agreement
Mr. Lumsdaine’s amended and restated employment agreement became effective on January 10, 2025 and the initial term ends on December 31, 2027, with automatic one-year term renewals unless either party gives timely written notice of non-renewal. Under the terms of the agreement, Mr. Lumsdaine’s base salary is set at $628,000, which base salary may be increased to such other amount as approved by the Board from time to time. Under the terms of the agreement, Mr. Lumsdaine is eligible to participate in the Employer’s annual bonus program with a target annual bonus opportunity established by the Board each year during the term of the agreement and is eligible to participate in and receive annual grants under the Ardent Health Partners, Inc. 2024 Omnibus Incentive Award Plan. In addition, pursuant to the terms of the agreement, Mr. Lumsdaine is eligible to participate in any fringe benefit and employee benefit programs available to other similarly situated senior officers of Employer.
Mr. Lumsdaine is eligible to receive severance benefits pursuant to the agreement in the event of his termination of employment under certain circumstances. In the event of a termination of the Mr. Lumsdaine’s employment by Mr. Lumsdaine for Good Reason or by the Employer without Cause, Mr. Lumsdaine is entitled to severance benefits equal to one and one-half times the sum of (a) the annual salary in effect immediately prior to the termination date (or, if a greater amount, immediately prior to the occurrence of the applicable Good Reason event) and (b) the target bonus amount for the year in which the termination occurred (or, if a greater amount, immediately prior to the occurrence of a Good Reason event), regardless of actual achievement. A termination without Cause for these purposes includes non-renewal of the stated term of employment by the Employer, and a termination for Good Reason for these purposes includes non-renewal of the employment agreement by Mr. Lumsdaine.
During the period beginning six months prior to a Change in Control and ending 18 months following a Change in Control, in the event of a termination of Mr. Lumsdaine’s employment by Mr. Lumsdaine for Good Reason or by the Employer for any reason (other than for Cause or due to Disability), Mr. Lumsdaine is entitled to severance benefits equal to two times the sum of (a) the annual salary rate in effect immediately prior to the termination date (or, if a greater amount, immediately prior to the occurrence of a Good Reason event) and (b) the target bonus in effect immediately prior to the termination date (or, if a greater amount, immediately prior to the occurrence of a Good Reason event), regardless of actual achievement.
The cash severance payments will be paid in equal installments over the 18-month period (or, in the case of a Change in Control in a lump sum within three business days) following Mr. Lumsdaine’s delivery and non-revocation of a separation and release that has become effective and irrevocable on or before the 60th day following the termination date, subject to acceleration in the event the executive dies post-termination.
In addition to any other required payments, in the event Mr. Lumsdaine’s employment is terminated as a result of a Disability, he is entitled to continued base salary payments during the six-month period following his termination of employment.
Mr. Lumsdaine is bound by a perpetual confidentiality restriction, as well as post-employment non-competition and employee non-solicitation restrictions. The post-employment non-competition and non-solicitation restricted period is the 12-month period following Mr. Lumsdaine’s termination of employment.
Capitalized terms used in this Form 8-K and not otherwise defined shall have the meaning set forth in the respective employment agreement. These summaries are qualified in their entirety by reference to the full text of the employment agreements, which are attached hereto as Exhibit 10.1 and Exhibit 10.2 and incorporated by reference herein.
Item 7.01. Regulation FD Disclosure.
Members of senior management of the Company are presenting at the 43rd Annual J.P. Morgan Healthcare Conference in San Francisco on January 14, 2025. Materials to be discussed at the conference are included in a slide presentation available on the investor relations section of the Company’s website at ir.ardenthealth.com, a copy of which is furnished as Exhibit 99 to this Form 8-K. A live webcast of the Company’s presentation may also be accessed via the Company’s website.
On November 25, 2024, the Centers for Medicare & Medicaid Services (“CMS”) approved the New Mexico state directed payment program for the period from July 1, 2024 through December 31, 2024. The approval was posted to the CMS website on December 26, 2024. The Company anticipates recording a material financial benefit in its fourth quarter 2024 financial results. However, given the timing of the approval, the Company is still finalizing the benefit and expects to disclose the amount when it reports its fourth quarter 2024 financial results. The Company’s previously-disclosed 2024 financial estimates included in the Company’s presentation do not reflect the impact of any benefit from the New Mexico directed payment program.
As part of its presentation, management intends to offer preliminary 2025 financial commentary, which is summarized in the slide presentation posted to the investor relations section of the Company’s website. The presentation summarizes key tailwinds and headwinds and captures management’s view relative to 2025 analyst consensus estimates. The Company intends to provide formal 2025 guidance in February and management currently expects:
• Revenue growth in the mid-single digits, consistent with the Company’s organic long-term target, plus approximately $200 million of incremental revenue impact from the New Mexico and Oklahoma state directed payment programs; and
• Adjusted EBITDA growth in the mid-single digits, which is slightly below the Company’s organic long-term target, plus approximately $140 million of incremental adjusted EBITDA impact from the New Mexico and Oklahoma state directed payment programs.
This initial outlook reflects management’s intent to establish prudently conservative guidance given the dynamic industry and regulatory environment, and management notes that the Company’s guidance would not include any benefit from potential unannounced mergers and acquisitions. The slide presentation also includes additional information and disclosures regarding the Company’s financial performance, including reconciliations between non-GAAP measures and related GAAP measures. Investors are encouraged to read these detailed financial disclosures and reconciliations.
Estimates for the fiscal year ended December 31, 2024 included in the presentation were previously provided by the Company on November 6, 2024 and are subject to change based on actual fourth quarter results, year-end adjustments in connection with the completion of customary financial closing procedures, including management’s review and finalization of the results for the full year 2024, and audit procedures by the Company’s independent registered public accounting firm, which have not yet been performed. Actual results could differ materially from management’s estimates. Please also refer to the section titled “Risk Factors” in the Company’s final prospectus dated July 17, 2024, filed with the Securities and Exchange Commission (the “SEC”) on July 18, 2024 pursuant to Rule 424(b) under the Securities Act of 1933, as amended (the “Securities Act”), in the Company’s Quarterly Reports on Form 10-Q for the quarters ended June 30, 2024 and September 30, 2024, and discussed from time to time in the Company’s reports filed with the SEC. You are cautioned not to rely on management’s estimates being achieved when making an investment decision in the Company’s securities.
The information in Item 2.02 and Item 7.01 of this Form 8-K and in the accompanying Exhibit 99 is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities under that Section and shall not be deemed to be incorporated by reference into any filing of the Registrant under the Securities Act of 1933, as amended, or the Exchange Act.
Forward Looking Statements
Certain statements contained in this item regarding future operating results or performance or business plans or prospects of
the Company and any other statements not constituting historical fact are “forward-looking statements” subject to the safe harbor created by the Private Securities Litigation Reform Act of 1995. Where possible, the words “anticipates,” “expects,” “intends,” “plans,” “predicts,” “believes,” “seeks,” “estimates,” “could,” “would,” “will,” “may,” “can,” “continue,” “potential,” “should” or the negative of such terms, or other comparable expressions, as they relate to the Company or its management, have been used to identify such forward-looking statements. All forward-looking statements reflect only management’s current beliefs and assumptions with respect to future business plans, prospects, decisions and results, and are based on information currently available to the Company. Accordingly, the statements are subject to significant risks, uncertainties and contingencies, which could cause the Company’s actual operating results, performance or business plans or prospects to differ materially from those expressed in, or implied by, these statements.
Factors that could cause actual results to differ materially from current expectations, such as various factors that may affect the Company’s business or financial results and which, in some instances, are beyond the Company’s control, include, among others: (1) changes in government healthcare programs, including Medicare and Medicaid and supplemental payment programs and state directed payment arrangements; (2) reduction in the reimbursement rates paid by commercial payors, the Company’s inability to retain and negotiate favorable contracts with private third-party payors, or an increasing volume of uninsured or underinsured patients; (3) the highly competitive nature of the healthcare industry; (4) inability to recruit and retain quality physicians, as well as increasing cost to contract with independent hospital-based physicians; (5) increased labor costs resulting from increased competition for staff or a continued or increased shortage of experienced nurses; (6) changes to physician utilization practices and treatment methodologies and third-party payor controls designed to impact delivery of medical services and reduce inpatient services or surgical procedures; (7) continued industry trends toward value-based purchasing, third-party payor consolidation and care coordination among healthcare providers; (8) loss of key personnel, including key members of the Company’s senior management team; (9) the Company’s failure to comply with complex laws and regulations applicable to the healthcare industry or to adjust its operations in response to changing laws and regulations; (10) inability to successfully complete acquisitions or strategic joint ventures (“JVs”) or inability to realize all of the anticipated benefits, including anticipated synergies, of past acquisitions and the risk that transactions may not receive necessary government clearances; (11) failure to maintain existing relationships with JV partners or enter into relationships with additional healthcare system partners; (12) the impact of known and unknown claims brought against our hospitals, physician practices, outpatient facilities or other business operations or against healthcare providers who provide services at the Company’s facilities; (13) the impact of government investigations, claims, audits, and whistleblower and other litigation; (14) the impact of any cybersecurity incidents affecting the Company or any third-party vendor upon which it relies; (15) inability or delay in the Company’s efforts to construct, acquire, sell, renovate or expand its healthcare facilities; (16) the Company’s failure to comply with federal and state laws relating to Medicare and Medicaid enrollment, permit, licensing and accreditation requirements, or the expansion of existing, or the enactment of new, laws or regulations relating to permit, licensing and accreditation requirements; (17) failure to obtain drugs and medical supplies at favorable prices or sufficient volumes; (18) operational, legal and financial risks associated with outsourcing functions to third parties; (19) sensitivity to regulatory, economic and competitive conditions in the states in which the Company’s operations are heavily concentrated; (20) decreased demand for the Company’s services due to factors beyond its control, such as seasonal fluctuations in the severity of critical illnesses, pandemic, epidemic or widespread health crisis; (21) inability to accurately estimate market opportunities and forecast market growth; (22) general economic and business conditions, both nationally and in the regions in which the Company operates; (23) the impact of seasonal or severe weather conditions and climate change; (24) inability to demonstrate meaningful use of Electronic Health Record technology; (25) inability to continually enhance the Company’s hospitals with the most recent technological advances in diagnostic and surgical equipment; (26) effects of current and future health reform initiatives, including the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (collectively, the “Affordable Care Act”), and the potential for changes to the Affordable Care Act, its implementation or its interpretation (including through executive orders and court challenges); (27) legal and regulatory restrictions on certain of the Company’s hospitals that have physician owners; (28) risks related to the master lease agreement that the Company entered into with Ventas, Inc. and its restrictions and limitations on the Company’s business; (29) the impact of the Company’s significant indebtedness, including its ability to comply with certain debt covenants and other significant operating and financial restrictions imposed on the Company by the agreements governing its indebtedness, and the effects that variable interest rates, and general economic factors could have on the Company’s operations, including potential inability to service its indebtedness; (30)
conflicts of interest with certain of the Company’s existing large stockholders; (31) effects of changes in federal tax laws; (32) increased costs as a result of operating as a public company; (33) risks related to maintaining an effective system of internal controls; (34) volatility of the Company’s share price and size of the public market for its common stock; (35) the Company’s guidance differing from actual operating and financial performance; (36) the results of the Company’s efforts to use technology, including artificial intelligence, to drive efficiencies and quality initiatives and enhance patient experience; (37) the impact of recent decisions of the U.S. Supreme Court regarding the actions of federal agencies; and (38) other risk factors described in the Company’s filings with the SEC.
Item 9.01. Financial Statements and Exhibits.
(d)Exhibits:
Exhibit No. | Exhibit Description | ||||
| 10.1 | |||||
| 10.2 | |||||
| 99 | |||||
| 104 | Cover Page Interactive Data File (embedded within the inline XBRL document). | ||||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Dated: January 13, 2025 | ARDENT HEALTH PARTNERS, INC. | ||||||||||
By: | /s/ Stephen C. Petrovich | ||||||||||
Name: | Stephen C. Petrovich | ||||||||||
Title: | Executive Vice President & General Counsel | ||||||||||
Exhibit 10.1
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “Agreement”) is made and entered into by and between AHS Management Company, Inc. (the “Employer”), and Martin Bonick, an individual (“Employee”), and is effective as of the Effective Date (as defined below).
WITNESSETH:
WHEREAS, the Employer and Employee previously entered into that certain Employment Agreement, dated as of August 10, 2020, under which the Employer has employed Employee as its President and Chief Executive Officer (the “Prior Agreement”);
WHEREAS, the Employer desires to enter into this Agreement with Employee, as an amendment and restatement to the Prior Agreement, and to provide him with the benefits set forth herein in recognition of the valuable services he will render to the Employer, and for the purposes evidenced herein;
WHEREAS, Employee is and remains ready and willing to render the services provided for, and on the terms and conditions set forth herein, and he is willing to refrain from activities competitive with the business of the Employer during the term of and after this Agreement on the terms and conditions set forth herein; and
WHEREAS, in serving as an employee of the Employer, Employee will continue to participate in the use and development of confidential proprietary information about the Employer, its customers and suppliers, and the methods used by the Employer and its employees in competition with other companies, as to which the Employer desires to protect fully its rights.
NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements herein set forth, the parties hereto agree as follows:
1.Employment.
(a)The Employer hereby offers to employ Employee and Employee accepts such employment with the Employer during the Term (as defined below) pursuant to the terms and conditions set forth herein. During the Term, Employee will be employed by the Employer as its President and Chief Executive Officer and will hold the same officer title with respect to Ardent Health Partners, Inc. (“Parent”). Employee shall report directly to the Board of Directors of Parent (the “Board”) and shall perform all duties and services incident to such position, and such other similar duties and services as may be prescribed by the governing documents of the Employer or established by the Employer (or an affiliate thereof) from time to time. During his employment hereunder, Employee shall devote his best efforts and attention, on a full-time basis, to the performance of the duties required of him as an employee of the Employer. For purposes of this Agreement, all references to determinations or tasks of the Board shall be deemed to include references to any duly authorized committee thereof, if applicable, and it is understood that such Board or committee shall exclude Employee for purposes of all decisions for which
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Employee’s participation would present a conflict of interest, including matters directly related to Employee’s compensation, benefits or employment.
