American Renal Associates Holdings, Inc. (Form: 8-K, Received: 03/16/2020 16:04:09)

Execution Copy

TRANSITION SERVICES AGREEMENT

This Transition Services Agreement (this “Agreement”), is made as of March 13, 2020 (the “Effective Date”), by and among American Renal Management LLC, a Delaware limited liability company (the “Company”), American Renal Holdings, Inc., a Delaware corporation (“ARH”) and Joseph A. Carlucci (the “Executive”).

WHEREAS, the Executive currently serves as Chairman of the Board of Directors of American Renal Associates Holdings, Inc. (“ARAH”) (the “Board”) and Chief Executive Officer of the Company pursuant to the terms of an Employment Agreement, dated as of March 22, 2010, as subsequently amended on May 10, 2010 (which amendment was subsequently terminated pursuant to the Termination Agreement, dated October 18, 2010, by and among the Company, ARH and the Executive), and subsequently amended on April 26, 2016, November 14, 2017 and on August 28, 2019 (as so amended, the “Employment Agreement”);

WHEREAS, the Executive has announced his desire to retire from his current position as Chief Executive Officer and as a member of the Board;

WHEREAS, the Company and ARH intend to actively recruit a successor Chief Executive Officer and the Executive has agreed to assist the Company and ARH in such efforts and thereafter continue to serve as a consultant to the Company and ARH to ensure a smooth transition between Chief Executive Officers for a period thereafter as more fully set forth herein;

WHEREAS, the parties wish to document the terms of the Executive’s transition from his role as Chief Executive Officer and the consulting arrangement with the Executive as set forth herein; and

WHEREAS, capitalized terms used herein without definition have the meanings assigned to such terms under the Employment Agreement.

NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth in this Agreement, the Company, ARH and the Executive agree as follows:

1.Retirement as CEO.

(a)From the Effective Date and continuing until the Transition Date (as defined below) (such period, the “Employment Period”), the Executive shall continue to be employed as Chief Executive Officer of the Company pursuant to the terms of the Employment Agreement, subject to Section 2 hereof. During the Employment Period, the Executive shall continue to perform his regular duties as Chief Executive Officer, as described in the Employment Agreement, and agrees to assist the Board and the Company, on an as-needed basis, if and as requested by the Board, in their efforts to recruit a successor Chief Executive Officer. Upon the end of the Employment Period, the Executive shall resign as Chief Executive Officer and as a member of the Board and shall also resign from all other officer and board positions held with the Company and its affiliates. The Executive agrees that he will not voluntarily resign from his role as Chief Executive Officer of the Company prior to the New CEO Date (as defined below), except upon a Resignation for Good Reason (as defined in the Employment Agreement, as modified by Section 2(a)Joe hereof).

(b)

(b)“Transition Date” shall mean the earliest to occur of (i) such date on which a successor Chief Executive Officer designated by the Board commences employment with the Company (the “New CEO Date”) and (ii) the date of the Executive’s termination of employment with the Company for any reason.

2.Continuing Duties and Compensation During Employment Period

(a)During the Employment Period, the terms of the Employment Agreement shall remain in full force and effect, provided that the parties agree that neither the entering into of this Agreement nor the matters contemplated hereby shall give to rise to any right or claim of “Good Reason” under the Employment Agreement (nor any similar right under any other compensation or benefit plan of ARAH or its affiliates).

(b)During the Employment Period, the Executive shall continue to receive his base salary at the annualized rate of $904,203 and shall be eligible to participate in the same employee benefit plans on the same basis as immediately prior to the Effective Date.

(c)At or around the time when the Company makes its regular 2020 annual equity grants to other senior executives, the Executive shall be granted an award of restricted stock in ARAH Common Stock with a grant date value of $1,000,000 based on the closing trading price of such Common Stock on such grant date (the “Restricted Stock Award”). The Restricted Stock Award shall be subject to the terms and conditions of the ARAH 2016 Omnibus Incentive Plan (the “2016 Plan”), with 70% of the shares subject to the Restricted Stock Award vesting upon the date that is 12 months following the date of the award and the remaining 30% of the shares subject to the Restricted Stock Award vesting upon the date that is 12 months following the end of the Employment Period (such dates, the “Vesting Dates”), subject to the Executive’s continued employment or performance of consulting services (as applicable) in accordance with this Agreement and continued compliance with the other terms of this Agreement through such Vesting Dates. The Executive hereby acknowledges that he will not be entitled to receive any other equity award during the duration of the Employment Period other than as described herein.

3.Consulting Arrangement.

(a)Effective upon the Transition Date, and provided that the Executive’s employment with the Company was not terminated as a result of a Termination For Cause, a Resignation without Good Reason (other than a resignation occurring on the New CEO Date in accordance with Section 1(a) hereof), a Termination for Disability or a Termination Upon Death (any such termination, a “Disqualifying Termination”), the Company agrees to retain the Executive, and the Executive agrees to serve, as a consultant to the Company with the honorific title of Chairman Emeritus during the period commencing on the Transition Date and continuing until the 12-month anniversary of the Transition Date; provided, however, that the Board may, in its sole discretion, extend such term for up to an additional three-month period (such term, as may be extended in the Board’s discretion, the “Consulting Term”). During the Consulting Term the Executive shall, from time to time on an as-needed basis, if and as requested by the Board, provide consultation and transition services to the Board and the new Chief Executive Officer regarding the Company, its strategic business plans and such other matters as the Board or the Chief Executive Officer may reasonably request.

(b)During the Consulting Term, the Executive shall not be an employee of the Company. The Executive shall have no authority to act as an agent of the Company, except on authority specifically so delegated, and he shall not represent to the contrary to any person. The Executive shall not direct the work of any employee of the Company, or make any management decisions, or undertake to commit the Company to any course of action in relation to third persons. Although the Company may specify the reasonable results to be achieved by the Executive and may reasonably control and direct him in that regard, the Company shall not control or direct the Executive as to the specific manner by which such results are accomplished.

(c)The Company may terminate the Consulting Term prior to its completion in the event the Executive breaches his restrictive covenants incorporated herein by reference in Section 6 hereof, or upon the occurrence of an event constituting Cause (as defined in the Employment Agreement but modified with all references to the Executive’s duties or employment as referring to the Executive’s duties and retention as a consultant pursuant to this Agreement); provided, however, that during the Consulting Term, the term “Cause” shall not include subclause “(c)” of the “Cause” definition in the Employment Agreement. That is, the term “Cause” shall not include the following during the Consulting Term: “the Executive’s willful failure to perform or adhere to explicitly stated duties or guidelines of employment or to follow the directives of the Board (which are not unlawful to perform or to adhere to or follow and which do not constitute Good Reason) following a written warning that if such failure continues it will be deemed a basis for dismissal for Cause.”

4.Retirement/Transition Benefits

(a)Salary Continuation Payments. Commencing on the Transition Date and continuing for a duration of twenty-four (24) months (such period, the “Salary Continuation Period”), provided that the Executive’s employment with the Company was not terminated as a result of a Disqualifying Termination, and subject to the Executive’s continued compliance with the terms of this Agreement, including, without limitation, the execution of the Initial Release pursuant to Section 7 hereof, the Executive shall be entitled to:

(i)Salary continuation payments at the rate in effect immediately prior to the Transition Date (i.e., an annualized rate of $904,203) payable in accordance with the Company’s regular payroll practices;

(ii)continued provision of health, life and disability benefits at the same levels as provided to active employees of the Company; provided, however, in the event the Company determines that it cannot provide continuation of such benefits or providing such benefits is not reasonably practicable, the Company may, in lieu of such benefit continuation, pay the Executive a monthly cash payment in an amount equal to the Company’s normal monthly cost of coverage for an active employee; and provided further, that the provision of such benefits (or cash payments in lieu thereof) shall terminate if the Executive becomes eligible for comparable benefits from a subsequent employer; and

(iii)a Pro-Rated Bonus (as defined in Section 7.2(iv) of the Employment Agreement) in respect of the calendar year during which the Employment Period ends; provided, however, that such bonus, if any, will be payable only after delivery of final audited financial statements for the ARH Group for the fiscal year to which such bonus relates.

Notwithstanding the foregoing, if any regular scheduled payroll date for any payments due under Section 4(a) hereof occurs prior to the completion of the Revocation Period (as defined in the Initial Release), any amount that would otherwise have been payable under subclauses (i), (ii) and (iii) hereof shall be deferred and paid together with the applicable payment installment otherwise to be made on the first regular payroll date following the completion of the Revocation Period; and provided further, that in the event the period during which the Executive is permitted to sign the Initial Release straddles two calendar years, any such payments shall be deferred until the second of such calendar years.

(b)The Executive agrees that the payments and benefits provided herein during the Salary Continuation Period shall cease or not commence if the Executive’s role as consultant during the Consulting Term is terminated by the Company for Cause (as defined in the Employment Agreement and as modified

pursuant to Section 3(c) hereof) or in the event the Executive breaches his restrictive covenants incorporated herein by reference in Section 6 hereof.

