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The risk factors set forth in this report update, and should be read together with, the risk factors discussed in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2025.
Stockholder litigation could prevent or delay the closing of the Merger or otherwise negatively impact our business, operating results, and financial condition.
We may incur additional costs in connection with the defense or settlement of any stockholder litigation relating to the Merger. Such litigation may adversely affect our ability to complete the Merger. We could incur significant costs in connection with any such litigation, including costs associated with our indemnification obligations to our Board of Directors.
The announcement and pendency of the proposed Merger may result in disruptions to our business which could adversely affect our business, operating results, and financial condition.
The announcement and pendency of the proposed Merger could cause disruptions or uncertainty surrounding our business, that could adversely affect our operating results and financial condition, regardless of whether the proposed Merger is completed. Such risks include, but are not limited to the following, all of which could be exacerbated by a delay in the completion of the proposed Merger:
• We may not be able to attract, retain, and motivate our employees, including key personnel. Any loss or distraction of such employees could adversely affect our business and operating results.
• We have diverted, and will continue to divert, significant management resources, and have expended, and will continue to expend, significant cash amounts, toward the completion of the proposed Merger, which could adversely affect our business, operating results, and financial condition.
• We may face difficulties maintaining relationships with our existing and potential patients, suppliers, and other business partners.
• There could be potential uncertainty regarding our future plans and strategy, including business model changes and transformation.
• The possibility of negative publicity or a negative impression of us in the financial markets could result from the announcement and pendency of the proposed Merger.
• We may be unable to pursue strategic business opportunities or to take certain actions with respect to our business that we may consider advantageous because of restrictions in the Merger Agreement.
• There could be other developments beyond our control that may affect the timing or success of the proposed Merger.
Failure to consummate the proposed Merger within the expected timeframe, or at all, may adversely affect our business, operating results, and financial condition.
Consummation of the proposed Merger is subject to several conditions beyond our control. If any of these conditions are not satisfied or waived, it is possible the proposed Merger will not be consummated in the expected time frame, or at all. For example, the proposed Merger requires: (a) the affirmative vote of (1) the holders of the Company's common stock representing a majority of the aggregate voting power of the outstanding common stock entitled to vote thereon and (2) holders of the Company's common stock representing a majority of the aggregate voting power of the outstanding common stock entitled to vote thereon that are not beneficially owned (directly or indirectly) by Parent, Merger Sub, the Rollover Holders (as defined in the Merger Agreement) and their respective affiliates, “associates” or members of their respective “immediate family” (as such terms are respectively defined in Rules 12b-2 and 16a-1 of the Securities Exchange Act of 1934, as amended) (collectively, the “Requisite Stockholder Approvals”); (b) the absence of any order or other action that is in effect (whether temporary, preliminary or permanent) by a governmental authority restraining, enjoining or otherwise prohibiting the consummation of the proposed Merger or applicable law that is in effect that makes consummation of the Merger illegal or otherwise prohibited and (c) the expiration or termination of the applicable waiting period (and any extension thereof, including pursuant to any timing or
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similar agreement with a governmental entity) under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended; and (d) the receipt of certain required regulatory approvals, including certain healthcare regulatory approvals required in connection with the change of control of the Company and its licensed healthcare facilities. There is no assurance that the various conditions will be satisfied, or that the proposed Merger will be consummated on the proposed terms, within the expected timeframe, or at all.
The proposed Merger may be delayed, and ultimately not be completed, due to a number of factors, including, but not limited to:
• the failure to obtain the Requisite Stockholder Approval;
• the failure to receive the consents required under certain antitrust and foreign investment laws (or the imposition of any conditions, limitations, or restrictions on such consents);
• the failure to obtain the required healthcare regulatory approvals;
• failure to satisfy the other conditions to the consummation of the proposed Merger; and
• current or potential future stockholder litigation and other legal and regulatory proceedings.
If the proposed Merger is delayed or does not close, we may suffer consequences that could adversely affect our business, operating results and financial condition. We have incurred, and will continue to incur, significant costs, expenses, and fees for professional services and other transaction costs in connection with the proposed Merger, for which we will have received little or no benefit if the proposed Merger is not consummated. Many of these fees and costs are payable regardless of whether or not the proposed Merger is consummated. If there is any delay in the consummation of the proposed Merger, these costs could increase significantly. Under certain circumstances, if the Company terminates the proposed Merger it will be required to pay the Company Termination Fee, which could adversely affect our financial condition.
The obligation of each party to consummate the proposed Merger is also conditioned upon each party's representations and warranties being true and correct to the extent specified in the Merger Agreement. Any failure to consummate the proposed Merger may result in negative publicity or a negative impression of us among our customers or in the investment community or business community generally which may cause the price of our common stock to decline.
If the proposed Merger is consummated, our stockholders will not be able to participate in any further upside to our business.
If the proposed Merger is consummated, our stockholders (subject to certain exceptions specified in the Merger Agreement) will receive $16.50 in cash per share of the common stock owned by them, without interest thereon and subject to any applicable withholding taxes, and will not receive any equity interests of Parent. As a result, if our business following the proposed Merger performs well, our current stockholders will not receive any additional consideration and will therefore not receive any benefit from any such future performance of our business.
While the Merger Agreement is in effect, we are subject to restrictions on our business activities.
While the Merger Agreement is in effect and subject to certain exceptions (including obtaining prior written consent of Parent, which is not to be unreasonably withheld, conditioned, or delayed) we are generally required to conduct our business in all material respects in the ordinary course, and are restricted from taking certain actions. These restrictions could prevent us from pursuing strategic business opportunities and taking actions with respect to our business that we may consider advantageous and may, as a result, materially and adversely affect our business, results of operations, and financial condition.