(b)The Term of this Agreement and Employee’s employment hereunder shall be governed by the provisions of Section 8.
2.Principal Office. Employee’s principal office and normal place of work is located at the Employer’s principal executive offices in the Nashville, Tennessee, metropolitan area.
3.Compensation.
(a)As compensation for services rendered by Employee hereunder, Employee shall receive:
(i)Salary. During the Term, Employee shall be paid an annual salary of $1,076,000, or such other increased salary amount as shall be approved by the Board from time to time, which shall be payable in accordance with regular payroll practices and cycles of the Employer (“Salary”).
(ii)Bonus. During the Term, Employee shall be eligible for an annual cash bonus in an amount to be determined by the Board based on whether certain reasonable objectives established by the Board for each fiscal year as set forth in the Employer’s Incentive Compensation Plan (that shall be established for such year) (the “Plan”) have been met (the “Bonus”). Although the Bonus is discretionary and will vary depending on actual performance, the Board will establish Employee’s target annual Bonus for each year during the Term, which target percentage for the entirety of fiscal year 2024 has been established as 125% of Employee’s annual Salary. Any earned Bonus may be prorated for partial years of service as set forth in the Plan and shall be subject to any maximum payout limitations as set forth in the Plan or otherwise approved by the Board each year. Bonuses will be payable by the Employer no later than March 15 of the calendar year following the year with respect to which the Bonus is earned; provided that, except as otherwise provided herein, payment of any earned Bonus shall be subject to Employee’s continued employment through the date such Bonus is paid.
(iii)Expenses. During the Term, the Employer shall reimburse Employee promptly for all reasonable travel, entertainment, parking, business meeting and similar expenditures in pursuance and furtherance of the Employer’s business, in each case, subject to the Employer’s policies applicable to its officers and other key employees generally as in effect from time-to-time, including the requirement to provide reasonable supporting documentation.
(iv)Other Benefits. During the Term, Employee will be eligible to participate in benefit and perquisite plans and programs of the type made available to similarly situated senior officers of the Employer, in accordance with the terms and conditions of such plans and programs in effect from time to time.
(v)Withholdings. All amounts payable to Employee hereunder shall be subject to such deductions or withholdings as are required by law or the policies of the Employer or as may be authorized or directed by Employee pursuant to the permitted practices of the Employer and applicable law. Furthermore, any monies owed to Employee by the Employer may be offset by any monies owed to the Employer by Employee; provided, however, that any offset of amounts considered to be deferred compensation under Section 409A of the Code (as defined below) shall only be offset to the extent consistent with Treas. Reg. Section 1.409A-3(j)(4)(xiii).
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(vi)Equity. During the Term, Employee shall be eligible to participate in and receive annual grants under, the Ardent Health Partners, Inc. 2024 Omnibus Incentive Award Plan, as such plan may be amended and/or restated from time to time or any successor plan thereto (the “LTIP”), on such terms and conditions as are stated therein and any applicable award agreement thereunder.
(b)Benefits Review. Employee’s Salary, target Bonus and benefits payable hereunder will be subject to annual review by the Board, in the good faith determination of the Board. Employee understands and acknowledges that the opportunity of an annual Salary and benefit review by the Board shall not be construed in any manner as an express or implied agreement by the Employer to raise or increase his Salary or benefits. References to the Board for such purposes (i.e., Employee’s Salary, target Bonus and benefits) or similar purposes in this Agreement shall also be deemed to include references to the Compensation Committee of the Board, as and when applicable.
4.Confidential Information and Trade Secrets.
(a)Trade Secrets. Employee recognizes that Employee’s position with the Employer requires considerable responsibility and trust, and, in reliance on Employee’s loyalty, the Employer, the Company (as defined below), and their respective subsidiaries and affiliates (collectively, the “Company Group”) may continue to entrust Employee with highly sensitive confidential, restricted and proprietary information involving Trade Secrets and Confidential Information. For purposes of this Agreement, a “Trade Secret” is any scientific or technical information, design, process, procedure, formula or improvement that is valuable and not generally known to competitors of any member of the Company Group. “Confidential Information” is any data or information, other than Trade Secrets, that is important, competitively sensitive, and not generally known by the public or competitors of any member of the Company Group, including, but not limited to, a Company Group member’s business plan, acquisition targets, training manuals, product development plans, pricing procedures, market strategies, internal performance statistics, financial data, confidential personnel information concerning employees of such member, supplier data, operational or administrative plans, policy manuals, and terms and conditions of contracts and agreements.
(b)Non-Disclosure. Subject to the exceptions set forth in Section 4(c), and except as required to perform Employee’s duties hereunder, Employee will not use or disclose the terms of this Agreement or any Trade Secrets or Confidential Information of the Company Group during employment, or at any time after termination of employment; provided, however, that Employee may disclose the terms of this Agreement and Confidential Information (i) to Employee’s spouse and Employee’s representatives, agents and advisors who are advising Employee with respect to this Agreement, but only for legitimate business purposes related to the negotiation and performance of this Agreement and with a covenant from those persons to keep such information confidential in accordance with this Section 4, or (ii) to the extent that disclosure is required by applicable law or order; provided, further, that as soon as reasonably practicable before such disclosure, Employee gives the Employer prompt written notice of such disclosure to enable the Employer to seek a protective order or otherwise preserve the confidentiality of such information.
(c)Exceptions. Employee acknowledges that, notwithstanding any of the Employer’s policies or agreements that could be read to the contrary, nothing in any agreement or policy prohibits, limits or otherwise restricts Employee or Employee’s counsel from initiating communications directly with, responding to any inquiry from, volunteering information (including Trade Secrets or Confidential Information of the Company Group) to, or providing testimony before, the Securities and Exchange Commission (the “SEC”), the Department of Justice, FINRA, any other self-regulatory organization or any other governmental authority, in
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connection with any reporting of, investigation into, or proceeding regarding suspected violations of law. Employee further acknowledges that Employee is not required to advise or seek permission from the Employer before engaging in any such activity with any such governmental authority, but that, in connection with any such activity, Employee must inform such governmental authority that the information Employee is providing is confidential. The foregoing exception includes cooperating with or reporting legal violations to the SEC and/or its Office of the Whistleblower. None of the Employer, the Company or any of their affiliates may retaliate against Employee for any of these activities, and nothing in this Agreement or otherwise would require Employee to waive any monetary award or other payment to which Employee might become entitled from the SEC or similar governmental authority. Despite the foregoing, Employee is not permitted to reveal to any third-party, including any governmental, law enforcement, or regulatory authority, information Employee came to learn during the course of employment with the Employer that is protected from disclosure by any applicable privilege, including but not limited to the attorney-client privilege or the attorney work product doctrine, and the Employer does not waive any applicable privileges or the right to continue to protect its privileged attorney-client information, attorney work product, and other privileged information. Employee is further advised that U.S. Federal law provides that an individual shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret that is made in (i) confidence to a Federal, State, or local government official (either directly or indirectly) or to an attorney, solely for the purpose of reporting or investigating a suspected violation of law, or (ii) a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.
(d)Material Surrender. Upon termination of Employee’s employment with the Employer, Employee will surrender to the Employer all files, correspondence, memoranda, notes, records, manuals or other documents or data pertaining to the business of the Company Group or Employee’s employment (including all copies thereof) however prepared and whether maintained in paper or electronic format. Employee will also leave with the Employer all materials involving any Trade Secrets or Confidential Information of the Company Group. All such information and materials, whether or not made or developed by Employee, shall be the sole and exclusive property of the Employer, and Employee hereby assigns to the Employer all of Employee’s right, title and interest in and to any and all of such information and materials.
5.Covenants. Employee shall be subject to the following covenants and obligations:
(a)Non-Competition Covenant. While employed by the Employer, Employee shall not compete or plan or prepare to compete with the Company regarding the ownership, investment in, management of or operation of free standing hospitals or a hospital’s affiliated sites of care that are owned, operated or managed by the Company that provide medical-surgical healthcare services. Employee shall not compete with the Company, for a period of twelve (12) months following the termination of his employment in the Metropolitan Service Area for healthcare services for any physical location where the Company provides, manages, or supervises the provision of medical-surgical healthcare services as of the Termination Date (as defined below) in which Employee worked or provided services during Employee’s employment.
(b)Non-Solicitation Covenant. Following the termination of Employee’s employment with the Employer, for a period equal to the term of the non-competition covenant under Section 5(a), Employee shall not directly or indirectly solicit the services of or otherwise induce or attempt to induce any Company Employee to sever his employment relationship with the Company. For purposes of this Section 5(b), “Company Employee” shall mean any employee with whom Employee worked or had contact with during Employee’s employment and who performs or performed (on the Termination Date or within the previous six (6) months of such date) any of his services for the Employer, the Company or any of their respective
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subsidiaries, including any member of the senior management staff of any hospital. Prior to the initiation of any conduct prohibited under this Section 5(b), Employee may request that the Company waive application of this Section 5(b) to said conduct. The granting of such request, however, shall be at the Company’s sole discretion.
(c)Scope and Duration; Severability. The Company, the Employer and Employee understand and agree that the scope and duration of the covenants contained in this Section 5 are reasonable both in time and geographical area and are necessary and fair to protect the business of the Company. Except as otherwise stated herein, such covenants shall survive the termination of Employee’s employment. It is further agreed that such covenants shall be regarded as divisible and shall be operative as to time and geographical area to the extent that they may be made so and, if any part of such covenants are declared invalid or unenforceable, the validity and enforceability of the remainder shall not be affected. If any covenant contained in this Section 5 is determined by an arbitrator to be unenforceable for reasons of overbreadth pursuant to the mandatory arbitration agreement set forth in Section 21, it shall be interpreted to extend only over the maximum period of time, range of activities or geographic area as to which the arbitrator shall determine to be enforceable. In the event the Federal Trade Commission passes a rule or regulation that becomes effective and prohibits any restriction set forth in this Agreement, such prohibited restriction shall be null and void until the time such rule is enjoined or otherwise preempted, overturned, or stayed.
(d)Assignment. Employee agrees that the covenants contained in this Section 5 shall inure to the benefit of any successor or assign of the Company, with the same force and effect as if such covenant had been made by Employee with such successor or assign.
(e)Exclusion. Notwithstanding the provisions of this Section 5, Employee’s non-competition obligations shall not preclude Employee from owning less than one percent (1%) of the voting power or common interest in any publicly traded corporation conducting business activities in the healthcare industry in competition with the Company or any affiliate.
(f)Company. For purposes of Section 4 and this Section 5, “Company” shall mean Parent and all of its directly or indirectly owned subsidiaries.
6.Program Participation. Employee represents that he is, and will for the Term be, eligible to participate in Medicare, Medicaid, CHAMPUS, TriCare, and other federal health programs, and Employee shall not have been sanctioned by any federal or state governmental agency or department and/or listed on the Health and Human Services Office of the Inspector General, Cumulative Sanctions Report, or excluded by the General Services Administration, as set forth on the List of Excluded Providers (see http://oig.hhs.gov/fraud/exclusions.html and http://epls.arnet.gov).
7.Specific Enforcement. Employee specifically acknowledges and agrees that the restrictions set forth in Sections 4 and 5 are reasonable and necessary to protect the legitimate interests of the Employer and that the Employer would not have entered into this Agreement in the absence of such restrictions. Employee further acknowledges and agrees that any violation of the provisions of Sections 4 and 5 will result in irreparable injury to the Employer, that the remedy at law for any violation or threatened violation of such Sections will be inadequate and that in the event of any such breach, the Employer, in addition to any other remedies or damages available to it at law or in equity, shall be entitled to temporary injunctive relief before trial from any court of competent jurisdiction as a matter of course and to permanent injunctive relief without the necessity of proving actual damages or providing notice to the greatest extent permitted by law. The Employer shall also have available all remedies provided under local, state and federal statutes, rules and regulations as well as any and all other remedies as may otherwise be contractually or equitably available. In addition to any other remedy herein granted
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or available to the Employer, either at law or in equity, Employee shall forfeit and forever release any claim or right Employee may have to any benefits remaining under this Agreement from the date Employee breached Sections 4 or 5. Any monetary damages sought by the Employer under this Section 7 shall not include the benefits forfeited under this Section 7.
8.Term. This Agreement and the term of employment thereunder shall continue until terminated in the manner set forth herein (the “Term”). The Term, and Employee’s employment hereunder, shall become effective on January 10, 2025 (the “Effective Date”) and end on December 31, 2027; provided, however, that the Term shall automatically renew for successive one (1)-year annual periods on such ending date and each applicable annual anniversary date thereafter, as applicable, unless written notice of non-renewal is provided by either party hereto no less than ninety (90) days prior to the expiration of the then-applicable Term; provided, further that, notwithstanding the foregoing, the Term and this Agreement may be earlier terminated in accordance with, and subject to the terms and conditions, set forth herein. The date upon which this Agreement and Employee’s employment hereunder shall terminate, whether pursuant to the terms of this Section 8 or pursuant to any other provision of this Agreement shall be referred to herein as the “Termination Date”. Employee agrees to take all actions necessary or deemed advisable by the Employer and the Board to resign from any and all positions with the Company Group effective as of the Termination Date. A non-renewal of the Term by the Employer that results in an actual termination of employment of Employee shall be treated as a termination without Cause (as defined below) by the Employer pursuant to Section 13. Further, a non-renewal of the Term by Employee shall be treated as a termination by Employee without Good Reason (as defined below). Employee’s obligations under Sections 4 and 5 hereof shall survive termination of this Agreement pursuant to non-renewal, and be applicable for the durations contemplated herein regardless of whether such non-renewal or other expiration of the Term is by the Employer or Employee.