(c)The Executive agrees that he shall not be entitled to any further separation payments or other termination benefits under the terms of the Employment Agreement or otherwise, except as for the benefits expressly provided herein; provided, however, that in the event the Executive’s employment terminates due to a Termination for Disability or a Termination Upon Death, then the Executive shall be entitled to receive the termination payments set forth under the Employment Agreement in lieu of any additional payments or benefits under this Agreement. For the avoidance of doubt, if the Executive’s employment with the Company is terminated during the Employment Period as a result of a Termination without Cause or a Resignation for Good Reason, the Executive shall be entitled solely to the payments and benefits provided in Sections 4 and 5 of this Agreement, and shall not be entitled to any severance or other termination payments or benefits provided in the Employment Agreement or otherwise.

(d)Notwithstanding any of the foregoing, in the event a Change in Control as that term is defined in the Employment Agreement occurs during the Consulting Term, all Common Stock underlying the Restricted Stock Award described under this Agreement that has not yet vested will immediately vest upon the effective date of the Change in Control, and any remaining salary continuation payments pursuant to Section 4(a) of this Agreement shall immediately come due and will be paid to Executive in one lump sum upon the effective date of the Change in Control (contingent upon Executive’s execution and non-revocation of the Initial Release). For the avoidance of doubt, other than the Restricted Stock Award, the terms of the applicable award grant notices and agreements govern the treatment of any outstanding equity awards that have not yet vested in the event of a Change in Control, and a “Qualifying Termination” as that term is defined in the Restricted Stock Grant Notice and Agreement for the grant dated March 9, 2018 includes a Termination of Executive’s Consulting Term without cause.

5.Treatment of Equity Awards During and Following the Consulting Term

(a)The Executive’s continued service as a consultant of the Company during the Consulting Term shall be treated as continued service with the Company for purposes of vesting and any applicable exercise periods under all outstanding equity awards of ARAH held by the Executive; provided, however, that the Executive’s outstanding equity awards shall be subject to the restrictions described in Section 5(b) hereof.

(b)The shares of Common Stock underlying all of the Executive’s outstanding equity awards (including, without limitation the Restricted Stock Award described under this Agreement) that vest during the Consulting Term may not be sold or otherwise disposed of by the Executive without prior approval of the Board until the completion of the Consulting Term and following the Executive’s execution and delivery, no later than twenty-one (21) days following the completion of the Consulting Term, and non-revocation of the Bring-Down Release. Any outstanding equity awards held by the Executive which do not vest in accordance with their terms prior to the completion of the Consulting Term (after taking into account the treatment of the Consulting Term for purposes of the outstanding equity awards under Section 5(a) hereof), shall be forfeited at the conclusion of the Consulting Term. The parties agree that the terms of this Section 5 shall govern and control with respect to all outstanding equity awards of ARAH held by the Executive, notwithstanding anything to the contrary in the Employment Agreement, any ARAH incentive plan, any award agreement of ARAH governing the Executive’s outstanding equity awards or any other agreement between the Executive and the Company, ARH, ARAH or their affiliates.

6.Restrictive Covenants

(a)The Executive hereby reaffirms his restrictive covenant obligations provided in Article 8 of the Employment Agreement, and Article 8 of the Employment Agreement is incorporated herein by reference in its entirety, except that for purposes of Section 8.1.4 of the Employment Agreement (regarding non-competition obligations) the “Restrictive Period” shall end on the third (3^rd) anniversary of the Transition Date and for purposes of Section 8.1.3 of the Employment Agreement (regarding non-solicitation obligations) the “Restrictive Period” shall end on the third (3^rd) anniversary of the termination of the Consulting Term.

(b)Without limitation to the restrictive covenants set forth in the Employment Agreement and incorporated herein by reference, during the Restrictive Period (as applicable to non-competition obligations as described under Section 6(a) hereof) the Executive agrees that he will not serve on the board of any company engaged in the kidney dialysis business and/or the operation of kidney dialysis facilities and will not provide services to any private equity fund sponsor holding a material equity position in any business engaged in the kidney dialysis business and/or the operation of kidney dialysis facilities.

(c)Nothing in this Agreement or the Employment Agreement shall prohibit the Executive from communicating, cooperating or filing a complaint with any U.S. federal, state or local enforcement branch, agency or entity (collectively, a “Governmental Entity”) with respect to possible violations of any U.S. federal, state or local law or regulation, or otherwise making disclosure relating thereto to any such Governmental Entity, that are protected under the whistleblower provisions of any such law or regulation provided that in each case (i) such communications and disclosures are consistent with applicable law and made in good faith and (ii) the information subject to such disclosure was not obtained by the Executive through a communication that was subject to the attorney-client privilege, unless such disclosure of that information would otherwise be permitted by an attorney pursuant to applicable state attorney conduct rules. Moreover, the Executive does not need any prior authorization from (or to give prior notice to) the Company regarding any such communication or disclosure. The Executive also acknowledges 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 (i) in confidence to a federal, state, or local government official or to an attorney solely for the purpose of reporting or investigating a suspected violation of law, or (ii) in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. An individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose the trade secret to the attorney of the individual and use the trade secret information in the court proceeding, if the individual files any document containing the trade secret under seal, and does not disclose the trade secret, except pursuant to court order.

7.Release

(a)Within twenty-one (21) days following the Transition Date, the Executive shall execute and deliver to the Company a release of claims in the form attached hereto as Exhibit A (the “Initial Release”). The Executive acknowledges and agrees that if he fails to execute and deliver, within the time period described in the preceding sentence, and not revoke the Initial Release during the Revocation Period (as defined in the Initial Release), then (i) the Executive shall not be entitled to receive any of the payments or benefits provided under Section 4 hereof and (ii) the continued vesting of the Restricted Stock Award and all of the Executive’s other outstanding equity awards, as provided in Section 5(a) hereof, shall cease.

(b)Within twenty-one (21) days following the termination of the Consulting Term, the Executive shall execute and deliver to the Company a release of claims in the form attached hereto as Exhibit B (the “Bring-Down Release”). The Executive acknowledges and agrees that if he fails to execute and deliver,

within the time period described in the preceding sentence, and not revoke the Bring-Down Release during the Revocation Period (as defined in the Bring-Down Release), then the Executive shall forfeit any equity awards that vested during the Consulting Term (including, without limitation, the Restricted Stock Award described under this Agreement).

8.Statements to the Company and to the Media. Within five business days of the Executive’s execution and delivery of this Agreement, the Company may release, internally and to external media outlets, the press release attached hereto as Exhibit C (the “Press Release”). The Executive agrees that statements describing the Executive’s employment and circumstances of departure will remain consistent with the Press Release.

9.Attorneys’ Fees Reimbursements. The Company agrees to reimburse the Executive for his reasonable attorneys’ fees and costs incurred in connection with the negotiation and preparation of this Agreement in an amount not to exceed $25,000.

10.Tax Withholding. All payments made under this Agreement shall be made less applicable taxes and withholdings, to the extent required by law. Notwithstanding anything to the contrary, the Company makes no representations concerning the Executive’s tax consequences under the Agreement under any federal, state or local tax law.

11.Miscellaneous Provisions. The provisions of Articles 9.1 through 9.15 of the Employment Agreement (Arbitration; Absence of Conflicting Agreements and Obligations; Severability; No Waiver; Assignment; Entire Agreement; Amendment; Notices; Binding Nature; Headings; Counterparts; Governing Law; Compliance with Internal Revenue Code Section 409A; Mutual Waiver of Jury Trial, and Construction of Terms are hereby incorporated herein by reference.

IN WITNESS WHEREOF, the Company, ARH and the Executive have executed this Agreement as of the date first above written.



					AMERICAN RENAL MANAGEMENT LLC

					By:		/s/ Mark Herbers
					Name:		Mark Herbers
					Title:		Interim Chief Financial Officer



					AMERICAN RENAL HOLDINGS INC

					By:		/s/ Mark Herbers
					Name:		Mark Herbers
					Title:		Interim Chief Financial Officer



					EXECUTIVE

					By:		/s/ Joseph A. Carlucci
					Name:		Joseph A. Carlucci

EXHIBIT A

FORM OF RELEASE AND WAIVER OF CLAIMS

This Release and Waiver of Claims (“Release”) is entered into as of this [•] day of [•] 2020, by Joseph A. Carlucci (the “Executive”).

The Executive agrees as follows:

The employment relationship between the Executive and American Renal Management LLC, a Delaware limited liability company (the “Company”) and its subsidiaries and affiliates, as applicable, terminated on the [•] day of , 2020 (the “Termination Date”) pursuant to Section 1(a) of the Transition Services Agreement between the Company, American Renal Holdings, Inc., a Delaware corporation and the Executive dated [•], 2020 (the “Transition Agreement”). The Executive [has resigned] [hereby resigns] from all positions as an officer, director or otherwise for the Company and each of its subsidiaries and affiliates.