9.Definitions. For purposes of the following Sections 10-16 of this Agreement:
(a)The term “Cause” shall mean (a) Employee’s willful refusal to perform, or gross negligence in performing, the reasonable duties of Employee’s office, (b) Employee’s conviction of, or guilty plea to, any crime punishable as a felony, or involving fraud or embezzlement, any crime involving moral turpitude or any crime in connection with the delivery of health care services, (c) Employee’s change in status under Section 6, (d) any act by Employee involving moral turpitude that materially affects the performance of his duties hereunder, (e) Employee’s use of alcohol in violation of the Employer’s policies or illegal use of drugs, (f) Employee’s engagement in fraud, theft, misappropriation or embezzlement with respect to the Employer or any of its affiliates, or (g) Employee’s exclusion from participation in any “federal health care program” as defined in 42 U.S.C. § 1320a-7b(f) (including Medicare, Medicaid, TRICARE and similar or successor programs with or for the benefit of any governmental authority) or other debarment from contracting with any governmental authority. Without limiting the foregoing, Employee’s employment shall be deemed to have been terminated for Cause if, after the Termination Date, facts and circumstances are discovered that the Employer determines would have constituted Cause as of the Termination Date; provided, however, that prior to any such post-termination determination of Cause being finalized, Employee shall be given (i) written notice that the Board intends to apply such post-termination determination of Cause described in this sentence, and (ii) an opportunity, upon election by Employee, to be heard by the Board (alone or represented by counsel) within the fifteen (15) days following receipt of such notice.
(b)The term “Change in Control” shall have the meaning ascribed to such term in the Ardent Health Partners, Inc. 2024 Omnibus Incentive Award Plan as of the Effective Date.
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(c)The term “Disability” shall mean the inability of Employee to perform the duties of his employment due to physical or emotional incapacity or illness (including, without limitation, alcohol or chemical dependency), where such inability has continued or is expected to continue for more than one hundred eighty (180) days in any one (1) year period. In the event of a dispute, the determination of Disability shall be made as follows: the Employer and Employee (or his executor or personal representative, as the case may be) shall each appoint a physician competent in the field of medicine to which such incapacity or illness relates, and the two (2) physicians so selected shall select a third physician who shall be similarly competent. The decision of a majority of such physicians as to the Disability of Employee shall be binding on the parties hereto.
(d)The term “Good Reason” shall mean one or more of the following has occurred: (i) a material reduction in Employee’s base salary, (ii) a material reduction in Employee’s authority, duties or responsibilities, provided, however, that a change in job position (including a change in title) or reporting structure relating to Employee shall not be deemed a “material reduction” unless Employee’s new authority, duties or responsibilities are materially reduced from the prior authority, duties or responsibilities, (iii) a relocation of Employee’s principal place of employment that results in an increase in Employee’s one-way driving distance by more than thirty (30) miles from Employee’s then current principal residence, or (iv) a material breach by the Employer of this Agreement.
10.Termination Upon Death of Employee. In the event Employee dies during the Term, this Agreement shall immediately terminate and neither Employee nor the Employer shall have any further obligations hereunder except for (a) earned but unpaid Salary or properly incurred but unreimbursed substantiated expenses owed at the time of death and any such other payments or benefits as may be required by applicable law (the “Accrued Obligations”), and (b) any Bonus that has been determined and declared earned by the Board but remains unpaid as of the Termination Date (“Earned Bonus”). The Accrued Obligations shall be paid within ninety (90) days of Employee’s death, or such other date as specified by applicable law and the Earned Bonus shall be paid within sixty (60) days after the Termination Date or such earlier date as specified by applicable law or the terms and conditions of such Bonus arrangement.
11.Termination by Employee for Good Reason. Employee may terminate this Agreement and his employment with the Employer for Good Reason if (a) Employee gives written notice to the Board of termination of employment for Good Reason within thirty (30) days of the first occurrence of the event which Employee contends constitutes Good Reason, (b) the Employer has failed to cure the event constituting Good Reason during the thirty (30)-day period commencing on the Board’s receipt of such notice by Employee, and (c) if the Employer has failed to cure such event, Employee has resigned from all positions Employee holds with the Company Group, which resignation must be effective not later than thirty (30) days after the end of the Employer’s cure period. In the event Employee’s employment hereunder is terminated in accordance with this Section 11, the Employer shall pay Employee (i) the Accrued Obligations within ninety (90) days of the Termination Date or such other date as specified by applicable law, and (ii) the severance benefits as set forth in, and subject to the terms and conditions of, Section 16 or Section 17 as the case may be. Employee’s obligations under Sections 4 and 5 hereof shall survive the termination of this Agreement pursuant to this Section 11.
12.Termination by the Employer for Cause. The Employer shall have the right at any time to terminate Employee’s employment for Cause, effective immediately or upon such date as specified by the Employer in its sole discretion. Employee’s obligations under Sections 4 and 5 hereof shall survive in full force and effect the termination of this Agreement pursuant to this Section 12. In the event Employee’s employment hereunder is terminated in accordance with this Section 12, the Employer shall have no further obligation to make any payments to
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Employee hereunder except for the Accrued Obligations, which shall be paid within ninety (90) days of the Termination Date or such other date as specified by applicable law.
13.Termination Without Cause. The Employer shall have the right at any time to terminate Employee’s employment without Cause, effective immediately or upon such date as specified by the Employer in its sole discretion. In the event that Employee is terminated by the Employer without Cause during the Term hereof (which shall not include a termination pursuant to Section 10, 11, 12 or 15), the Employer shall pay to Employee (a) the Accrued Obligations within ninety (90) days of the Termination Date or such other date as specified by applicable law, and (b) the Salary and benefits as set forth in, and subject to the terms and conditions of, Section 16 or Section 17 as the case may be. Employee’s obligations under Sections 4 and 5 hereof shall survive in full force and effect the termination of this Agreement pursuant to this Section 13.
14.Termination Upon Change in Control. If, during the period (a) beginning six (6) months immediately prior to a Change in Control (or, if earlier, upon the execution of a letter of intent or similar agreement relating to a transaction that ultimately results in a Change in Control), and (b) ending eighteen (18) months following such Change in Control, Employee’s employment hereunder shall be terminated (i) by the Employer for any reason (other than for Cause or due to Disability), or (ii) by Employee for Good Reason, then, upon such termination, all compensation and benefits to Employee hereunder shall terminate contemporaneously with the Termination Date, except that Employee shall be entitled to receive the severance benefits set forth in, and subject to the terms and conditions of, Section 17. Employee’s obligations under Sections 4 and 5 hereof shall survive in full force and effect his termination of employment pursuant to this Section 14.
15.Disability of Employee. In the event Employee’s employment with the Employer is terminated by the Employer on account of Employee’s Disability (as hereinafter defined), the Employer shall pay Employee at the rate of Salary Employee was entitled to receive on the payroll date immediately preceding such termination due to Disability on each regular payroll date occurring within the six (6)-month period after his Termination Date. In addition, the Employer will pay Employee all Salary, Bonus, awards and other benefits and reimbursements of expenses incurred or earned but unpaid or unreimbursed before Employee’s Disability within sixty (60) days after the Termination Date or such other date as specified by applicable law or the terms and conditions of such benefit, Bonus, award or other arrangement. During the period in which Employee is entitled to payment under this Section 15, for so long as Employee is physically and mentally able to do so, Employee will furnish information and assistance to the Employer.
16.Severance Amount in the Case of Termination under Sections 11 and 13.
(a)In addition to payment of the Accrued Obligations in accordance with Section 11 or Section 13, as the case may be, subject to Employee’s delivery and non-revocation of a separation and release substantially in the form that applies for the Company’s executive leadership employees that has become effective and irrevocable on or before the sixtieth (60th) day following the Termination Date (the “Release Condition”), Employee shall receive the following as severance benefits under this Section 16:
(i)A series of cash payments equal in the aggregate to two (2) times the sum of (A) the annual Salary in effect for Employee immediately prior to the occurrence of the Termination Date (or, if a greater amount, immediately prior to the occurrence of the applicable Good Reason event described in Section 11); and (B) the target Bonus in effect for Employee immediately prior to the occurrence of the Termination Date (or, if a greater amount, immediately prior to the occurrence of the
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applicable Good Reason event described in Section 11) that would be payable to Employee if such Bonus plan target(s) were achieved for the year in which the Termination Date occurs, regardless of actual achievement;
(ii)Reimbursement of all of Employee’s cost to participate in COBRA health, dental and/or vision continuation coverage for up to eighteen (18) months following the Termination Date, if and to the extent Employee is entitled to and timely elects COBRA continuation coverage under the Employer’s group health plan(s) in which Employee participated immediately prior to the Termination Date (the “COBRA Continuation Benefit”). Notwithstanding the foregoing, the COBRA Continuation Benefit shall be discontinued prior to the end of the stated continuation period in the event Employee is eligible to receive substantially similar benefits from a subsequent employer, as determined solely by the Board in good faith, it being understood that, Employee shall be obligated to keep the Board informed of the terms and conditions of any subsequent employment and the corresponding benefits that relate to such employment; and
(iii)Treatment of any outstanding awards issued to Employee under the LTIP shall be in accordance with the LTIP governing plan document and award agreements, as applicable.
(b)Schedule of Payments. The Employer will make the severance benefit payments described in this Section 16 at the time and in the manner described below, as applicable, subject to Sections 26 and 27.
(i)All cash payments under Section 16(a)(i) will be paid in substantially equal installments over twenty-four (24) months pursuant to the normal payroll cycle of the Employer beginning on the first regular payroll date that occurs following Employee’s satisfaction of the Release Condition.
(ii)In the event of the death of Employee prior to the payment of all cash due under Section 16(a)(i), all remaining payments will be made in a single sum to Employee’s surviving spouse within ninety (90) days after Employee’s death. If Employee is not married at the time of death, such cash payments may be made to Employee’s estate.
17.Severance Amount in the Case of Termination under Section 14.
(a)In addition to payment of the Accrued Obligations in accordance with Section 11 or Section 13, as the case may be, subject to Employee’s satisfaction of the Release Condition, Employee shall receive the following as severance benefits under this Section 17:
(i)A cash payment equal to three (3) times the sum of (A) the annual Salary in effect for Employee immediately prior to the occurrence of the Termination Date (or, if a greater amount, immediately prior to the occurrence of the applicable Good Reason event described in Section 11); and (B) the target Bonus in effect for Employee immediately prior to the occurrence of the Termination Date (or, if a greater amount, immediately prior to the occurrence of the applicable Good Reason event described in Section 11) that would be payable to Employee if such Bonus plan target(s) were achieved for the year in which the Termination Date occurs, regardless of actual achievement;
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(ii)The COBRA Continuation Benefit, it being understood that, the COBRA Continuation Benefit shall be subject to discontinuation, and Employee shall be subject to the obligations, set forth in Section 16(a)(ii); and
(iii)Treatment of any outstanding awards issued to Employee under the LTIP shall be in accordance with the LTIP governing plan document and award agreements, as applicable.
(b)Timing of Payments. The Employer will make the severance benefit payments described in this Section 17 at the time and in the manner described below, as applicable, subject to Sections 26 and 27.
(i)The amount under Section 17(a)(i) will be paid in a lump sum within three (3) business days following satisfaction of the Release Condition.
(ii)In the event Employee becomes eligible for the severance benefit payments described in this Section 17 after the payment commencement date for the severance benefits set forth in Section 16 has already occurred, then the Employer will pay Employee the difference between the severance benefit payments described in this Section 17 and the severance benefits previously paid to Employee under Section 16, within thirty (30) days after the occurrence of a Change in Control.
18.Assignment. The rights and benefits of Employee under this Agreement, other than accrued and unpaid amounts due under Section 3(a), are personal to him and shall not be assignable. Discharge of Employee’s undertakings in Section 4 shall be an obligation of Employee’s executors, administrators, or other legal representatives or heirs.
19.Notices. Any notice or other communications under this Agreement shall be in writing, signed by the party making same, and shall be delivered personally or sent by overnight courier, certified or registered mail, postage prepaid, addressed as follows:
If to Employee, to the most recent address reflected for Employee on the Employer’s books and records
If to the Employer:
AHS Management Company, Inc.
Ardent Health Partners, Inc.
c/o General Counsel
340 Seven Springs Way, Suite 100
Brentwood, Tennessee 37027
Ardent Health Partners, Inc.
c/o General Counsel
340 Seven Springs Way, Suite 100
Brentwood, Tennessee 37027
or to such other address as may hereafter be designated by either party hereto. All such notices shall be deemed given on the date personally delivered or mailed.
20.Governing Law. This Agreement shall be interpreted and enforced in accordance with the laws of the State of Tennessee, without giving effect to the choice of law provisions of such State.
21.Arbitration and Waiver of Jury Trial. Any dispute among the parties hereto shall be settled by arbitration in Nashville, Tennessee, in accordance with the then applicable rules of the Model Employment Arbitration Procedures of American Arbitration Association and
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judgment upon the award rendered may be entered in any court having jurisdiction thereof. The arbitrator shall award all costs, legal expenses and fees to the successful party. The Employer and Employee each hereby waive any right to trial by jury of any dispute arising under this Agreement or with Employee’s employment with the Employer.
22.Severability. Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid, but if any one or more of the provisions contained in this Agreement shall be invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability for any such provisions in every other respect and of the remaining provisions of this Agreement shall not be in any way impaired.
23.Modification. No waiver or modification of this Agreement or of any covenant, condition, or limitation herein contained shall be valid unless in writing and duly executed by the party to be charged therewith and no evidence of any waiver or modification shall be offered or received in evidence of any arbitration between the parties hereunder, unless such waiver or modification is in writing, duly executed as aforesaid and the parties further agree that the provisions of this Section 23 may not be waived except as herein set forth.
24.Entire Agreement. This Agreement contains the entire agreement of the parties hereto with respect to the subject matter contained herein. There are no restrictions, promises, covenants or undertakings, other than those expressly set forth herein. This Agreement supersedes all prior agreements and understandings between the parties with respect to such subject matter, including, without limitation, the Prior Agreement, which is of no further force or effect, it being understood that the Prior Agreement shall remain enforceable to the extent any of the parties thereto are determined on or after the Effective Date to have been in breach of the Prior Agreement during any applicable periods that preceded the Effective Date.
25.Employer Policies, Regulations and Guidelines for Employee. The Employer may issue policies, rules, regulations, guidelines, procedures or other informational material, whether in the form of handbooks, memoranda, or otherwise, relating to its employees.
26.Section 409A. It is the intention of the parties that the payments and benefits to which Employee could become entitled pursuant to this Agreement, as well as the termination of Employee’s employment under this Agreement, comply with or are exempt from Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”). Any payments that qualify for the “short-term deferral” exception, the “separation pay” exception or another exception under Section 409A of the Code shall be paid pursuant to the applicable exception. Any payments that qualify for the “short-term deferral” exception, the “separation pay” exception or another exception under Section 409A of the Code shall be paid pursuant to the applicable exception. For purposes of the limitations on nonqualified deferred compensation under Section 409A of the Code, each payment of compensation under this Agreement shall be treated as a separate payment of compensation for purposes of Section 409A of the Code. If any payment provided by this Agreement may result in the application of Section 409A of the Code, then the Employer shall, in consultation with Employee, modify this Agreement to the extent permissible under Section 409A of the Code in the least restrictive manner as necessary to exclude such payment from the definition of “deferred compensation” within the meaning of such Section 409A of the Code or in order to comply with provisions of Section 409A of the Code. For purposes of this Agreement, as it may be amended from time to time, references to Employee’s termination of employment with the Employer shall mean Employee’s “separation from service” within the meaning of Treasury Regulation § 1.409A-1(h). All expenses or other reimbursements owed to Employee under this Agreement shall be for expenses incurred during Employee’s lifetime or within ten (10) years after his death, shall be payable in accordance with the Employer’s policies in effect from time to time, but in any event, to the extent required in order to comply with Section 409A of the Code, and shall be made on or prior to the last day of the taxable year
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following the taxable year in which such expenses were incurred by Employee. In addition, to the extent required in order to comply with Section 409A of the Code, no such reimbursement or expenses eligible for reimbursement in any taxable year shall in any way affect the expenses eligible for reimbursement in any other taxable year and Employee’s right to reimbursement or in-kind benefits shall not be subject to liquidation or exchanged for another benefit. If the period between the termination of Employee’s employment and the latest possible date for satisfying the Release Condition spans two (2) calendar years, the severance payments hereunder shall be paid or shall commence, as the case may be, in the second calendar year. Notwithstanding any other provision of this Agreement, if (a) Employee is to receive payments or benefits by reason of his separation from service (as such term is defined in Section 409A of the Code) other than as a result of his death, and (b) Employee is a “specified employee” within the meaning of Section 409A of the Code (as determined in accordance with the methodology established by the Employer as in effect on the date of Employee’s separation from service) for the period in which the payment or benefit would otherwise commence, and such payment or benefit would otherwise subject Employee to any tax, interest or penalty imposed under Section 409A of the Code (or any regulation promulgated thereunder) if the payment or benefit would commence within six (6) months of a termination of Employee’s employment, then such payment or benefit will instead be paid as provided below in this Section 26. Such payments or benefits that would have otherwise been required to be made during such six (6)-month period will be paid to Employee (or his estate, as the case may be) in one lump sum payment or otherwise provided to Employee (or his estate, as the case may be) on the earlier of (A) the first business day that is six (6) months and one day after Employee’s separation from service or (B) the fifth business day following Employee’s death. Thereafter, the payments and benefits will continue, if applicable, for the relevant period set forth in this Agreement, as the case may be.
27.Section 280G of the Code. If the Employer determines, based on the reasonable advice of a nationally recognized certified public accounting firm selected by the Employer and the expenses of which shall be incurred by the Employer (other than an accounting firm for the entity seeking to effectuate an applicable change in control), that the aggregate amount of the payments, distributions, benefits and entitlements, whether pursuant to this Agreement or otherwise, by any member of the Company Group (or any person or entity effecting the applicable change in control) to or for the benefit of Employee that constitute “parachute payments” within the meaning of Section 280G of the Code (the “Parachute Payments”) would, but for this Section 26, exceed the greatest amount of Parachute Payments that could be paid to Employee without giving rise to any liability for any excise tax imposed by Section 4999 of the Code (or any successor provision thereto) or any similar State or local tax (as applicable, the “Excise Tax”) or constituting “excess parachute payments” that are not deductible by the Employer or other applicable payor, then the aggregate amount of the Parachute Payments payable to Employee shall be modified, including by reduction or elimination, to the extent necessary to equal the amount that produces the greatest after-tax benefit to Employee, taking into account any Excise Tax.
28.Legal Fees. The Employer shall reimburse Employee for reasonable legal fees and related expenses incurred by Employee in connection with the negotiation and execution of this Agreement and his offer of employment, together with any related equity agreements or other related agreements between the Employer and Employee up to a maximum of $10,000. Such reimbursement will be paid to Employee on the first regular payroll date of the Employer following the beginning of the Term and submission of documentation for the fees incurred.
29.Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original and all of which, when taken together, will constitute one and the same instrument. Delivery of an executed counterpart of a signature page of this Agreement by facsimile transmission or electronic means (including by “pdf”) shall be effective as delivery of a manually executed counterpart of this Agreement.
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[SIGNATURE PAGE IMMEDIATELY FOLLOWS]
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IN WITNESS WHEREOF, the undersigned have executed this Agreement effective as of the Effective Date.
THE EMPLOYER: | |||||||||||
| AHS MANAGEMENT COMPANY, INC. | |||||||||||
| By: | /s/ Stephen C. Petrovich | ||||||||||
| Name: | Stephen C. Petrovich | ||||||||||
| Title: | EVP, General Counsel | ||||||||||
| Date: | 1/9/2025 | ||||||||||
| EMPLOYEE: | |||||||||||
| /s/ Martin J. Bonick | |||||||||||
| Date: | 1/10/2025 | ||||||||||
[Signature Page to Amended and Restated Employment Agreement]
4889-5973-8050v.8
Exhibit 10.2
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “Agreement”) is made and entered into by and between AHS Management Company, Inc. (the “Employer”), and Alfred Lumsdaine, an individual (“Employee”), and is effective as of the Effective Date (as defined below).
WITNESSETH:
WHEREAS, the Employer and Employee previously entered into that certain Employment Agreement, dated as of August 10, 2021, under which the Employer has employed Employee as its Chief Financial Officer (the “Prior Agreement”);
WHEREAS, the Employer desires to enter into this Agreement with Employee, as an amendment and restatement to the Prior Agreement, and to provide him with the benefits set forth herein in recognition of the valuable services he will render to the Employer, and for the purposes evidenced herein;
WHEREAS, Employee is and remains ready and willing to render the services provided for, and on the terms and conditions set forth herein, and he is willing to refrain from activities competitive with the business of the Employer during the term of and after this Agreement on the terms and conditions set forth herein; and
WHEREAS, in serving as an employee of the Employer, Employee will continue to participate in the use and development of confidential proprietary information about the Employer, its customers and suppliers, and the methods used by the Employer and its employees in competition with other companies, as to which the Employer desires to protect fully its rights.
NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements herein set forth, the parties hereto agree as follows:
1.Employment.
(a)The Employer hereby offers to employ Employee and Employee accepts such employment with the Employer during the Term (as defined below) pursuant to the terms and conditions set forth herein. During the Term, Employee will be employed by the Employer as its Chief Financial Officer and will hold the same officer title with respect to Ardent Health Partners, Inc. (“Parent”). Employee shall report directly to the President and Chief Executive Officer of Parent and shall perform all duties and services incident to such position, and such other similar duties and services as may be prescribed by the governing documents of the Employer or established by the Employer (or an affiliate thereof) from time to time. During his employment hereunder, Employee shall devote his best efforts and attention, on a full-time basis, to the performance of the duties required of him as an employee of the Employer. For purposes of this Agreement, all references to determinations or tasks of the Board of Directors of Parent (the “Board”) shall be deemed to include references to any duly authorized committee thereof, if applicable, and it is understood that such Board or committee shall exclude Employee for
4872-3648-9936v.5
purposes of all decisions for which Employee’s participation would present a conflict of interest, including matters directly related to Employee’s compensation, benefits or employment.
(b)The Term of this Agreement and Employee’s employment hereunder shall be governed by the provisions of Section 8.
2.Principal Office. Employee’s principal office and normal place of work is located at the Employer’s principal executive offices in the Nashville, Tennessee, metropolitan area.
3.Compensation.
(a)As compensation for services rendered by Employee hereunder, Employee shall receive:
(i)Salary. During the Term, Employee shall be paid an annual salary of $628,000, or such other increased salary amount as shall be approved by the Board from time to time, which shall be payable in accordance with regular payroll practices and cycles of the Employer (“Salary”).
(ii)Bonus. During the Term, Employee shall be eligible for an annual cash bonus in an amount to be determined by the Board based on whether certain reasonable objectives established by the Board for each fiscal year as set forth in the Employer’s Incentive Compensation Plan (that shall be established for such year) (the “Plan”) have been met (the “Bonus”). Although the Bonus is discretionary and will vary depending on actual performance, the Board will establish Employee’s target annual Bonus for each year during the Term, which target percentage for the entirety of fiscal year 2024 has been established as 75% of Employee’s annual Salary. Any earned Bonus may be prorated for partial years of service as set forth in the Plan and shall be subject to any maximum payout limitations as set forth in the Plan or otherwise approved by the Board each year. Bonuses will be payable by the Employer no later than March 15 of the calendar year following the year with respect to which the Bonus is earned; provided that, except as otherwise provided herein, payment of any earned Bonus shall be subject to Employee’s continued employment through the date such Bonus is paid.
(iii)Expenses. During the Term, the Employer shall reimburse Employee promptly for all reasonable travel, entertainment, parking, business meeting and similar expenditures in pursuance and furtherance of the Employer’s business, in each case, subject to the Employer’s policies applicable to its officers and other key employees generally as in effect from time-to-time, including the requirement to provide reasonable supporting documentation.
(iv)Other Benefits. During the Term, Employee will be eligible to participate in benefit and perquisite plans and programs of the type made available to similarly situated senior officers of the Employer, in accordance with the terms and conditions of such plans and programs in effect from time to time.
(v)Withholdings. All amounts payable to Employee hereunder shall be subject to such deductions or withholdings as are required by law or the policies of the Employer or as may be authorized or directed by Employee pursuant to the permitted practices of the Employer and applicable law. Furthermore, any monies owed to Employee by the Employer may be offset by any monies owed to the Employer by Employee; provided, however, that any offset of amounts considered to be deferred compensation under Section 409A of the Code (as defined below) shall only be offset to the extent consistent with Treas. Reg. Section 1.409A-3(j)(4)(xiii).
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(vi)Equity. During the Term, Employee shall be eligible to participate in and receive annual grants under, the Ardent Health Partners, Inc. 2024 Omnibus Incentive Award Plan, as such plan may be amended and/or restated from time to time or any successor plan thereto (the “LTIP”), on such terms and conditions as are stated therein and any applicable award agreement thereunder.
(b)Benefits Review. Employee’s Salary, target Bonus and benefits payable hereunder will be subject to annual review by the Board, in the good faith determination of the Board. Employee understands and acknowledges that the opportunity of an annual Salary and benefit review by the Board shall not be construed in any manner as an express or implied agreement by the Employer to raise or increase his Salary or benefits. References to the Board for such purposes (i.e., Employee’s Salary, target Bonus and benefits) or similar purposes in this Agreement shall also be deemed to include references to the Compensation Committee of the Board, as and when applicable.
4.Confidential Information and Trade Secrets.
(a)Trade Secrets. Employee recognizes that Employee’s position with the Employer requires considerable responsibility and trust, and, in reliance on Employee’s loyalty, the Employer, the Company (as defined below), and their respective subsidiaries and affiliates (collectively, the “Company Group”) may continue to entrust Employee with highly sensitive confidential, restricted and proprietary information involving Trade Secrets and Confidential Information. For purposes of this Agreement, a “Trade Secret” is any scientific or technical information, design, process, procedure, formula or improvement that is valuable and not generally known to competitors of any member of the Company Group. “Confidential Information” is any data or information, other than Trade Secrets, that is important, competitively sensitive, and not generally known by the public or competitors of any member of the Company Group, including, but not limited to, a Company Group member’s business plan, acquisition targets, training manuals, product development plans, pricing procedures, market strategies, internal performance statistics, financial data, confidential personnel information concerning employees of such member, supplier data, operational or administrative plans, policy manuals, and terms and conditions of contracts and agreements.
(b)Non-Disclosure. Subject to the exceptions set forth in Section 4(c), and except as required to perform Employee’s duties hereunder, Employee will not use or disclose the terms of this Agreement or any Trade Secrets or Confidential Information of the Company Group during employment, or at any time after termination of employment; provided, however, that Employee may disclose the terms of this Agreement and Confidential Information (i) to Employee’s spouse and Employee’s representatives, agents and advisors who are advising Employee with respect to this Agreement, but only for legitimate business purposes related to the negotiation and performance of this Agreement and with a covenant from those persons to keep such information confidential in accordance with this Section 4, or (ii) to the extent that disclosure is required by applicable law or order; provided, further, that as soon as reasonably practicable before such disclosure, Employee gives the Employer prompt written notice of such disclosure to enable the Employer to seek a protective order or otherwise preserve the confidentiality of such information.