In consideration of the payments, rights and benefits provided for in Sections 2(c) and 4 of the Transition Agreement (“Separation Terms”), the sufficiency of which the Executive hereby acknowledges, the Executive, on behalf of the Executive and the Executive’s agents, representatives, attorneys, administrators, heirs, executors and assigns (collectively, the “Employee Releasing Parties”), but subject to Section 4 hereof, hereby releases and forever discharges the Company Released Parties (as defined below), from all claims, charges, causes of action, obligations, expenses, damages of any kind (including attorneys fees and costs actually incurred) or demands, in law or in equity, whether known or unknown, which may have existed or which may now exist from the beginning of time to the date of this Release, arising from or relating to the Executive’s employment or termination from employment with the Company or otherwise, including a release of any rights or claims the Executive may have under Title VII of the Civil Rights Act of 1964; the Civil Rights Act of 1991; the Age Discrimination in Employment Act of 1967, as amended (“ADEA”); the Older Workers Benefit Protection Act; the Americans with Disabilities Act of 1990; the Rehabilitation Act of 1973; the Family and Medical Leave Act of 1993; Section 1981 of the Civil Rights Act of 1866; Section 1985(3) of the Civil Rights Act of 1871; the Employee Retirement Income Security Act of 1974; the Fair Labor Standards Act; any other federal, state or local laws against discrimination; or any other federal, state, or local statute, regulation or common law relating to employment, wages, hours, or any other terms and conditions of employment. This includes a release of any and all claims or rights arising under contract (whether written or oral, express or implied), covenant, public policy, tort or otherwise. For purposes hereof, “Company Released Parties” shall mean the Company, any of its direct or indirect stockholders holding a beneficial ownership of more than 5% of the Company’s voting stock and any of its and their respective divisions, parents, members, subsidiaries, affiliates, predecessors, successors (and any of its and their respective past, current and future employees, agents, insurers, attorneys, administrators, officials, directors, direct or indirect shareholders, employee benefit plans, and the sponsors, fiduciaries, or administrators of such employee benefit plans in their individual or representative capacities).

The Executive acknowledges that the Executive is waiving and releasing rights that the Executive may have under the ADEA and other federal, state and local statutes contract and the common law and that this Release is knowing and voluntary. The Executive agrees that this Release does not apply to any rights or claims that may arise after the date of execution by the Executive of this Release. The Executive acknowledges that the consideration given for this Release is in

addition to anything of value to which the Executive is already entitled. The Executive further acknowledges that the Executive has been advised by this writing that: (i) the Executive should consult with an attorney prior to executing this Release; (ii) the Executive has up to twenty-one (21) days within which to consider this Release, although the Executive may, at the Executive’s discretion, sign and return this Release at an earlier time, in which case the Executive waives all rights to the balance of this twenty-one (21) day review period; and (iii) for a period of 7 days following the execution of this Release (the “Revocation Period”) in duplicate originals, the Executive may revoke this Release in a writing delivered to the Company’s General Counsel, and this Release shall not become effective or enforceable until the Revocation Period has expired.

This Release does not release the Company Released Parties from (i) any obligations due to the Executive under the Separation Terms or under this Release, (ii) any rights the Executive has to indemnification by the Company (or any subsidiary or affiliate thereof) and to directors and officers liability insurance coverage under the Employment Agreement or otherwise, (iii) any vested rights the Executive has under the Company’s employee pension benefit plans or any other tax-qualified employee benefit plans as a result of the Executive’s actual service with the Company, or (iv) any rights of the Executive as a shareholder or optionholder of the Company (or any subsidiary or affiliate thereof), in the Executive’s sole capacity as such (including, without limitation, any rights to proceeds from the sale or other action with respect to any stock or options of the Company (or any subsidiary or affiliate thereof).


5.	The Executive represents and warrants that he has not filed any action, complaint, charge, grievance, arbitration or similar proceeding against the Company Released Parties.


6.	This Release is not an admission by the Company Released Parties or the Employee Releasing Parties of any wrongdoing, liability or violation of law.


7.	The Executive waives any right to reinstatement or future employment with the Company following the Executive’s separation from the Company.


8.	The Executive shall continue to be bound by the restrictive covenants contained in the Employment Agreement, as amended and incorporated by reference in the Transition Agreement, or any other agreement with the Company or its affiliates, in accordance with their terms.


9.	This Release shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts, without reference to the principles of conflict of laws.

10.

Any controversy or claim arising out of or relating to this Release shall be resolved by binding confidential arbitration by a single arbitrator who is licensed to practice law in a State in the United States, to be held in Boston, Massachusetts, in accordance with the Employee Dispute Resolution Rules of the American Arbitration Association (or its successor rules). The arbitrator shall have the discretionary authority to award attorneys’ and arbitrator’s reasonable fees and expenses and the costs of arbitration to the prevailing party. Judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. The arbitrator’s decision shall be in writing and shall include the findings of fact and a statement of law on which the decision is based.


11.	This Release represents the complete agreement between the Executive and the Company concerning the subject matter in this Release and supersedes all prior agreements or

understandings, written or oral, with respect solely to the subject matter hereof. For avoidance of doubt, this Release does not supersede that certain Amended and Restated Stockholders Agreement dated as of June 28, 2010, as amended, among the Company’s affiliates and their stockholders, including the Executive, or any equity award agreement to which the Executive is a party. This Release may not be amended or modified otherwise than by a written agreement executed by the parties hereto or their respective successors and legal representatives.


12.	Each of the sections contained in this Release shall be enforceable independently of every other section in this Release, and the invalidity or unenforceability of any section shall not invalidate or render unenforceable any other section contained in this Release.

13.

The Executive acknowledges that the Executive has carefully read and understands this Release, that the Executive has the right to consult an attorney with respect to its provisions and that this Release has been entered into knowingly and voluntarily. The Executive acknowledges that no representation, statement, promise, inducement, threat or suggestion has been made by any of the Company Released Parties to influence the Executive to sign this Release except such statements as are expressly set forth herein or in the Employment Agreement.

The parties to this Release have executed this Release as of the day and year first written above.

Joseph A. Carlucci

______________________________

By:

Title:

EXHIBIT B

FORM OF BRING-DOWN RELEASE AND WAIVER OF CLAIMS

This Release and Waiver of Claims (“Release”) is entered into as of this [•] day of [•], by Joseph A. Carlucci (the “Executive”).

The Executive agrees as follows:

The employment relationship between the Executive and American Renal Management LLC, a Delaware limited liability company (the “Company”) and its subsidiaries and affiliates, as applicable, terminated on the [•] day of , 2020 (the “Termination Date”) pursuant to Section 1(a) of the Transition Services Agreement between the Company, American Renal Holdings, Inc., a Delaware corporation and the Executive dated [•], 2020 (the “Transition Agreement”). Pursuant to the Transition Agreement and following the Termination Date, the Executive served as a consultant to the Company. Such service by the Executive as a consultant terminated on the on the [•] day of , 2020 (the “Consulting Termination Date”). The Executive [has resigned] [hereby resigns] from all positions as a consultant or otherwise for the Company and each of its subsidiaries and affiliates

In consideration of the rights and benefits provided for in Section 5 of the Transition Agreement (“Separation Terms”), the sufficiency of which the Executive hereby acknowledges, the Executive, on behalf of the Executive and the Executive’s agents, representatives, attorneys, administrators, heirs, executors and assigns (collectively, the “Employee Releasing Parties”), but subject to Section 4 hereof, hereby releases and forever discharges the Company Released Parties (as defined below), from all claims, charges, causes of action, obligations, expenses, damages of any kind (including attorneys fees and costs actually incurred) or demands, in law or in equity, whether known or unknown, which may have existed or which may now exist from the beginning of time to the date of this Release, arising from or relating to the Executive’s employment or termination from employment with the Company or otherwise, including a release of any rights or claims the Executive may have under Title VII of the Civil Rights Act of 1964; the Civil Rights Act of 1991; the Age Discrimination in Employment Act of 1967, as amended (“ADEA”); the Older Workers Benefit Protection Act; the Americans with Disabilities Act of 1990; the Rehabilitation Act of 1973; the Family and Medical Leave Act of 1993; Section 1981 of the Civil Rights Act of 1866; Section 1985(3) of the Civil Rights Act of 1871; the Employee Retirement Income Security Act of 1974; the Fair Labor Standards Act; any other federal, state or local laws against discrimination; or any other federal, state, or local statute, regulation or common law relating to employment, wages, hours, or any other terms and conditions of employment. This includes a release of any and all claims or rights arising under contract (whether written or oral, express or implied), covenant, public policy, tort or otherwise. For purposes hereof, “Company Released Parties” shall mean the Company, any of its direct or indirect stockholders holding a beneficial ownership of more than 5% of the Company’s voting stock and any of its and their respective divisions, parents, members, subsidiaries, affiliates, predecessors, successors (and any of its and their respective past, current and future employees, agents, insurers, attorneys, administrators, officials, directors, direct or indirect shareholders, employee benefit plans, and the sponsors, fiduciaries, or administrators of such employee benefit plans in their individual or representative capacities).