(c)Exceptions. Employee acknowledges that, notwithstanding any of the Employer’s policies or agreements that could be read to the contrary, nothing in any agreement or policy prohibits, limits or otherwise restricts Employee or Employee’s counsel from initiating communications directly with, responding to any inquiry from, volunteering information (including Trade Secrets or Confidential Information of the Company Group) to, or providing testimony before, the Securities and Exchange Commission (the “SEC”), the Department of Justice, FINRA, any other self-regulatory organization or any other governmental authority, in
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connection with any reporting of, investigation into, or proceeding regarding suspected violations of law. Employee further acknowledges that Employee is not required to advise or seek permission from the Employer before engaging in any such activity with any such governmental authority, but that, in connection with any such activity, Employee must inform such governmental authority that the information Employee is providing is confidential. The foregoing exception includes cooperating with or reporting legal violations to the SEC and/or its Office of the Whistleblower. None of the Employer, the Company or any of their affiliates may retaliate against Employee for any of these activities, and nothing in this Agreement or otherwise would require Employee to waive any monetary award or other payment to which Employee might become entitled from the SEC or similar governmental authority. Despite the foregoing, Employee is not permitted to reveal to any third-party, including any governmental, law enforcement, or regulatory authority, information Employee came to learn during the course of employment with the Employer that is protected from disclosure by any applicable privilege, including but not limited to the attorney-client privilege or the attorney work product doctrine, and the Employer does not waive any applicable privileges or the right to continue to protect its privileged attorney-client information, attorney work product, and other privileged information. Employee is further advised that U.S. Federal law provides that an individual shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret that is made in (i) confidence to a Federal, State, or local government official (either directly or indirectly) or to an attorney, solely for the purpose of reporting or investigating a suspected violation of law, or (ii) a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.
(d)Material Surrender. Upon termination of Employee’s employment with the Employer, Employee will surrender to the Employer all files, correspondence, memoranda, notes, records, manuals or other documents or data pertaining to the business of the Company Group or Employee’s employment (including all copies thereof) however prepared and whether maintained in paper or electronic format. Employee will also leave with the Employer all materials involving any Trade Secrets or Confidential Information of the Company Group. All such information and materials, whether or not made or developed by Employee, shall be the sole and exclusive property of the Employer, and Employee hereby assigns to the Employer all of Employee’s right, title and interest in and to any and all of such information and materials.
5.Covenants. Employee shall be subject to the following covenants and obligations:
(a)Non-Competition Covenant. While employed by the Employer, Employee shall not compete or plan or prepare to compete with the Company regarding the ownership, investment in, management of or operation of free standing hospitals or a hospital’s affiliated sites of care that are owned, operated or managed by the Company that provide medical-surgical healthcare services. Employee shall not compete with the Company, for a period of twelve (12) months following the termination of his employment in the Metropolitan Service Area for healthcare services for any physical location where the Company provides, manages, or supervises the provision of medical-surgical healthcare services as of the Termination Date (as defined below) in which Employee worked or provided services during Employee’s employment.
(b)Non-Solicitation Covenant. Following the termination of Employee’s employment with the Employer, for a period equal to the term of the non-competition covenant under Section 5(a), Employee shall not directly or indirectly solicit the services of or otherwise induce or attempt to induce any Company Employee to sever his employment relationship with the Company. For purposes of this Section 5(b), “Company Employee” shall mean any employee with whom Employee worked or had contact with during Employee’s employment and who performs or performed (on the Termination Date or within the previous six (6) months of such date) any of his services for the Employer, the Company or any of their respective
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subsidiaries, including any member of the senior management staff of any hospital. Prior to the initiation of any conduct prohibited under this Section 5(b), Employee may request that the Company waive application of this Section 5(b) to said conduct. The granting of such request, however, shall be at the Company’s sole discretion.
(c)Scope and Duration; Severability. The Company, the Employer and Employee understand and agree that the scope and duration of the covenants contained in this Section 5 are reasonable both in time and geographical area and are necessary and fair to protect the business of the Company. Except as otherwise stated herein, such covenants shall survive the termination of Employee’s employment. It is further agreed that such covenants shall be regarded as divisible and shall be operative as to time and geographical area to the extent that they may be made so and, if any part of such covenants are declared invalid or unenforceable, the validity and enforceability of the remainder shall not be affected. If any covenant contained in this Section 5 is determined by an arbitrator to be unenforceable for reasons of overbreadth pursuant to the mandatory arbitration agreement set forth in Section 21, it shall be interpreted to extend only over the maximum period of time, range of activities or geographic area as to which the arbitrator shall determine to be enforceable. In the event the Federal Trade Commission passes a rule or regulation that becomes effective and prohibits any restriction set forth in this Agreement, such prohibited restriction shall be null and void until the time such rule is enjoined or otherwise preempted, overturned, or stayed.
(d)Assignment. Employee agrees that the covenants contained in this Section 5 shall inure to the benefit of any successor or assign of the Company, with the same force and effect as if such covenant had been made by Employee with such successor or assign.
(e)Exclusion. Notwithstanding the provisions of this Section 5, Employee’s non-competition obligations shall not preclude Employee from owning less than one percent (1%) of the voting power or common interest in any publicly traded corporation conducting business activities in the healthcare industry in competition with the Company or any affiliate.
(f)Company. For purposes of Section 4 and this Section 5, “Company” shall mean Parent and all of its directly or indirectly owned subsidiaries.
6.Program Participation. Employee represents that he is, and will for the Term be, eligible to participate in Medicare, Medicaid, CHAMPUS, TriCare, and other federal health programs, and Employee shall not have been sanctioned by any federal or state governmental agency or department and/or listed on the Health and Human Services Office of the Inspector General, Cumulative Sanctions Report, or excluded by the General Services Administration, as set forth on the List of Excluded Providers (see http://oig.hhs.gov/fraud/exclusions.html and http://epls.arnet.gov).
7.Specific Enforcement. Employee specifically acknowledges and agrees that the restrictions set forth in Sections 4 and 5 are reasonable and necessary to protect the legitimate interests of the Employer and that the Employer would not have entered into this Agreement in the absence of such restrictions. Employee further acknowledges and agrees that any violation of the provisions of Sections 4 and 5 will result in irreparable injury to the Employer, that the remedy at law for any violation or threatened violation of such Sections will be inadequate and that in the event of any such breach, the Employer, in addition to any other remedies or damages available to it at law or in equity, shall be entitled to temporary injunctive relief before trial from any court of competent jurisdiction as a matter of course and to permanent injunctive relief without the necessity of proving actual damages or providing notice to the greatest extent permitted by law. The Employer shall also have available all remedies provided under local, state and federal statutes, rules and regulations as well as any and all other remedies as may otherwise be contractually or equitably available. In addition to any other remedy herein granted
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or available to the Employer, either at law or in equity, Employee shall forfeit and forever release any claim or right Employee may have to any benefits remaining under this Agreement from the date Employee breached Sections 4 or 5. Any monetary damages sought by the Employer under this Section 7 shall not include the benefits forfeited under this Section 7.
8.Term. This Agreement and the term of employment thereunder shall continue until terminated in the manner set forth herein (the “Term”). The Term, and Employee’s employment hereunder, shall become effective on January 10, 2025 (the “Effective Date”) and end on December 31, 2027; provided, however, that the Term shall automatically renew for successive one (1)-year annual periods on such ending date and each applicable annual anniversary date thereafter, as applicable, unless written notice of non-renewal is provided by either party hereto no less than ninety (90) days prior to the expiration of the then-applicable Term; provided, further that, notwithstanding the foregoing, the Term and this Agreement may be earlier terminated in accordance with, and subject to the terms and conditions, set forth herein. The date upon which this Agreement and Employee’s employment hereunder shall terminate, whether pursuant to the terms of this Section 8 or pursuant to any other provision of this Agreement shall be referred to herein as the “Termination Date”. Employee agrees to take all actions necessary or deemed advisable by the Employer and the Board to resign from any and all positions with the Company Group effective as of the Termination Date. A non-renewal of the Term by the Employer that results in an actual termination of employment of Employee shall be treated as a termination without Cause (as defined below) by the Employer pursuant to Section 13. Further, a non-renewal of the Term by Employee shall be treated as a termination by Employee without Good Reason (as defined below). Employee’s obligations under Sections 4 and 5 hereof shall survive termination of this Agreement pursuant to non-renewal, and be applicable for the durations contemplated herein regardless of whether such non-renewal or other expiration of the Term is by the Employer or Employee.
9.Definitions. For purposes of the following Sections 10-16 of this Agreement:
(a)The term “Cause” shall mean (a) Employee’s willful refusal to perform, or gross negligence in performing, the reasonable duties of Employee’s office, (b) Employee’s conviction of, or guilty plea to, any crime punishable as a felony, or involving fraud or embezzlement, any crime involving moral turpitude or any crime in connection with the delivery of health care services, (c) Employee’s change in status under Section 6, (d) any act by Employee involving moral turpitude that materially affects the performance of his duties hereunder, (e) Employee’s use of alcohol in violation of the Employer’s policies or illegal use of drugs, (f) Employee’s engagement in fraud, theft, misappropriation or embezzlement with respect to the Employer or any of its affiliates, or (g) Employee’s exclusion from participation in any “federal health care program” as defined in 42 U.S.C. § 1320a-7b(f) (including Medicare, Medicaid, TRICARE and similar or successor programs with or for the benefit of any governmental authority) or other debarment from contracting with any governmental authority. Without limiting the foregoing, Employee’s employment shall be deemed to have been terminated for Cause if, after the Termination Date, facts and circumstances are discovered that the Employer determines would have constituted Cause as of the Termination Date; provided, however, that prior to any such post-termination determination of Cause being finalized, Employee shall be given (i) written notice that the Board intends to apply such post-termination determination of Cause described in this sentence, and (ii) an opportunity, upon election by Employee, to be heard by the Board (alone or represented by counsel) within the fifteen (15) days following receipt of such notice.
(b)The term “Change in Control” shall have the meaning ascribed to such term in the Ardent Health Partners, Inc. 2024 Omnibus Incentive Award Plan as of the Effective Date.
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(c)The term “Disability” shall mean the inability of Employee to perform the duties of his employment due to physical or emotional incapacity or illness (including, without limitation, alcohol or chemical dependency), where such inability has continued or is expected to continue for more than one hundred eighty (180) days in any one (1) year period. In the event of a dispute, the determination of Disability shall be made as follows: the Employer and Employee (or his executor or personal representative, as the case may be) shall each appoint a physician competent in the field of medicine to which such incapacity or illness relates, and the two (2) physicians so selected shall select a third physician who shall be similarly competent. The decision of a majority of such physicians as to the Disability of Employee shall be binding on the parties hereto.
(d)The term “Good Reason” shall mean one or more of the following has occurred: (i) a material reduction in Employee’s base salary, (ii) a material reduction in Employee’s authority, duties or responsibilities, provided, however, that a change in job position (including a change in title) or reporting structure relating to Employee shall not be deemed a “material reduction” unless Employee’s new authority, duties or responsibilities are materially reduced from the prior authority, duties or responsibilities, (iii) a relocation of Employee’s principal place of employment that results in an increase in Employee’s one-way driving distance by more than thirty (30) miles from Employee’s then current principal residence, or (iv) a material breach by the Employer of this Agreement.
10.Termination Upon Death of Employee. In the event Employee dies during the Term, this Agreement shall immediately terminate and neither Employee nor the Employer shall have any further obligations hereunder except for (a) earned but unpaid Salary or properly incurred but unreimbursed substantiated expenses owed at the time of death and any such other payments or benefits as may be required by applicable law (the “Accrued Obligations”), and (b) any Bonus that has been determined and declared earned by the Board but remains unpaid as of the Termination Date (“Earned Bonus”). The Accrued Obligations shall be paid within ninety (90) days of Employee’s death, or such other date as specified by applicable law and the Earned Bonus shall be paid within sixty (60) days after the Termination Date or such earlier date as specified by applicable law or the terms and conditions of such Bonus arrangement.
11.Termination by Employee for Good Reason. Employee may terminate this Agreement and his employment with the Employer for Good Reason if (a) Employee gives written notice to the Board of termination of employment for Good Reason within thirty (30) days of the first occurrence of the event which Employee contends constitutes Good Reason, (b) the Employer has failed to cure the event constituting Good Reason during the thirty (30)-day period commencing on the Board’s receipt of such notice by Employee, and (c) if the Employer has failed to cure such event, Employee has resigned from all positions Employee holds with the Company Group, which resignation must be effective not later than thirty (30) days after the end of the Employer’s cure period. In the event Employee’s employment hereunder is terminated in accordance with this Section 11, the Employer shall pay Employee (i) the Accrued Obligations within ninety (90) days of the Termination Date or such other date as specified by applicable law, and (ii) the severance benefits as set forth in, and subject to the terms and conditions of, Section 16 or Section 17 as the case may be. Employee’s obligations under Sections 4 and 5 hereof shall survive the termination of this Agreement pursuant to this Section 11.
12.Termination by the Employer for Cause. The Employer shall have the right at any time to terminate Employee’s employment for Cause, effective immediately or upon such date as specified by the Employer in its sole discretion. Employee’s obligations under Sections 4 and 5 hereof shall survive in full force and effect the termination of this Agreement pursuant to this Section 12. In the event Employee’s employment hereunder is terminated in accordance with this Section 12, the Employer shall have no further obligation to make any payments to
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Employee hereunder except for the Accrued Obligations, which shall be paid within ninety (90) days of the Termination Date or such other date as specified by applicable law.
13.Termination Without Cause. The Employer shall have the right at any time to terminate Employee’s employment without Cause, effective immediately or upon such date as specified by the Employer in its sole discretion. In the event that Employee is terminated by the Employer without Cause during the Term hereof (which shall not include a termination pursuant to Section 10, 11, 12 or 15), the Employer shall pay to Employee (a) the Accrued Obligations within ninety (90) days of the Termination Date or such other date as specified by applicable law, and (b) the Salary and benefits as set forth in, and subject to the terms and conditions of, Section 16 or Section 17 as the case may be. Employee’s obligations under Sections 4 and 5 hereof shall survive in full force and effect the termination of this Agreement pursuant to this Section 13.
14.Termination Upon Change in Control. If, during the period (a) beginning six (6) months immediately prior to a Change in Control (or, if earlier, upon the execution of a letter of intent or similar agreement relating to a transaction that ultimately results in a Change in Control), and (b) ending eighteen (18) months following such Change in Control, Employee’s employment hereunder shall be terminated (i) by the Employer for any reason (other than for Cause or due to Disability), or (ii) by Employee for Good Reason, then, upon such termination, all compensation and benefits to Employee hereunder shall terminate contemporaneously with the Termination Date, except that Employee shall be entitled to receive the severance benefits set forth in, and subject to the terms and conditions of, Section 17. Employee’s obligations under Sections 4 and 5 hereof shall survive in full force and effect his termination of employment pursuant to this Section 14.
15.Disability of Employee. In the event Employee’s employment with the Employer is terminated by the Employer on account of Employee’s Disability (as hereinafter defined), the Employer shall pay Employee at the rate of Salary Employee was entitled to receive on the payroll date immediately preceding such termination due to Disability on each regular payroll date occurring within the six (6)-month period after his Termination Date. In addition, the Employer will pay Employee all Salary, Bonus, awards and other benefits and reimbursements of expenses incurred or earned but unpaid or unreimbursed before Employee’s Disability within sixty (60) days after the Termination Date or such other date as specified by applicable law or the terms and conditions of such benefit, Bonus, award or other arrangement. During the period in which Employee is entitled to payment under this Section 15, for so long as Employee is physically and mentally able to do so, Employee will furnish information and assistance to the Employer.
16.Severance Amount in the Case of Termination under Sections 11 and 13.
(a)In addition to payment of the Accrued Obligations in accordance with Section 11 or Section 13, as the case may be, subject to Employee’s delivery and non-revocation of a separation and release substantially in the form that applies for the Company’s executive leadership employees that has become effective and irrevocable on or before the sixtieth (60th) day following the Termination Date (the “Release Condition”), Employee shall receive the following as severance benefits under this Section 16:
(i)A series of cash payments equal in the aggregate to one and one-half (1½) times the sum of (A) the annual Salary in effect for Employee immediately prior to the occurrence of the Termination Date (or, if a greater amount, immediately prior to the occurrence of the applicable Good Reason event described in Section 11); and (B) the target Bonus in effect for Employee immediately prior to the occurrence of the Termination Date (or, if a greater amount, immediately prior to the occurrence of the
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applicable Good Reason event described in Section 11) that would be payable to Employee if such Bonus plan target(s) were achieved for the year in which the Termination Date occurs, regardless of actual achievement;
(ii)Reimbursement of all of Employee’s cost to participate in COBRA health, dental and/or vision continuation coverage for up to eighteen (18) months following the Termination Date, if and to the extent Employee is entitled to and timely elects COBRA continuation coverage under the Employer’s group health plan(s) in which Employee participated immediately prior to the Termination Date (the “COBRA Continuation Benefit”). Notwithstanding the foregoing, the COBRA Continuation Benefit shall be discontinued prior to the end of the stated continuation period in the event Employee is eligible to receive substantially similar benefits from a subsequent employer, as determined solely by the Board in good faith, it being understood that, Employee shall be obligated to keep the Board informed of the terms and conditions of any subsequent employment and the corresponding benefits that relate to such employment; and
(iii)Treatment of any outstanding awards issued to Employee under the LTIP shall be in accordance with the LTIP governing plan document and award agreements, as applicable.
(b)Schedule of Payments. The Employer will make the severance benefit payments described in this Section 16 at the time and in the manner described below, as applicable, subject to Sections 26 and 27.
(i)All cash payments under Section 16(a)(i) will be paid in substantially equal installments over eighteen (18) months pursuant to the normal payroll cycle of the Employer beginning on the first regular payroll date that occurs following Employee’s satisfaction of the Release Condition.
(ii)In the event of the death of Employee prior to the payment of all cash due under Section 16(a)(i), all remaining payments will be made in a single sum to Employee’s surviving spouse within ninety (90) days after Employee’s death. If Employee is not married at the time of death, such cash payments may be made to Employee’s estate.
17.Severance Amount in the Case of Termination under Section 14.
(a)In addition to payment of the Accrued Obligations in accordance with Section 11 or Section 13, as the case may be, subject to Employee’s satisfaction of the Release Condition, Employee shall receive the following as severance benefits under this Section 17:
(i)A cash payment equal to two (2) times the sum of (A) the annual Salary in effect for Employee immediately prior to the occurrence of the Termination Date (or, if a greater amount, immediately prior to the occurrence of the applicable Good Reason event described in Section 11); and (B) the target Bonus in effect for Employee immediately prior to the occurrence of the Termination Date (or, if a greater amount, immediately prior to the occurrence of the applicable Good Reason event described in Section 11) that would be payable to Employee if such Bonus plan target(s) were achieved for the year in which the Termination Date occurs, regardless of actual achievement;
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(ii)The COBRA Continuation Benefit, it being understood that, the COBRA Continuation Benefit shall be subject to discontinuation, and Employee shall be subject to the obligations, set forth in Section 16(a)(ii); and
(iii)Treatment of any outstanding awards issued to Employee under the LTIP shall be in accordance with the LTIP governing plan document and award agreements, as applicable.
(b)Timing of Payments. The Employer will make the severance benefit payments described in this Section 17 at the time and in the manner described below, as applicable, subject to Sections 26 and 27.
(i)The amount under Section 17(a)(i) will be paid in a lump sum within three (3) business days following satisfaction of the Release Condition.
(ii)In the event Employee becomes eligible for the severance benefit payments described in this Section 17 after the payment commencement date for the severance benefits set forth in Section 16 has already occurred, then the Employer will pay Employee the difference between the severance benefit payments described in this Section 17 and the severance benefits previously paid to Employee under Section 16, within thirty (30) days after the occurrence of a Change in Control.
18.Assignment. The rights and benefits of Employee under this Agreement, other than accrued and unpaid amounts due under Section 3(a), are personal to him and shall not be assignable. Discharge of Employee’s undertakings in Section 4 shall be an obligation of Employee’s executors, administrators, or other legal representatives or heirs.
19.Notices. Any notice or other communications under this Agreement shall be in writing, signed by the party making same, and shall be delivered personally or sent by overnight courier, certified or registered mail, postage prepaid, addressed as follows:
If to Employee, to the most recent address reflected for Employee on the Employer’s books and records
If to the Employer:
AHS Management Company, Inc.
Ardent Health Partners, Inc.
c/o General Counsel
340 Seven Springs Way, Suite 100
Brentwood, Tennessee 37027
Ardent Health Partners, Inc.
c/o General Counsel
340 Seven Springs Way, Suite 100
Brentwood, Tennessee 37027
or to such other address as may hereafter be designated by either party hereto. All such notices shall be deemed given on the date personally delivered or mailed.
20.Governing Law. This Agreement shall be interpreted and enforced in accordance with the laws of the State of Tennessee, without giving effect to the choice of law provisions of such State.
21.Arbitration and Waiver of Jury Trial. Any dispute among the parties hereto shall be settled by arbitration in Nashville, Tennessee, in accordance with the then applicable rules of the Model Employment Arbitration Procedures of American Arbitration Association and
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judgment upon the award rendered may be entered in any court having jurisdiction thereof. The arbitrator shall award all costs, legal expenses and fees to the successful party. The Employer and Employee each hereby waive any right to trial by jury of any dispute arising under this Agreement or with Employee’s employment with the Employer.
22.Severability. Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid, but if any one or more of the provisions contained in this Agreement shall be invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability for any such provisions in every other respect and of the remaining provisions of this Agreement shall not be in any way impaired.
23.Modification. No waiver or modification of this Agreement or of any covenant, condition, or limitation herein contained shall be valid unless in writing and duly executed by the party to be charged therewith and no evidence of any waiver or modification shall be offered or received in evidence of any arbitration between the parties hereunder, unless such waiver or modification is in writing, duly executed as aforesaid and the parties further agree that the provisions of this Section 23 may not be waived except as herein set forth.
24.Entire Agreement. This Agreement contains the entire agreement of the parties hereto with respect to the subject matter contained herein. There are no restrictions, promises, covenants or undertakings, other than those expressly set forth herein. This Agreement supersedes all prior agreements and understandings between the parties with respect to such subject matter, including, without limitation, the Prior Agreement, which is of no further force or effect, it being understood that the Prior Agreement shall remain enforceable to the extent any of the parties thereto are determined on or after the Effective Date to have been in breach of the Prior Agreement during any applicable periods that preceded the Effective Date.
25.Employer Policies, Regulations and Guidelines for Employee. The Employer may issue policies, rules, regulations, guidelines, procedures or other informational material, whether in the form of handbooks, memoranda, or otherwise, relating to its employees.
26.Section 409A. It is the intention of the parties that the payments and benefits to which Employee could become entitled pursuant to this Agreement, as well as the termination of Employee’s employment under this Agreement, comply with or are exempt from Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”). Any payments that qualify for the “short-term deferral” exception, the “separation pay” exception or another exception under Section 409A of the Code shall be paid pursuant to the applicable exception. Any payments that qualify for the “short-term deferral” exception, the “separation pay” exception or another exception under Section 409A of the Code shall be paid pursuant to the applicable exception. For purposes of the limitations on nonqualified deferred compensation under Section 409A of the Code, each payment of compensation under this Agreement shall be treated as a separate payment of compensation for purposes of Section 409A of the Code. If any payment provided by this Agreement may result in the application of Section 409A of the Code, then the Employer shall, in consultation with Employee, modify this Agreement to the extent permissible under Section 409A of the Code in the least restrictive manner as necessary to exclude such payment from the definition of “deferred compensation” within the meaning of such Section 409A of the Code or in order to comply with provisions of Section 409A of the Code. For purposes of this Agreement, as it may be amended from time to time, references to Employee’s termination of employment with the Employer shall mean Employee’s “separation from service” within the meaning of Treasury Regulation § 1.409A-1(h). All expenses or other reimbursements owed to Employee under this Agreement shall be for expenses incurred during Employee’s lifetime or within ten (10) years after his death, shall be payable in accordance with the Employer’s policies in effect from time to time, but in any event, to the extent required in order to comply with Section 409A of the Code, and shall be made on or prior to the last day of the taxable year
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following the taxable year in which such expenses were incurred by Employee. In addition, to the extent required in order to comply with Section 409A of the Code, no such reimbursement or expenses eligible for reimbursement in any taxable year shall in any way affect the expenses eligible for reimbursement in any other taxable year and Employee’s right to reimbursement or in-kind benefits shall not be subject to liquidation or exchanged for another benefit. If the period between the termination of Employee’s employment and the latest possible date for satisfying the Release Condition spans two (2) calendar years, the severance payments hereunder shall be paid or shall commence, as the case may be, in the second calendar year. Notwithstanding any other provision of this Agreement, if (a) Employee is to receive payments or benefits by reason of his separation from service (as such term is defined in Section 409A of the Code) other than as a result of his death, and (b) Employee is a “specified employee” within the meaning of Section 409A of the Code (as determined in accordance with the methodology established by the Employer as in effect on the date of Employee’s separation from service) for the period in which the payment or benefit would otherwise commence, and such payment or benefit would otherwise subject Employee to any tax, interest or penalty imposed under Section 409A of the Code (or any regulation promulgated thereunder) if the payment or benefit would commence within six (6) months of a termination of Employee’s employment, then such payment or benefit will instead be paid as provided below in this Section 26. Such payments or benefits that would have otherwise been required to be made during such six (6)-month period will be paid to Employee (or his estate, as the case may be) in one lump sum payment or otherwise provided to Employee (or his estate, as the case may be) on the earlier of (A) the first business day that is six (6) months and one day after Employee’s separation from service or (B) the fifth business day following Employee’s death. Thereafter, the payments and benefits will continue, if applicable, for the relevant period set forth in this Agreement, as the case may be.
27.Section 280G of the Code. If the Employer determines, based on the reasonable advice of a nationally recognized certified public accounting firm selected by the Employer and the expenses of which shall be incurred by the Employer (other than an accounting firm for the entity seeking to effectuate an applicable change in control), that the aggregate amount of the payments, distributions, benefits and entitlements, whether pursuant to this Agreement or otherwise, by any member of the Company Group (or any person or entity effecting the applicable change in control) to or for the benefit of Employee that constitute “parachute payments” within the meaning of Section 280G of the Code (the “Parachute Payments”) would, but for this Section 26, exceed the greatest amount of Parachute Payments that could be paid to Employee without giving rise to any liability for any excise tax imposed by Section 4999 of the Code (or any successor provision thereto) or any similar State or local tax (as applicable, the “Excise Tax”) or constituting “excess parachute payments” that are not deductible by the Employer or other applicable payor, then the aggregate amount of the Parachute Payments payable to Employee shall be modified, including by reduction or elimination, to the extent necessary to equal the amount that produces the greatest after-tax benefit to Employee, taking into account any Excise Tax.
28.Legal Fees. The Employer shall reimburse Employee for reasonable legal fees and related expenses incurred by Employee in connection with the negotiation and execution of this Agreement and his offer of employment, together with any related equity agreements or other related agreements between the Employer and Employee up to a maximum of $10,000. Such reimbursement will be paid to Employee on the first regular payroll date of the Employer following the beginning of the Term and submission of documentation for the fees incurred.
29.Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original and all of which, when taken together, will constitute one and the same instrument. Delivery of an executed counterpart of a signature page of this Agreement by facsimile transmission or electronic means (including by “pdf”) shall be effective as delivery of a manually executed counterpart of this Agreement.
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[SIGNATURE PAGE IMMEDIATELY FOLLOWS]
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IN WITNESS WHEREOF, the undersigned have executed this Agreement effective as of the Effective Date.