3.	The Executive acknowledges that the Executive is waiving and releasing rights that the Executive may have under the ADEA and other federal, state and local statutes contract and the common law and that this Release is knowing and voluntary. The Executive agrees that this Release does not apply to any

rights or claims that may arise after the date of execution by the Executive of this Release. The Executive acknowledges that the consideration given for this Release is in addition to anything of value to which the Executive is already entitled. The Executive further acknowledges that the Executive has been advised by this writing that: (i) the Executive should consult with an attorney prior to executing this Release; (ii) the Executive has up to twenty-one (21) days within which to consider this Release, although the Executive may, at the Executive’s discretion, sign and return this Release at an earlier time, in which case the Executive waives all rights to the balance of this twenty-one (21) day review period; and (iii) for a period of 7 days following the execution of this Release (the “Revocation Period”) in duplicate originals, the Executive may revoke this Release in a writing delivered to the Company’s General Counsel, and this Release shall not become effective or enforceable until the Revocation Period has expired.


5.	The Executive represents and warrants that he has not filed any action, complaint, charge, grievance, arbitration or similar proceeding against the Company Released Parties.


6.	This Release is not an admission by the Company Released Parties or the Employee Releasing Parties of any wrongdoing, liability or violation of law.


7.	The Executive waives any right to reinstatement or future employment with the Company following the Executive’s separation from the Company.


8.	The Executive shall continue to be bound by the restrictive covenants contained in the Employment Agreement, as amended and incorporated by reference in the Transition Agreement, or any other agreement with the Company or its affiliates, in accordance with their terms.


9.	This Release shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts, without reference to the principles of conflict of laws.

10.


11.	This Release represents the complete agreement between the Executive and the Company concerning the subject matter in this Release and supersedes all prior agreements or understandings, written or oral, with respect solely to the subject matter hereof. For avoidance of doubt, this Release does not supersede

that certain Amended and Restated Stockholders Agreement dated as of June 28, 2010, as amended, among the Company’s affiliates and their stockholders, including the Executive, or any equity award agreement to which the Executive is a party. This Release may not be amended or modified otherwise than by a written agreement executed by the parties hereto or their respective successors and legal representatives.


12.	Each of the sections contained in this Release shall be enforceable independently of every other section in this Release, and the invalidity or unenforceability of any section shall not invalidate or render unenforceable any other section contained in this Release.

13.

The parties to this Release have executed this Release as of the day and year first written above.

Joseph A. Carlucci

______________________________

By:

Title:

EXHIBIT C

FORM OF PRESS RELEASE

[See press release, dated March 16, 2020, as furnished as Exhibit 99.1 with the Company’s Current Report on Form 8-K, filed March 16, 2020]

American Renal Associates Holdings, Inc. Announces Fourth Quarter 2019 Results

Company Announces CEO Plans to Retire by the End of 2020

BEVERLY, MA (March 16, 2020) - American Renal Associates Holdings, Inc. (NYSE: ARA) (the “Company”), a leading kidney care and dialysis provider focused on partnering with local nephrologists, today announced financial and operating results for the quarter and year ended December 31, 2019.

The Company also announced that Joseph (Joe) Carlucci has communicated his intention to retire as Chief Executive Officer of the Company by the end of 2020. The Board of Directors will initiate a process to identify a successor for Mr. Carlucci and will immediately engage an executive search firm to support the search. Mr. Carlucci plans to continue as CEO and Chairman until his successor has started and will assist in ensuring a smooth transition.

“After a 42-year career in the healthcare industry, I am announcing my intention to retire in 2020. Co-founding ARA approximately two decades ago has been the highlight of my career, and it has been a tremendous privilege to lead this organization and our exceptional team ever since. Today, we provide high quality, clinically integrated care to more than 17,300 patients in partnership with 400 physicians in 246 dialysis clinics across 27 states, and I am so proud of the growth we’ve achieved,” Carlucci said. “Now is the right time for a new leader who can build on our established foundation and further realize ARA’s growth opportunities in a way that still prioritizes our Core Values.”

Steven Silver, Senior Managing Director of Centerbridge Partners, L.P., and Member of the Company’s Board of Directors, said: “On behalf of the Board, I would like to personally thank and commend Joe for his leadership. Among his many accomplishments during his long and distinguished career, Joe co-founded ARA and pioneered the physician partnership model within the dialysis sector, establishing the Company as a differentiated physician-driven organization focused on excellent patient care. We are grateful to Joe that he will continue in his role as CEO and Chairman while we work to identify a successor to lead ARA’s next phase of growth and value creation.”

Fourth Quarter 2019 Highlights (all percentage changes compare Q4 2019 to Q4 2018 unless noted):

Certain metrics, including those expressed on an adjusted basis, are Non-GAAP financial measures (See “Use of Non-GAAP Financial Measures” and the reconciliation tables further below).


•	Patient service operating revenues decreased 0.8% to $206.1 million;


•	Net income attributable to American Renal Associates Holdings, Inc. was $0.1 million, as compared to a net loss of $0.6 million in Q4 2018;


•	Adjusted EBITDA less noncontrolling interests (“Adjusted EBITDA-NCI”) was $23.0 million, as compared to $24.7 million in Q4 2018;


•	Adjusted net income attributable to American Renal Associates Holdings, Inc. was $6.5 million, or $0.19 per share, for Q4 2019;


•	Total dialysis treatments increased 4.8%, of which 3.2% was non-acquired growth. Normalized total treatment growth was 6.0%, and normalized non-acquired treatment growth was 4.4%; and


•	As of December 31, 2019, the Company operated 246 outpatient dialysis clinics serving more than 17,300 patients.

Carlucci said, “We are pleased that ARA achieved our 2019 guidance. We remain encouraged by our treatment growth performance, with the fourth quarter and fiscal year 2019 normalized total treatment growth of 6.0% and 7.3%, respectively. These volume trends continue to demonstrate that more patients continue to choose ARA to receive high quality dialysis care.”

Carlucci added, “As indicated in our outlook for 2020, we expect to achieve year-over-year growth in Adjusted EBITDA-NCI despite an anticipated reduction in Calcimimetic reimbursement. We will continue to remain focused on improving our operating efficiency and strengthening our balance sheet, while strategically capturing the growth and development opportunities that remain ahead.”

Financial and operating highlights include:

Revenue: Patient service operating revenues for the fourth quarter of 2019 were $206.1 million, a decrease of 0.8%, as compared to $207.8 million for the prior-year period, which was primarily due to declines in commercial treatment rates, partially offset by an increase of 4.8% in the number of dialysis treatments. Patient service operating revenues for the year ended December 31, 2019 were $822.5 million, an increase of 2.1%, as compared to $805.8 million for the prior-year period, which was primarily due to an increase of 6.5% in the number of dialysis treatments, partially offset by adverse changes in commercial treatment rates.

Treatment Volume: Total dialysis treatments for the fourth quarter of 2019 were 628,817, representing an increase of 4.8% over the fourth quarter of 2018. Non-acquired treatment growth was 3.2%, and acquired treatment growth was 1.6% for the fourth quarter of 2019. Normalized total treatment growth was 6.0%, and non-acquired treatment growth was 4.4%, as compared to the fourth quarter of 2018. Total dialysis treatments for the year ended December 31, 2019 were 2,460,710, representing an increase of 6.5% over the prior-year period. Non-acquired treatment growth was 4.5%, and acquired treatment growth was 2.0% for the year ended December 31, 2019. Normalized total treatment growth was 7.3%, and non-acquired treatment growth was 5.3%, as compared to the prior-year period.

Clinic Activity: As of December 31, 2019, the Company provided services at 246 outpatient dialysis clinics serving 17,306 patients. During the year ended December 31, 2019, we opened seven de novo clinics, two of which were opened in the fourth quarter, acquired two clinics, and sold four clinics.

Net income, Net income attributable to noncontrolling interests, Net income (loss) attributable to American Renal Associates Holdings, Inc., Adjusted EBITDA and Adjusted EBITDA-NCI:



	(Unaudited)
	Three Months Ended December 31,						Increase (Decrease)
(in thousands)	2019			2018			Amount			Percentage Change
Net income	$	9,123		$	11,174		$	(2,051	)	(18.4	)%
Net income attributable to noncontrolling interests	(9,033		)	(11,746		)	$	2,713		23.1	%
Net income (loss) attributable to American Renal Associates Holdings, Inc.	$	90		$	(572	)	$	662		NM*
Non-GAAP financial measures**:
Adjusted EBITDA	$	32,012		$	36,454		$	(4,442	)	(12.2	)%
Adjusted EBITDA-NCI	$	22,979		$	24,708		$	(1,729	)	(7.0	)%



	(Unaudited)
	Year Ended December 31,						Increase (Decrease)
(in thousands)	2019			2018			Amount			Percentage Change
Net income	$	26,145		$	22,467		$	3,678		16.4	%
Net income attributable to noncontrolling interests	(39,935		)	(51,234		)	$	11,299		22.1	%
Net loss attributable to American Renal Associates Holdings, Inc.	$	(13,790	)	$	(28,767	)	$	14,977		NM*
Non-GAAP financial measures**:
Adjusted EBITDA	$	127,549		$	141,254		$	(13,705	)	(9.7	)%
Adjusted EBITDA-NCI	$	87,614		$	90,020		$	(2,406	)	(2.7	)%

_______________________________________________________

* Not Meaningful

** See “Reconciliation of Non-GAAP Financial Measures.”

Operating Expenses: Patient care costs for the fourth quarter of 2019 were $154.4 million, or 74.9% of patient service operating revenues, as compared to $148.5 million, or 71.5% of patient service operating revenues, in the prior-year period. General and administrative expenses were $22.8 million, or 11.1% of patient service operating revenues, as compared to $25.0 million, or 12.0% of patient service operating revenues, in the prior-year period.

Patient care costs for the year ended December 31, 2019 were $610.2 million, or 74.2% of patient service operating revenues, as compared to $570.0 million, or 70.7% of patient service operating revenues, in the prior-year period. General and administrative expenses during the year ended December 31, 2019 were $91.1 million, or 11.1% of patient service operating revenues, as compared to $101.1 million, or 12.5% of patient service operating revenues, in the prior-year period.

Cash Flow: Cash provided by operating activities for the fourth quarter of 2019 was $3.7 million, as compared to $22.5 million in the prior-year period. Adjusted cash used in operating activities less distributions to noncontrolling interests (see “Reconciliation of Non-GAAP Financial Measures”) for the fourth quarter of 2019 was $19.0 million, as compared to adjusted cash provided by operating activities less distributions to noncontrolling interests of $6.7 million in the prior-year period. Total capital expenditures for the fourth quarter of 2019 were $5.2 million, as compared to $15.9 million in the prior-year period. Capital expenditures for the three months ended December 31, 2019 included $2.6 million for expansions and new clinic development, as compared to $13.2 million in the prior-year period, and $2.7 million for other capital expenditures, similar to the prior-year period.

Cash provided by operating activities for the year ended December 31, 2019 was $38.8 million, as compared to $106.4 million in the prior-year period. Adjusted cash used in operating activities less distributions to noncontrolling interests (see “Reconciliation of Non-GAAP Financial Measures”) for the year ended December 31, 2019 was $24.2 million, as compared to adjusted cash provided by operating activities of $36.3 million in the prior-year period. Total capital expenditures for the year ended December 31, 2019 were $23.1 million, as compared to $45.0 million in the prior-year period. Capital expenditures for the year ended December 31, 2019 included $16.5 million for expansions and new clinic development, as compared to $33.3 million in the prior-year period, and $6.6 million for other capital expenditures, as compared to $11.7 million in the prior-year period.

Balance Sheet: At December 31, 2019, the Company’s balance sheet included consolidated cash of $34.5 million and consolidated debt of $587.6 million, including the current portion of long-term debt. Excluding clinic-level debt not guaranteed by the Company and clinic-level cash not owned by the Company, Adjusted owned net debt (see “Reconciliation of Non-GAAP Financial Measures”) was $515.2 million at December 31, 2019, as compared to $470.9 million at December 31, 2018. Adjusted owned net debt to last twelve months Adjusted EBITDA-NCI leverage ratio was 5.9x at December 31, 2019. As of December 31, 2019, net patient accounts receivable was $102.2 million.

Outlook for 2020 Adjusted EBITDA-NCI:

The Company expects 2020 Adjusted EBITDA-NCI to be in a range of $90 million and $95 million. The 2020 Adjusted EBITDA-NCI range is consistent with the Company’s preliminary outlook first established in September 2019. The Company expects its 2020 normalized total treatment growth to be in a range of 4.5% and 5.0%, and expects its 2020 revenue per treatment (“RPT”) to be in a range of flat to down 1% as compared to 2019 RPT of $334. The Company expects its leverage ratio (defined below) to improve by between 0.3x and 0.6x by year-end 2020, as compared to 5.9x at December 31, 2019. The Company’s 2020 Adjusted EBITDA-NCI outlook excludes any potential adverse financial impact resulting from the coronavirus (COVID-19) outbreak.

The Company is not providing a quantitative reconciliation of our Non-GAAP outlook to the corresponding GAAP information because the GAAP measures that we exclude from our Non-GAAP outlook are not available without unreasonable effort on a forward-looking basis due to their unpredictability, high variability, complexity and low visibility. These excluded GAAP measures include noncontrolling interests, interest expense, income taxes, certain legal and other matters, and other charges. We expect the variability of these charges to have a potentially unpredictable, and potentially significant, impact on our future GAAP financial results.

Please see the “Forward-Looking Statements” section of this release for a discussion of certain risks to our outlook.

Conference Call

American Renal Associates Holdings, Inc. will hold a conference call to discuss this release on Monday, March 16, 2020, at 5:00 p.m. Eastern time. Investors will have the opportunity to listen to the conference call by dialing (877) 407-8029, or for international callers (201) 689-8029, or may listen over the Internet by going to the Investor Relations section at www.ir.americanrenal.com. For those who cannot listen to the live broadcast, a replay will be available and can be accessed by dialing (877) 660-6853, or for international callers (201) 612-7415. The conference ID for the live call and the replay is 13697054.

About American Renal Associates

American Renal Associates (“ARA”) is a leading provider of outpatient dialysis services in the United States. As of December 31, 2019, ARA operated 246 dialysis clinic locations in 27 states and the District of Columbia serving more than 17,300 patients with end stage renal disease. ARA operates principally through a physician partnership model, in which it partners with approximately 400 local nephrologists to develop, own and operate dialysis clinics. ARA’s Core Values emphasize taking good care of patients, providing physicians with clinical autonomy and operational support, hiring and retaining the best possible staff and providing comprehensive management services. For more information about American Renal Associates, visit www.americanrenal.com.

Forward-Looking Statements

Statements in this press release that are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our outlook for Adjusted EBITDA-NCI, are based upon currently available information, operating plans and projections about future events and trends. Terminology such as “anticipate,” “believe,” “contemplate,” “estimate,” “expect,” “forecast,” “intend,” “may,” “objective,” “outlook,” “plan,” “potential,” “project,” “seek,” “should,” “strategy,” “target” or “will” or variations of such words or similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such terms.

Forward-looking statements inherently involve risks and uncertainties that could cause actual results to differ materially from those predicted in such forward-looking statements. Such risks and uncertainties include, among others, the effect of the restatement of our previously issued financial results and the related securities and derivative litigation and related matters; our ability to remediate material weaknesses in our internal controls over financial reporting; continuing decline in the number of patients with commercial insurance, including as a result of changes to the healthcare exchanges or changes in regulations or enforcement of regulations regarding the healthcare exchanges and challenges from commercial payors or any regulatory or other changes leading to changes

in the ability of patients with commercial insurance coverage to receive charitable premium support; decline in commercial payor reimbursement rates, including with respect to Medicare Advantage plans; the ultimate resolution of the Centers for Medicare and Medicaid Services Interim Final Rule published December 14, 2016 related to dialysis facilities Conditions for Coverage (CMS 3337-IFC), including an issuance of a different but related Final Rule; reduction of government-based payor reimbursement rates or insufficient rate increases or adjustments that do not cover all of our operating costs; our ability to successfully develop de novo clinics, acquire existing clinics and attract new nephrologist partners; our ability to compete effectively in the dialysis services industry; the performance of our joint venture subsidiaries and their ability to make distributions to us; changes to the Medicare end-stage renal disease (“ESRD”) program that could affect reimbursement rates and evaluation criteria, as well as changes in Medicaid or other non-Medicare government programs or payment rates, including the ESRD prospective payment rate system final rule for 2020 issued October 31, 2019; federal or state healthcare laws that could adversely affect us; our ability to comply with all of the complex federal, state and local government regulations that apply to our business, including those in connection with federal and state anti-kickback laws and state laws prohibiting the corporate practice of medicine or fee-splitting; heightened federal and state investigations and enforcement efforts; the impact of the SEC investigation; changes in the availability and cost of erythropoietin-stimulating agents and other pharmaceuticals used in our business; changes in the reimbursement rates of the calcimimetics pharmaceutical class reimbursed under the Medicare Transitional Drug Add-on Payment Adjustment; development of new technologies or government regulation that could decrease the need for dialysis services or decrease our in-center patient population; our ability to timely and accurately bill for our services and meet payor billing requirements; claims and losses relating to malpractice, professional liability and other matters; the sufficiency of our insurance coverage for those claims and rising insurances costs, and negative publicity or reputational damage arising from such matters; loss of any members of our senior management; damage to our reputation or our brand and our ability to maintain brand recognition; our ability to maintain relationships with our medical directors and renew our medical director agreements; shortages of qualified skilled clinical personnel, or higher than normal turnover rates; competition and consolidation in the dialysis services industry; deterioration in economic conditions, particularly in states where we operate a large number of clinics, or disruptions in the financial markets or the effects of natural or other disasters, public health crises or adverse weather events; the participation of our physician partners in material strategic and operating decisions and our ability to favorably resolve any disputes; our ability to honor obligations under the joint venture operating agreements with our physician partners were they to exercise certain put rights and other rights; unauthorized disclosure of personally identifiable, protected health or other sensitive or confidential information; our ability to meet our obligations and comply with restrictions under our substantial level of indebtedness; and the ability of our principal stockholder, whose interests may conflict with yours, to strongly influence or effectively control our corporate decisions.