THE EMPLOYER: | |||||||||||
| AHS MANAGEMENT COMPANY, INC. | |||||||||||
| By: | /s/ Stephen C. Petrovich | ||||||||||
| Name: | Stephen C. Petrovich | ||||||||||
| Title: | EVP, General Counsel | ||||||||||
| Date: | 1/9/2025 | ||||||||||
| EMPLOYEE: | |||||||||||
| /s/ Alfred Lumsdaine | |||||||||||
| Date: | 1/10/2025 | ||||||||||
[Signature Page to Amended and Restated Employment Agreement]
January 2025 Investor Presentation Important disclaimers Forward-Looking Statements Certain statements contained in this presentation regarding future operating results or performance or business plans or prospects of Ardent Health Partners, Inc. ("Ardent", "we," "us," "our," or the "Company") and any other statements not constituting historical fact are "forward-looking statements" subject to the safe harbor created by the Private Securities Litigation Reform Act of 1995. Where possible, the words “anticipates,” “expects,” “intends,” “plans,” “predicts,” “believes,” “seeks,” “estimates,” “could,” “would,” “will,” “may,” “can,” “continue,” “potential,” “should” or the negative of such terms, or other comparable expressions, as they relate to Ardent or its management, have been used to identify such forward-looking statements. All forward-looking statements reflect only management's current beliefs and assumptions with respect to future business plans, prospects, decisions and results, and are based on information currently available to Ardent. Accordingly, the statements are subject to significant risks, uncertainties and contingencies, which could cause Ardent's actual operating results, performance or business plans or prospects to differ materially from those expressed in, or implied by, these statements. Factors that could cause actual results to differ materially from current expectations, such as various factors that may affect Ardent's business or financial results and which, in some instances, are beyond Ardent's control, include, among others: (1) changes in government healthcare programs, including Medicare and Medicaid and supplemental payment programs and state directed payment ("SDP") arrangements; (2) reduction in the reimbursement rates paid by commercial payors, our inability to retain and negotiate favorable contracts with private third-party payors, or an increasing volume of uninsured or underinsured patients; (3) the highly competitive nature of the healthcare industry; (4) inability to recruit and retain quality physicians, as well as increasing cost to contract with independent hospital-based physicians; (5) increased labor costs resulting from increased competition for staff or a continued or increased shortage of experienced nurses; (6) changes to physician utilization practices and treatment methodologies and third-party payor controls designed to impact delivery of medical services and reduce inpatient services or surgical procedures; (7) continued industry trends toward value-based purchasing, third-party payor consolidation and care coordination among healthcare providers; (8) loss of key personnel, including key members of our senior management team; (9) our failure to comply with complex laws and regulations applicable to the healthcare industry or to adjust our operations in response to changing laws and regulations; (10) inability to successfully complete acquisitions or strategic joint ventures ("JVs") or inability to realize all of the anticipated benefits, including anticipated synergies, of past acquisitions and the risk that transactions may not receive necessary government clearances; (11) failure to maintain existing relationships with JV partners or enter into relationships with additional healthcare system partners; (12) the impact of known and unknown claims brought against our hospitals, physician practices, outpatient facilities or other business operations or against healthcare providers who provide services at our facilities; (13) the impact of government investigations, claims, audits, and whistleblower and other litigation; (14) the impact of any cybersecurity incidents affecting us or any third-party vendor upon which we rely; (15) inability or delay in our efforts to construct, acquire, sell, renovate or expand our healthcare facilities; (16) our failure to comply with federal and state laws relating to Medicare and Medicaid enrollment, permit, licensing and accreditation requirements, or the expansion of existing, or the enactment of new, laws or regulations relating to permit, licensing and accreditation requirements; (17) failure to obtain drugs and medical supplies at favorable prices or sufficient volumes; (18) operational, legal and financial risks associated with outsourcing functions to third parties; (19) sensitivity to regulatory, economic and competitive conditions in the states in which our operations are heavily concentrated; (20) decreased demand for our services due to factors beyond our control, such as seasonal fluctuations in the severity of critical illnesses, pandemic, epidemic or widespread health crisis; (21) inability to accurately estimate market opportunity(ies) and forecast market growth; (22) general economic and business conditions, both nationally and in the regions in which we operate; (23) the impact of seasonal or severe weather conditions and climate change; (24) inability to demonstrate meaningful use of Electronic Health Record ("EHR") technology; (25) inability to continually enhance our hospitals with the most recent technological advances in diagnostic and surgical equipment; (26) effects of current and future health reform initiatives, including the Affordable Care Act, and the potential for changes to the Affordable Care Act, its implementation or its interpretation (including through executive orders and court challenges); (27) legal and regulatory restrictions on certain of our hospitals that have physician owners; (28) risks related to the master lease agreement that we entered into with Ventas, Inc. ("Ventas") and its restrictions and limitations on our business; (29) the impact of our significant indebtedness, including our ability to comply with certain debt covenants and other significant operating and financial restrictions imposed on us by the agreements governing our indebtedness, and the effects that variable interest rates, and general economic factors could have on our operations, including our potential inability to service our indebtedness; (30) conflicts of interest with certain of our existing large stockholders; (31) effects of changes in federal tax laws; (32) increased costs as a result of operating as a public company; (33) risks related to maintaining an effective system of internal controls; (34) volatility of our share price and size of the public market for our common stock; (35) our guidance differing from actual operating and financial performance; (36) the results of our efforts to use technology, including artificial intelligence, to drive efficiencies and quality initiatives and enhance patient experience; (37) the impact of recent decisions of the U.S. Supreme Court regarding the actions of federal agencies; and (38) other risk factors described in our filings with the Securities and Exchange Commission. 2 Important disclaimers Non-GAAP Financial Information We have included certain financial measures in this presentation that have not been prepared in a manner that complies with U.S. generally accepted accounting principles ("GAAP"), including Adjusted EBITDA and Adjusted EBITDAR. We define these terms as follows: Adjusted EBITDA. Adjusted EBITDA is defined as net income plus (i) provision for income taxes, (ii) interest expense and (iii) depreciation and amortization expense (or EBITDA), as adjusted to deduct noncontrolling interest earnings, and excludes the effects of losses on the extinguishment and modification of debt; other non-operating losses (gains); cybersecurity incident recoveries, net of incremental information technology and litigation costs; restructuring, exit and acquisition-related costs; expenses incurred in connection with the implementation of Epic Systems ("Epic"), our integrated health information technology system; equity-based compensation expense; and loss (income) from disposed operations. Adjusted EBITDA is a non-GAAP performance measure used by our management and external users of our financial statements, such as investors, analysts, lenders, rating agencies and other interested parties, to evaluate companies in our industry. Adjusted EBITDA is a performance measure that is not defined under GAAP and is presented in this presentation because our management considers it an important analytical indicator that is commonly used within the healthcare industry to evaluate financial performance and allocate resources. Further, our management believes that Adjusted EBITDA is a useful financial metric to assess our operating performance from period to period by excluding certain material non-cash items and unusual or non-recurring items that we do not expect to continue in the future and certain other adjustments we believe are not reflective of our ongoing operations and our performance. Because not all companies use identical calculations, our presentation of Adjusted EBITDA may not be comparable to other similarly titled measures of other companies. While we believe this is a useful supplemental performance measure for investors and other users of our financial information, you should not consider Adjusted EBITDA in isolation or as a substitute for net income or any other items calculated in accordance with GAAP. Adjusted EBITDA has inherent material limitations as a performance measure because it adds back certain expenses to net income, resulting in those expenses not being taken into account in the performance measure. We have borrowed money, so interest expense is a necessary element of our costs. Because we have material capital and intangible assets, depreciation and amortization expense are necessary elements of our costs. Likewise, the payment of taxes is a necessary element of our operations. Because Adjusted EBITDA excludes these and other items, it has material limitations as a measure of our performance. Adjusted EBITDAR. Adjusted EBITDAR is defined as Adjusted EBITDA further adjusted to add back rent expense payable to real estate investment trusts ("REITs"), which consists of rent expense pursuant to the master lease agreement with Ventas (the "Ventas Master Lease"), lease agreements associated with the MOB Transactions (defined below) and a lease arrangement with Medical Properties Trust ("MPT") for Hackensack Meridian Mountainside Medical Center. Adjusted EBITDAR is a commonly used non-GAAP valuation measure used by our management, research analysts, investors and other interested parties to evaluate and compare the enterprise value of different companies in our industry. Adjusted EBITDAR excludes: (1) certain material noncash items and unusual or non-recurring items that we do not expect to continue in the future; (2) certain other adjustments that do not impact our enterprise value; and (3) rent expense payable to REITs. We operate 30 acute care hospitals, 12 of which we lease from two REITs, Ventas and MPT, pursuant to long-term lease agreements. Additionally, during 2022 we completed the sale of 18 medical office buildings to Ventas in exchange for $204.0 million and concurrently entered into agreements to lease the real estate back from Ventas over a 12-year initial term with eight options to renew for additional five-year terms (the "MOB Transactions"). Our management views the long-term lease agreements with Ventas and MPT, as well as the MOB Transactions, as more like financing arrangements than true operating leases, with rent payable to such REITs being similar to interest expense. As a result, our capital structure is different than many of our competitors, especially those whose real estate portfolio is predominately owned and not leased. Excluding the rent payable to such REITs allows investors to compare our enterprise value to those of other healthcare companies without regard to differences in capital structures, leasing arrangements and geographic markets, which can vary significantly among companies. Our management also uses Adjusted EBITDAR as one measure in determining the value of prospective acquisitions or divestitures. Finally, financial covenants in certain of our lease agreements, including the Ventas Master Lease, use Adjusted EBITDAR as a measure of compliance. Adjusted EBITDAR does not reflect our cash requirements for leasing commitments. As such, our presentation of Adjusted EBITDAR should not be construed as a performance or liquidity measure. Because not all companies use identical calculations, our presentation of Adjusted EBITDAR may not be comparable to other similarly titled measures of other companies. While we believe this is a useful supplemental valuation measure for investors and other users of our financial information, you should not consider Adjusted EBITDAR in isolation or as a substitute for net income or any other items calculated in accordance with GAAP. Adjusted EBITDAR has inherent material limitations as a valuation measure, because it adds back certain expenses to net income, resulting in those expenses not being taken into account in the valuation measure. The payment of taxes and rent is a necessary element of our valuation. Because Adjusted EBITDAR excludes these and other items, it has material limitations as a measure of our valuation. 3 Note: See appendix for reconciliation of non-GAAP financial metrics. JV represents joint venture. Sites of care include acute and ambulatory. Minority-owned locations do not consolidate into the Company’s financial results. Market population sourced from Strata Decision Technology (2023, 2024) and Esri Geoenrichment Service and is defined by counties, cities, and zip codes that account for approximately 85-90% of the patients we serve in that market. 1. Based on number of hospitals; 2. Represents employed and affiliated providers. Affiliated providers are physicians and advanced practice providers with whom we contract for services through a professional services agreement or other independent contractor agreement 3. Represents mid-point of the Company’s FY 2024 guidance issued on November 6, 2024. 4. In order to adjust for the impact of equity method accounting for joint ventures, Adjusted EBITDAR margin is calculated before noncontrolling interest earnings. Who We Are 4 • A leading operator of hospitals and provider of healthcare services with a track record of success delivering care in communities across the country • Strong footprint in eight growing mid-sized urban markets with favorable demographic and economic profiles • Leading (#1 or #2) position in majority of our markets1 • Significant scale and density with a broad range of services • Rapidly growing consumer-centric healthcare ecosystem • Well-established and differentiated JV partnership model • Multi-faceted growth strategy 30 Hospitals 200+ Sites of Care 6 States 1,800+ Providers2 4,200+ Licensed Beds $5.84bn3 Est. FY2024 Revenue $433MM3 Est. FY 2024 Adj. EBITDA 3.5x 9/30/24 Lease Adjusted Net Leverage 11.6%4 Est. FY 2024 Adj. EBITDAR Margin 24,000+ Team Members 1 Hospital 9 Sites of Care 125 Providers 136k Population 3 Hospitals 14 Sites of Care 122 Providers 580k Population 1 Hospital 16 Sites of Care 156 Providers 284k Population 2 Hospitals 27 Sites of Care 132 Providers 547k Population 9 Hospitals 59 Sites of Care 479 Providers 983k Population 8 Hospitals 69 Sites of Care 473 Providers 1.1mm Population 5 Hospitals 31 Sites of Care 293 Providers 1.5mm Population Home Office 1 Hospital 11 Sites of Care 28 Providers 436k Population