For additional information and other factors that could cause ARA’s actual results to materially differ from those set forth herein, please see ARA’s filings with the SEC. Investors are cautioned not to place undue reliance on any such forward-looking statements, which speak only as of the date they are made. ARA undertakes no obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise.

Use of Non-GAAP Financial Measures

In addition to the results prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) provided throughout this press release, the Company has presented the following Non-GAAP financial measures: Adjusted EBITDA, Adjusted EBITDA less noncontrolling interests, Adjusted net income attributable to American Renal Associates Holdings, Inc., Adjusted cash provided by operating activities and Adjusted owned net debt, which exclude various items detailed in the attached “Reconciliation of Non-GAAP Financial Measures.”

These Non-GAAP financial measures are not intended to replace financial performance and liquidity measures determined in accordance with GAAP. Rather, they are presented as supplemental measures of the Company's performance and liquidity that management believes may enhance the evaluation of the Company's ongoing operating results. Please see “Reconciliation of Non-GAAP Financial Measures” for additional reasons why these measures are provided.

American Renal Associates Holdings, Inc. and Subsidiaries

Consolidated Statements of Operations

(Unaudited)

(dollars in thousands, except for share data)



	Three Months Ended December 31,						Year Ended December 31,
	2019			2018			2019			2018
Patient service operating revenues	$	206,079		$	207,806		$	822,522		$	805,776
Operating expenses:
Patient care costs	154,394			148,525			610,179			570,009
General and administrative	22,772			24,981			91,081			101,101
Transaction-related costs	—			—			—			856
Gain on business interruption insurance	—			(375		)	—			(375		)
Depreciation, amortization and impairment	13,180			10,342			43,765			39,802
Certain legal and other matters	2,518			1,384			25,824			39,061
Total operating expenses	192,864			184,857			770,849			750,454
Operating income	13,215			22,949			51,673			55,322
Interest expense, net	(11,054		)	(8,797		)	(43,587		)	(32,632		)
Change in fair value of income tax receivable agreement	(1,127		)	5,438			221			2,673
Income before income taxes	1,034			19,590			8,307			25,363
Income tax (benefit) expense	(8,089		)	8,416			(17,838		)	2,896
Net income	9,123			11,174			26,145			22,467
Less: Net income attributable to noncontrolling interests	(9,033		)	(11,746		)	(39,935		)	(51,234		)
Net income (loss) attributable to American Renal Associates Holdings, Inc.	90			(572		)	(13,790		)	(28,767		)
Less: Change in the difference between the redemption value and estimated fair value for accounting purposes of the related noncontrolling interests	(7,122		)	(1,235		)	(7,999		)	(2,566		)
Net loss attributable to common shareholders	$	(7,032	)	$	(1,807	)	$	(21,789	)	$	(31,333	)

Loss per share:
Basic	$	(0.22	)	$	(0.06	)	$	(0.68	)	$	(0.98	)
Diluted	$	(0.22	)	$	(0.06	)	$	(0.68	)	$	(0.98	)
Weighted-average number of common shares outstanding:
Basic	32,351,067			32,104,263			32,274,570			31,965,844
Diluted	32,351,067			32,104,263			32,274,570			31,965,844

American Renal Associates Holdings, Inc. and Subsidiaries

Consolidated Balance Sheets

(dollars in thousands, except for share data)



Assets	December 31, 2019			December 31, 2018
Cash	$	34,494		$	55,200
Accounts receivable, less allowance for doubtful accounts of $1,258 and $3,270 at December 31, 2019 and 2018, respectively	102,150			99,526
Inventories	7,752			11,433
Prepaid expenses and other current assets	22,268			28,127
Income tax receivable	3,251			—
Current assets held for sale	50,099			577
Total current assets	220,014			194,863
Property and equipment, net of accumulated depreciation	151,175			180,268
Operating lease right-of-use assets	133,899			—
Intangible assets, net of accumulated amortization	24,486			24,628
Other long-term assets	18,608			14,745
Goodwill	538,609			571,339
Total assets	$	1,086,791		$	985,843
Liabilities and Equity
Accounts payable	$	49,539		$	59,082
Accrued compensation and benefits	37,196			34,587
Accrued expenses and other current liabilities	37,593			61,116
Current portion of long-term debt	38,779			42,855
Current portion of operating lease liabilities	22,061			—
Current liabilities held for sale	5,767			—
Total current liabilities	190,935			197,640
Long-term debt, less current portion	548,835			517,511
Long-term operating lease liabilities, less current portion	123,792			—
Income tax receivable agreement payable	3,000			3,700
Other long-term liabilities	6,501			24,813
Deferred tax liabilities	2,706			3,169
Total liabilities	875,769			746,833
Commitments and contingencies
Noncontrolling interests subject to put provisions	126,483			129,099
Equity
Preferred stock, $0.01 par value; 1,000,000 shares authorized; none issued
Common stock, $0.01 par value; 300,000,000 shares authorized; 32,976,416 and 32,603,846 issued and outstanding at December 31, 2019 and December 31, 2018, respectively	197			196
Additional paid-in capital	100,744			105,715
Receivable from noncontrolling interests	(531		)	(506		)
Accumulated deficit	(178,241		)	(164,451		)
Accumulated other comprehensive (loss) income, net of tax	(1,619		)	76
Total American Renal Associates Holdings, Inc. deficit	(79,450		)	(58,970		)
Noncontrolling interests not subject to put provisions	163,989			168,881
Total equity	84,539			109,911
Total liabilities and equity	$	1,086,791		$	985,843

American Renal Associates Holdings, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)

(dollars in thousands)



	Three Months Ended December 31,						Year Ended December 31,
Operating activities	2019			2018			2019			2018
Net income	$	9,123		$	11,174		$	26,145		$	22,467
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation, amortization and impairment	13,180			10,342			43,765			39,802
Amortization of discounts, fees and deferred financing costs	747			597			2,825			1,981
Stock-based compensation	1,515			1,547			4,745			5,721
Deferred taxes	(5,371		)	8,234			121			2,350
Change in fair value of income tax receivable agreement	1,127			(5,438		)	(221		)	(2,673		)
Loss (gain) on disposal of assets, net	1,210			(1		)	529			80
Other non-cash charges, net	313			(299		)	317			119
Change in operating assets and liabilities, net of acquisitions:
Accounts receivable	1,208			(847		)	(2,624		)	13,118
Inventories	126			(5,083		)	3,659			(6,799		)
Prepaid expenses and other current assets	2,285			(9,601		)	2,072			(2,340		)
Other assets	(10,009		)	1,579			(5,377		)	(5,712		)
Right-of-use assets and operating lease liabilities	353			—			(2,067		)	—
Accounts payable	(8,515		)	5,059			(9,543		)	25,661
Accrued compensation and benefits	(446		)	(71		)	2,609			5,602
Accrued expenses and other liabilities	(3,128		)	5,341			(28,134		)	7,027
Cash provided by operating activities	3,718			22,533			38,821			106,404
Investing activities
Purchases of property, equipment and intangible assets	(5,217		)	(15,886		)	(23,122		)	(44,960		)
Proceeds from asset sales	3,100			—			9,400			2,502
Cash paid for acquisitions	—			(388		)	(6,590		)	(388		)
Cash used in investing activities	(2,117		)	(16,274		)	(20,312		)	(42,846		)
Financing activities
Proceeds from term loans, net of discounts and fees	4,912			29,813			78,299			82,389
Payments on long-term debt	(13,086		)	(30,525		)	(54,069		)	(90,428		)
Dividends and dividend equivalents paid	(6		)	(12		)	(50		)	(332		)
Proceeds from exercise of stock options	(43		)	241			10			1,398
Repurchase of vested restricted stock awards withheld on net share settlement	(6		)	—			(368		)	(421		)
Common stock repurchases for tax withholdings of net settlement equity awards	—			(417		)	—			(417		)
Distributions to noncontrolling interests	(22,738		)	(15,829		)	(62,987		)	(70,960		)
Contributions from noncontrolling interests	3,665			4,094			8,349			7,739
Purchases of noncontrolling interests	5			(337		)	(8,499		)	(9,066		)
Proceeds from sales of additional noncontrolling interests	—			51			—			229
Cash used in financing activities	(27,297		)	(12,921		)	(39,315		)	(79,869		)

Decrease in cash and restricted cash	(25,696		)	(6,662		)	(20,806		)	(16,311		)
Cash and restricted cash at beginning of period	60,190			61,962			55,300			71,611
Cash and restricted cash at end of period	$	34,494		$	55,300		$	34,494		$	55,300

Supplemental Disclosure of Cash Flow Information
Cash paid for income taxes	$	1,154		$	483		$	2,159		$	2,635
Cash paid for interest	8,732			8,283			34,152			30,504

American Renal Associates Holdings, Inc. and Subsidiaries

Unaudited GAAP, Non-GAAP, and Other Supplemental Business Metrics

(dollars in thousands, except per treatment amounts)



	Three Months Ended									Year Ended
	December 31, 2019			September 30, 2019			December 31, 2018			December 31, 2019			December 31, 2018
Dialysis Clinic Activity:
Number of clinics (as of end of period)	246			244			241			246			241
Number of de novo clinics opened (during period)	2			1			5			7			13
Number of acquired clinics (during period)	—			—			1			2			1
Sold or merged clinics (during period)	—			(2		)	—			(4		)	(1		)
Patients and Treatment Volume:
Patients (as of end of period)	17,306			17,159			16,543			17,306			16,543
Number of treatments	628,817			625,684			600,190			2,460,710			2,311,037
Number of treatment days	79			79			79			313			313
Treatments per day	7,960			7,920			7,597			7,862			7,384
Sources of treatment growth (year over year % change):
Non-acquired growth	3.2		%	5.8		%	4.9		%	4.5		%	4.4		%
Normalized non-acquired growth	4.4		%	5.7		%	4.5		%	5.3		%	5.0		%
Acquired growth	1.6		%	2.3		%	1.2		%	2.0		%	1.1		%
Total treatment growth	4.8		%	8.1		%	6.1		%	6.5		%	5.5		%
Normalized Total treatment growth	6.0		%	7.9		%	5.6		%	7.3		%	6.1		%
Revenue:
Patient service operating revenues	$	206,079		$	211,429		$	207,806		$	822,522		$	805,776
Patient service operating revenues per treatment	$	328		$	338		$	346		$	334		$	349
Expenses:
Patient care costs
Amount	$	154,394		$	154,588		$	148,525		$	610,179		$	570,009
As a % of patient service operating revenues	74.9		%	73.1		%	71.5		%	74.2		%	70.7		%
Per treatment	$	246		$	247		$	247		$	248		$	247
General and administrative expenses
Amount	$	22,772		$	18,783		$	24,981		$	91,081		$	101,101
As a % of patient service operating revenues	11.1		%	8.9		%	12.0		%	11.1		%	12.5		%
Per treatment	$	36		$	30		$	42		$	37		$	44
Adjusted general and administrative expenses(1)
Amount	$	21,653		$	19,930		$	24,981		$	91,166		$	101,362
As a % of patient service operating revenues	10.5		%	9.4		%	12.0		%	11.1		%	12.6		%
Per treatment	$	34		$	32		$	42		$	37		$	44
Accounts receivable DSO (days)	46			45			44			45			45
Adjusted EBITDA*
Adjusted EBITDA including noncontrolling interests	$	32,012		$	38,705		$	36,454		$	127,549		$	141,254
Adjusted EBITDA-NCI	$	22,979		$	26,455		$	24,708		$	87,614		$	90,020
Clinical (quarterly averages):
Dialysis adequacy - % of patients with Kt/V > 1.2	99		%	98		%	98		%	98		%	98		%
Vascular access - % long-term catheter use	13		%	13		%	12		%	13		%	12		%

* See “Reconciliation of Non-GAAP Financial Measures.”

(1)

Adjusted general and administrative expenses per treatment during the three months ended December 31, 2019 is adjusted for the loss on sale or closure of clinics of $1.1 million. Adjusted general and administrative expenses per treatment during the three months ended September 30, 2019 is adjusted for a $0.8 million reduction of bonus compensation for certain executives repaid in respect of prior years in light of the restatement (the “Restatement”) of certain of our prior financial statements and other financial information in our Annual Report on Form 10-K, a $0.3 million gain on sale of clinics and approximately $0.1 million of severance expense adjustments. Adjusted general and administrative expenses per treatment during the year ended December 31, 2019 is adjusted for $0.4 million of severance expense, $0.3 million of loss on sale or closure of clinics, and the $0.8 million reduction of bonus compensation for certain executives noted above. Adjusted general and administrative expenses per treatment during the year ended December 31, 2018 is adjusted for $0.3 million of gain on the sale of clinics.

American Renal Associates Holdings, Inc. and Subsidiaries

Net Loss per Share Reconciliation

(Unaudited)

(dollars in thousands, except per share data)



	Three Months Ended December 31,						Year Ended December 31,
	2019			2018			2019			2018
Basic
Net income (loss) attributable to American Renal Associates Holdings, Inc.	$	90		$	(572	)	$	(13,790	)	$	(28,767	)
Change in the difference between the redemption value and estimated fair value for accounting purposes of the related noncontrolling interests	(7,122		)	(1,235		)	(7,999		)	(2,566		)
Net loss attributable to common shareholders	$	(7,032	)	$	(1,807	)	$	(21,789	)	$	(31,333	)
Weighted-average common shares outstanding	32,351,067			32,104,263			32,274,570			31,965,844
Weighted-average common shares outstanding, assuming dilution	32,351,067			32,104,263			32,274,570			31,965,844
Loss per share, basic and diluted	$	(0.22	)	$	(0.06	)	$	(0.68	)	$	(0.98	)
Outstanding options and restricted stock excluded as impact would be anti-dilutive	3,123,815			3,430,056			2,986,656			3,442,048

American Renal Associates Holdings, Inc. and Subsidiaries

Reconciliation of Non-GAAP Financial Measures

(Unaudited)

(dollars in thousands)

We use Adjusted EBITDA and Adjusted EBITDA-NCI to track our performance. “Adjusted EBITDA” is defined as net income before stock-based compensation and associated payroll taxes, depreciation, amortization and impairment, interest expense, net, income taxes and other non-income-based tax, transaction-related costs, change in fair value of income tax receivable agreement, certain legal and other matters, executive and management severance costs and loss (gain) on sale or closure of clinics. “Adjusted EBITDA-NCI” is defined as Adjusted EBITDA less net income attributable to noncontrolling interests. We believe Adjusted EBITDA and Adjusted EBITDA-NCI provide information useful for evaluating our business and a further understanding of our results of operations from management’s perspective. We believe Adjusted EBITDA is helpful in highlighting trends because Adjusted EBITDA excludes certain expenses that can differ significantly from company to company depending on, among other things, long-term strategic decisions regarding capital structure and investments, and the tax jurisdictions in which companies operate, or that we believe do not reflect our core business operations. We believe Adjusted EBITDA-NCI is helpful in highlighting the amount of Adjusted EBITDA that is available to us after reflecting the interests of our joint venture partners. Adjusted EBITDA and Adjusted EBITDA-NCI are not measures of operating performance computed in accordance with GAAP and should not be considered as a substitute for operating income, net income, cash flows from operations, or other statement of operations or cash flow data prepared in conformity with GAAP, or as measures of profitability or liquidity. In addition, Adjusted EBITDA and Adjusted EBITDA-NCI may not be comparable to similarly titled measures of other companies and differ from the calculation of “Consolidated EBITDA” under our credit agreement. Adjusted EBITDA and Adjusted EBITDA-NCI may not be indicative of historical operating results, and we do not mean for these items to be predictive of future results of operations or cash flows. Adjusted EBITDA and Adjusted EBITDA-NCI have limitations as analytical tools, and they should not be considered in isolation, or as substitutes for an analysis of our results as reported under GAAP. Some of these limitations are that Adjusted EBITDA and Adjusted EBITDA-NCI:


•	do not include stock-based compensation expense and associated payroll taxes;


•	do not include depreciation, amortization and impairment—because construction and operation of our dialysis clinics requires significant capital expenditures, depreciation and amortization are a necessary element of our costs and our ability to generate profits;


•	do not include interest expense—as we have borrowed money for general corporate and facility purposes, interest expense is a necessary element of our costs and ability to generate profits and cash flows;


•	do not include income tax expense or benefits and other non-income-based taxes;


•	do not include transaction-related costs;


•	do not include change in fair value of income tax receivable agreement;


•	do not include costs related to certain legal and other matters;


•	do not include executive and management severance costs; and


•	do not reflect the loss (gain) on sale or closure of clinics.

In addition, Adjusted EBITDA is not adjusted for the portion of earnings that we distribute to our joint venture partners.

We use Adjusted net income (loss) attributable to American Renal Associates Holdings, Inc. because it is a useful measure to evaluate our performance by excluding the impact of certain items that we believe are not related to our normal business operations and/or are a result of changes in our liabilities from period to period. See the notes to the tables below for further explanation of the exclusion of certain items. By excluding these items, we believe Adjusted net income (loss) allows us and investors to evaluate our net income on a more consistent basis. “Adjusted net income (loss) attributable to American Renal Associates Holdings, Inc.” is defined as Net income (loss) attributable to American Renal Associates Holdings, Inc. plus or minus, as applicable, certain legal and other matters costs, executive and management severance costs, (gain) loss on sale or closure of assets, bonus

compensation reduction, change in fair value of income tax receivable agreement, tax valuation allowance, and accounting changes in fair value of non-controlling interest puts, net of taxes. We use the Adjusted weighted average number of diluted shares to calculate Adjusted net income (loss) attributable to American Renal Associates Holdings, Inc. per share.