1 Ventas acquired real estate for 10 of our hospitals; 2 As of initial EGI and Ventas investment; 3 Represents mid-point of the Company’s FY 2024 guidance issued on November 6, 2024. H o sp it a ls • Founded in 2001 • Equity Group Investments (“EGI”) & Ventas1 acquired Ardent in 2015 • Focused initially on hospital acquisitions • Acquired and created JV partnerships • Improved financial performance throughout COVID-19 pandemic • New management team • Completed Epic integration • Internal centralization and standardization • Durable underlying volume growth • Organic growth augmented by ambulatory growth strategy • Significant margin enhancement opportunity • Opportunistically evaluating M&A in new and adjacent markets • Strong balance sheet: Ample cash and leverage gives us flexibility To ta l re ve n u e ( $ m m ) CAGR: 6.2% 3 Evolution of Our Platform 5 Current (2024-2025) COVID-19 & Integration (2019-2023) Investments & Acquisitions (2015-2018) 142 30 Leading market share in markets with attractive opportunities for sustainable growth 1 Represents growth from 2023 to 2025E; 2 Sourced via Strata Decision Technology (2023, 2024) and Esri Geoenrichment Service, which projects via US Census estimates; 3 Represents growth from 2023 to 2028E; 4 Represents growth from 2023 to 2027E from S&P Global Market Growth >3x U.S Average Projected Population Growth1 Above-Average Income Growth Projected Income Growth Ardent Markets Avg2,3: 12.8% US Avg4: 12.1% Leading Market Share Growing Scale & Density 1st 2nd 3rd (Tyler, TX) (Topeka, KS)(Tulsa, OK) (Montclair / Westwood, NJ) (Pocatello, ID) (Albuquerque, NM) (Amarillo, TX) (Killeen, TX) ~1.2mm Unique patients ~5.4mm patient encounters 609,000+ ER visits ~150,000 admissions Selectively scaled into growing markets with • Strong population and wage growth • Favorable payor mixes • Stable and growing job markets • Significant long-term healthcare demand • Favorable competitive dynamics Strategically positioned in each market as a differentiated provider of scale, which enables us to: Recruit and retain the best caregivers and partners Achieve purchasing power for key medical supplies Provide patient care in the best possible care setting and enhance the patient experience Obtain favorable contracts with managed care and other payor sources 2 Growing Urban Markets 6 6.7% 6.5% 4.2% -2.5% 3.6% 5.4% 5.1% 6.4% 1Q23 2Q23 3Q23 4Q23 2023 1Q24 2Q24 3Q24 Admissions YoY Growth 10.7% 6.0% 5.0% -1.2% 5.0% 3.3% 3.4% 3.8% 1Q23 2Q23 3Q23 4Q23 2023 1Q24 2Q24 3Q24 Adjusted Admissions YoY GrowthAdjusted i i Growth YoYAd is i Growth YoY Strong Volume Trends: Expect Durable Demand 7 Adversely impacted by cybersecurity incident 2024 benefit of nearly 200bps from 2-midnight rule Adversely impacted by cybersecurity incident Opportunistic M&AOrganic GrowthMargin Expansion • Expense management and improved operating efficiencies – Implementation of uniform clinical practices – Expand technology solutions to drive efficiencies • Service line optimization and maximizing through-put and mix of services • Leveraging centralized and scaled operating platform to improve margin and operating leverage • Expand health services access points so patients can receive care in non- hospital based sites of care • Grow extensive and diverse provider network • Invest in digital engagement technologies to acquire new patients and better engage and retain existing patients • Enter new markets through acquisition and partnership opportunities • Continually evaluate and selectively pursue strategic growth opportunities • Target markets with significant unmet needs that fit our target profile Operational Excellence Targeted Market Share Growth Disciplined Capital Allocation Highly Actionable Roadmap for Long-Term Value Creation 8
• One instance of Epic across Ardent’s platform • Uniform clinical practices, which in turn improve outcomes, optimize revenue capture, and support value- based care programs • Revenue cycle partner helps Ardent optimize revenue yield, accelerate reimbursement and systematically address payor denials • GPO partner that provides national purchasing power • Drives value across supply expense, labor and purchased services • Management transformed operations from a decentralized operating company into an integrated operating company model with centralization and standardization through key outsourcing initiatives with Epic, Ensemble, and HealthTrust. • Centralized integration optimizes operating performance, facilitates margin expansion and positions the company to effectively integrate assets and maximize ROI as it scales the business. Operating Model is Ready to Scale 9 Focused investment in pipeline of ambulatory sites of care and related outpatient services Expanded focus on physician alignment and acquisition Growing market share by improving access to healthcare through ambulatory investment and physician alignment Ambulatory Sites of Care Physician Alignment & Acquisitions • Ambulatory Surgery Centers • Urgent Care Centers • Micro-Hospital • Curbing Patient Outmigration • Aligning Independent Physicians • Targeted Recruiting Untapped Opportunity in Our Current Markets1 1 Total estimated 2020 revenue and accompanying Ardent market share. Hospital service expenditures growth from 2022 to 2031E according to CMS; Physician and clinical services expenditures from 2022 to 2031E according to CMS. Hospital Revenue Ambulatory Revenue Total Revenue Total Spend Ardent Spend Capture • Attracting Top Specialty Physicians • Medical School Affiliations • Freestanding Imaging and Emergency Rooms • Telehealth In-market Ambulatory Expansion (M&A and De Novo) Will Enhance Our Leading Market Positions 10 $16.9bn 3% $20.9bn 21% $37.8bn 11% • Early January 2025: Announced acquisition of 18 urgent care clinics across Oklahoma and New Mexico from NextCare Urgent Care • Expansion complements our existing Oklahoma and New Mexico health systems' access points beyond main urban area • Acquired assets expand urgent care footprint to nearly 25% share in both Tulsa and Albuquerque1 • Acquisition follows 2024 addition of nine urgent care centers in our East Texas and Topeka, Kansas markets 2025 NextCare Acquisition announced January 2025 18 urgent care centers Tulsa, OK 12 urgent care centers Albuquerque, NM 6 urgent care centers 2024 Acquired 9 urgent care centers East TX 6 urgent care centers Topeka, KS 3 urgent care centers ~45% of the 2024 patient visits in the six urgent care centers we acquired in East Texas were new to the Ardent system Of those new visits, ~15% resulted in additional care within 30 days 1 Source: Market share data via Definitive Healthcare Proofpoint of Downstream Volume Benefit Urgent Care M&A Activity 11 Expanding our presence in mid-sized urban markets through M&A and by leveraging differentiated JV model Note: TAM represents total addressable market; SAM represents serviceable addressable market $2.2tn+ TAM ~$800bn SAM ~$38bn Current Ardent markets ~$5bn Ardent today Target Market Attributes Growing mid-sized urban areas Attractive payor mixes Strong population growth Significant long-term market demand Stable and growing job markets Favorable competitive dynamics Targeting acquisitions of $500 million to $1 billion in patient revenues; cash flow accretive and margin neutral/enhancing within 24-36 months of closing We believe there are approximately 350 markets that fit our strategic focus of mid-sized urban communities within a serviceable market of $800 billion Seek opportunities in both existing and new states where we are confident that we can employ our best practices and established model to realize operating synergies Selectively pursue acquisitions of healthcare systems in new (secondary) urban markets with favorable demographic trends and high unmet healthcare demands Opportunistic Hospital M&A 12
Joint venture model provides capital efficient avenue for accretive growth and provides our hospital portfolio with the effective scale of a larger hospital network 1 Represents ownership of Mountainside Medical Center; 2 Represents ownership of Pascack Valley Medical Center; What we do • We are a leading for-profit JV partner of choice for premier academic medical centers, large not-for-profit hospital systems, community physicians, and a community foundation What it means for us • Provides ability to access brand, regional presence, clinical talent, and JV partner’s access points What it means for our partners • Helps our partners by enhancing their network and regional presence while allowing them to retain economics and ownership • Ability to operate on Epic clinical operating system How it works • We own a majority interest in each JV, serve as day-to-day operator, and receive a management fee while driving clinical, financial, and operating improvements with shared services as needed Our Facility JV Partner Ardent ownership (%) UT Health East Texas 70% The University of Kansas Health System St. Francis Campus 71% Hackensack Meridian Health • Mountainside Medical Center • Pascack Valley Medical Center 80%1 65%2 Seton Medical Center Harker Heights 80% Portneuf Medical Center 77% Lovelace Health System 51% Hillcrest Healthcare System 51% BSA Health System 59% M a rk e t E n tr y J V P a rt n e rs M a rk e t E x p a n si o n JV P a rt n e rs Academic JV Not-for- profit JV Physician JV Academic JV Differentiated and Well-Established JV Model Strategy 13 Strong balance sheet and ample liquidity to support growth strategy 1 Net leverage calculated as net debt / Adjusted EBITDA, with net debt calculated as total debt less cash and cash equivalents; 2 Lease adjusted net leverage calculated as (net debt + 8x REIT rent expense) / Adjusted EBITDAR. Leverage ratios are calculated according to our credit agreements and exclude cash held by JVs of $58 million and $46 million at September 30, 2024 and September 30, 2023, respectively. ~$851mm in Available Liquidity ($mm) Net Leverage Profile 1 2 Capital Structure to Support Opportunistic Growth 14 • Ardent expects adjusted EBITDA growth in 2025 to be favorably impacted by Directed Payment Programs (DPPs) in New Mexico and Oklahoma contributing an incremental $140 million • Thereafter, the Company targets long-term revenue and adjusted EBITDA growth in the mid-single digits (MSD) to high single digits (HSDs) Organic • Split roughly evenly between volume and rate Total Including Capital Deployment • Acute care hospital M&A (new and adjacent markets) • Ambulatory build-out (M&A & de novo) in existing markets, which also creates downstream in-market hospital volume benefit Revenue Growth • Targeting 100-200bps of core margin expansion over 3-4 years • Ambulatory assets have a higher margin profile than acute care hospitals Adj EBITDA Growth MSDs HSDs > MSD revenue growth Approach 10% EBITDAR Margin Mid-teens 11.6% ~2% 1-2% = Out-year EBITDAR margin 2024 EBITDAR margin guidance + NM/OK DPP benefit in 2025 + Core margin expansion over 3-4 yrs Achieving mid-teens margin would be in-line with 2024E peer margin range of 12-20% Long-Term Growth Algorithm after 2025 15 2025 Tail/Headwinds 2025 Revenue Commentary Tailwinds • Durable underlying volume growth (don’t expect 2-midnight rule to meaningfully impact 2025 growth the way it did in 2024) • Above historical average commercial rate increases (~90% of book renewed) • Core margin expansion, primarily driven by supply chain, IT, and scale • $140mm incremental benefit from NM and OK DPP programs • Financial contribution from announced M&A (e.g., NextCare) Headwinds • Cost increases for hospital-based physician services have persisted longer than expected • Aggressive payment/denial practices from managed care companies We would expect the initial formal guidance we provide in February to reflect: • MSD growth, consistent with our organic long-term target • Plus ~$200mm of incremental revenue from the NM/OK DPP programs 2025 Adjusted EBITDA Commentary Ardent will provide formal 2025 guidance in February in the 4Q24 earnings release. However, we offer preliminary 2025 comments as detailed below. We would expect the initial formal guidance we provide in February to reflect: • MSD growth that is slightly below our organic long-term target • Plus ~$140mm of incremental EBITDA from the NM/OK DPP programs • Key considerations: – Elevated professional fees have persisted longer than expected – Ardent intends to establish prudently conservative guidance – We are respectful of the regulatory environment under the new presidential administration – Guidance will not include unannounced mergers and acquisitions. • 2024: New Mexico DPP for July 1, 2024 – December 31, 2024 has been approved. We are still finalizing the 2024 impact. 2025 Financial Considerations 16
Capital Deployment Augments GrowthMargin Expansion LeversAttractive Assets/Footprint • Strong footprint in eight growing mid-sized urban markets with favorable demographic and economic profiles • Leading (#1 or #2) share in a majority of our markets1 • Expansion opportunities in acute inpatient service lines and ambulatory service offerings in each market Ardent is well positioned to drive consistent, durable top- and bottom-line growth of MSD-HSDs in 2026+ • Expect 100-200bps of core margin expansion over 3-4 years • These initiatives are largely within Ardent’s control • Opportunistic acute care M&A in new or adjacent markets • Ambulatory build-out: M&A and/or de novo in geographies where Ardent currently has an acute footprint – Higher margin assets (above company average) – Augments hospital(s) ability to attract new patients/revenue • Strong balance sheet to support growth – ~$560 million of cash as of 3Q24 – Lease adjusted net-leverage of ~3x expected in 4Q24 INVESTIMPROVEEXPAND Key Takeaways 17 1 Based on number of hospitals. APPENDIX 1. Other non-operating losses include losses realized on certain non-recurring events or events that are non-operational in nature. 2. Cybersecurity Incident recoveries, net represents insurance recovery proceeds associated with the Cybersecurity Incident, net of incremental information technology and litigation costs. 3. Restructuring, exit and acquisition-related costs represent (i) enterprise restructuring costs, including severance costs related to work force reductions of $3.2 million and $1.3 million for the three months ended September 30, 2024 and 2023, respectively; (ii) penalties and costs incurred for terminating pre-existing contracts at acquired facilities of $0.2 million and $0.1 million for the three months ended September 30, 2024 and 2023, respectively; and (iii) third-party professional fees and expenses, salaries and benefits, and other internal expenses incurred in connection with potential and completed acquisitions of $0.4 million and $0.1 million for the three months ended September 30, 2024 and 2023, respectively. 4. Epic expenses consist of various costs incurred in connection with the implementation of Epic, our health information technology system. These costs included professional fees of $0.5 million and $0.4 million for the three months ended September 30, 2024 and 2023, respectively. Epic expenses do not include the ongoing costs of the Epic system. Three Months Ended September 30, 2024 2023 (in thousands) Net income $ 46,005 $ 38,708 Income tax expense 11,062 7,261 Interest expense, net 14,629 19,041 Depreciation and amortization 36,771 35,488 Noncontrolling interest earnings (19,683) (17,870) Loss on extinguishment and modification of debt 1,490 — Other non-operating losses 1 47 — Cybersecurity Incident recoveries, net 2 (4,976) — Restructuring, exit and acquisition-related costs 3 3,796 1,511 Epic expenses 4 485 437 Equity-based compensation 8,135 181 Loss from disposed operations 3 3 Adjusted EBITDA $ 97,764 $ 84,760 Rent expense payable to REITs 40,056 39,134 Adjusted EBITDAR $ 137,820 $ 123,894 Plus: noncontrolling interest earnings $ 19,683 $ 17,870 Adjusted EBITDAR, including noncontrolling interest earnings $ 157,503 $ 141,764 Total revenue $ 1,449,817 $ 1,377,727 Adjusted EBITDAR Margin 10.9% 10.3% Non-GAAP Reconciliations – 3Q24 & 3Q23 19 1 Cybersecurity Incident insurance recoveries, net represents estimated insurance recovery proceeds net of incremental information technology and litigation costs associated with the ransomware cybersecurity incident that occurred in November 2023 (the "Cybersecurity Incident"), impacting and disrupting a number of the Company's operational and informational technology systems. Full Year Ending December 31, 2024 Low High (in Millions) Net income $241 $263 Income tax expense 39 45 Interest expense, net 66 65 Depreciation and amortization 145 144 Noncontrolling interest earnings (85) (87) Loss on extinguishment and modification of debt 3 3 Cybersecurity Incident recoveries, net1 (20) (25) Restructuring, exit and acquisition-related costs 13 12 Epic expenses, net 4 3 Equity-based compensation 17 17 Loss from disposed operations 2 — Adjusted EBITDA $425 $440 Non-GAAP Reconciliations – FY 2024 Guidance 20