We use Adjusted cash (used in) provided by operating activities less distributions to NCI because it is a useful measure to evaluate the cash flow that is available to the Company for investment in property, plant and equipment, debt service, growth and other general corporate purposes. “Adjusted cash (used in) provided by operating activities less distributions to NCI” is defined as cash provided by operating activities plus transaction-related costs less distributions to noncontrolling interests.

We use Adjusted owned net debt because we believe it is a useful metric to evaluate the Company’s share of interests in the cash on our consolidated balance sheet and the debt of the Company. “Adjusted owned net debt” is defined as debt (other than clinic-level debt) plus clinic-level debt guaranteed by our wholly owned subsidiaries less unamortized debt discounts and fees less cash (other than clinic-level cash) less the Company’s pro rata interest in clinic-level cash.

The following table presents the reconciliation from net income to Adjusted EBITDA and Adjusted EBITDA-NCI for the periods indicated:



	(Unaudited)
Reconciliation of Net income to Adjusted EBITDA	Three Months Ended December 31,						Year Ended December 31,
	2019			2018			2019			2018
Net income	$	9,123		$	11,174		$	26,145		$	22,467
Stock-based compensation and associated payroll taxes	1,529			1,575			4,806			5,931
Depreciation, amortization and impairment	13,180			10,342			43,765			39,802
Interest expense, net	11,054			8,797			43,587			32,632
Income tax (benefit) expense and other non-income based tax	(7,638		)	8,620			(17,180		)	3,439
Transaction-related costs	—			—			—			856
Change in fair value of income tax receivable agreement	1,127			(5,438		)	(221		)	(2,673		)
Certain legal and other matters(1)	2,518			1,384			25,824			39,061
Executive and management severance costs	—			—			480			—
Loss (gain) on sale or closure of clinics	1,119			—			343			(261		)
Adjusted EBITDA (including noncontrolling interests)	$	32,012		$	36,454		$	127,549		$	141,254
Less: Net income attributable to noncontrolling interests	(9,033		)	(11,746		)	(39,935		)	(51,234		)
Adjusted EBITDA-NCI	$	22,979		$	24,708		$	87,614		$	90,020

__________________________________

(1)

Certain legal and other matters include legal fees and other expenses associated with matters that we believe do not reflect our core business operations, including, but not limited to, our handling of, and response to the following: the United litigation and settlement; the Restatement and the related SEC investigation and Audit Committee review; the securities and derivative litigation related to the foregoing; our internal review and analysis of factual and legal issues relating to the aforementioned matters; and legal fees and other expenses relating to matters that we believe do not reflect our core business operations.

The following table presents the reconciliation from Net (loss) income attributable to American Renal Associates Holdings, Inc. to Adjusted net (loss) income attributable to American Renal Associates Holdings, Inc. for the periods indicated:

Reconciliation of Net (Loss) Income Attributable to American Renal Associates Holdings, Inc. to Adjusted Net (Loss) Income Attributable to American Renal Associates Holdings, Inc.:



(dollars in thousands, except per share data)	(Unaudited)
(dollars in thousands, except per share data)	Three Months Ended												Year Ended
	March 31, 2019			June 30, 2019			September 30, 2019			December 31, 2019			December 31, 2019
Net (loss) income attributable to American Renal Associates Holdings, Inc.	$	(10,479	)	$	(8,178	)	$	4,777		$	90		$	(13,790	)
Change in the difference between the redemption value and estimated fair value for accounting purposes of the related noncontrolling interests(1)	(741		)	1,025			(1,161		)	(7,122		)	(7,999		)
Net (loss) income attributable to common shareholders	$	(11,220	)	$	(7,153	)	$	3,616		$	(7,032	)	$	(21,789	)

Adjustments:
Certain legal and other matters(2)	$	5,291		$	8,381		$	9,634		$	2,518		$	25,824
Executive and management severance costs	212			243			25			—			480
(Gain) loss on sale or closure of clinics	(512		)	—			(264		)	1,119			343
Bonus compensation reduction(3)	—			—			(808		)	—			(808		)
Impairment for held for sale assets	—			270			675			4,225			$	5,170
Total pre-tax adjustments	$	4,991		$	8,894		$	9,262		$	7,862		$	31,009
Tax effect	1,298			2,312			2,408			2,044			8,062
Net taxable adjustments	$	3,693		$	6,582		$	6,854		$	5,818		$	22,947
Change in fair value of income tax receivable agreement	(1,682		)	304			30			1,127			(221		)
Tax valuation allowance(4)	—			—			—			(515		)	(515		)
Change in the difference between the redemption value and estimated fair value for accounting purposes of the related noncontrolling interests(1)	(741		)	1,025			(1,161		)	(7,122		)	(7,999		)
Total adjustments, net	$	2,752		$	5,861		$	8,045		$	13,552		$	30,210
Adjusted net (loss) income attributable to American Renal Associates Holdings, Inc.	$	(8,468	)	$	(1,292	)	$	11,661		$	6,520		$	8,421

Basic shares outstanding	32,187,715			32,275,807			32,281,818			32,351,067			32,248,791
Adjusted effect of dilutive stock options	—			—			1,336,905			1,447,887			696,198
Adjusted weighted average number of diluted shares used to compute adjusted net (loss) income attributable to American Renal Associates Holdings, Inc. per share	32,187,715			32,275,807			33,618,723			33,798,954			32,944,989
Adjusted net (loss) income attributable to American Renal Associates Holdings, Inc. per share	$	(0.26	)	$	(0.04	)	$	0.35		$	0.19		$	0.26

________________________


(1)	Changes in fair values of contractual noncontrolling interest put provisions are related to certain put rights that were accelerated as a result of the IPO.

(2)

Certain legal and other matters include legal fees and other expenses associated with matters that we believe do not reflect our core business operations, including, but not limited to, our handling of, and response to the following: the United litigation and settlement; the Restatement and related SEC investigation and Audit Committee review; the securities and derivative litigation related to the foregoing; our internal review and analysis of factual and legal issues relating to the aforementioned matters; and legal fees and other expenses relating to matters that we believe do not reflect our core business operations.


(3)	Reduction of bonus compensation related to prior years as reflected in the Consolidated Statements of Operations for the three months ended September 30, 2019 for certain executives in light of the Restatement.


(4)	Represents a decrease to the Company's established valuation allowance for certain tax items that began expiring in 2019.

American Renal Associates Holdings, Inc. and Subsidiaries

Unaudited Supplemental Cash Flow Information

(dollars in thousands)



	Three Months Ended December 31,						Year Ended December 31,
	2019			2018			2019			2018
Cash provided by operating activities	$	3,718		$	22,533		$	38,821		$	106,404
Plus:
Transaction-related costs(1)	—			—			—			856
Adjusted cash provided by operating activities	$	3,718		$	22,533		$	38,821		$	107,260
Distributions to noncontrolling interests	(22,738		)	(15,829		)	(62,987		)	(70,960		)
Adjusted cash (used in) provided by operating activities less distributions to NCI	$	(19,020	)	$	6,704		$	(24,166	)	$	36,300
Capital expenditure breakdown:
Development capital expenditures	$	2,564		$	13,166		$	16,531		$	33,309
Other capital expenditures	2,653			2,720			6,591			11,651
Total capital expenditures	$	5,217		$	15,886		$	23,122		$	44,960

_________________________


(1)	For the year ended December 31, 2018, transaction-related costs represent costs associated with our registration statement and the secondary offering that was withdrawn in March 2018. These costs include legal, accounting, valuation and other professional or consulting fees.

American Renal Associates Holdings, Inc. and Subsidiaries

Unaudited Supplemental Leverage Statistics

(dollars in thousands)



	As of December 31, 2019
	Total ARA			ARA “Owned”
Cash (other than clinic-level cash)	$	10,869		$	10,869
Clinic-level cash	23,625			12,716
Total cash	$	34,494		$	23,585
Debt (other than clinic-level debt)	$	493,500		$	493,500
Clinic-level debt	106,610			57,591
Unamortized debt discounts and fees	(12,496		)	(12,352		)
Total debt	$	587,614		$	538,739
Adjusted owned net debt (total debt - total cash)				$	515,154
Adjusted EBITDA-NCI, LTM				$	87,614
Leverage ratio (2)				5.9x

_________________________

(2) Leverage ratio is calculated as follows: Adjusted owned net debt divided by Adjusted EBITDA -NCI, last twelve months.

Investor Contact:

Darren Lehrich

Telephone: (978)-522-6063; Email: dlehrich@americanrenal.com



Delaware			001-37751	27-2170749
(State or other jurisdiction of incorporation or organization)			(Commission File Number)	(IRS Employer Identification Number)

500 Cummings Center	Beverly,	Massachusetts		01915
(Address of principal executive offices)				(Zip code)



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	ARA	New York Stock Exchange



Exhibit Number		Description
10.1		Transition Services Agreement between Joseph A. Carlucci and the Company, dated March 13, 2020.
99.1		Press release, dated March 16, 2020, announcing the registrant’s financial and operating results for the quarter and year ended December 31, 2019.
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)



☐	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))



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.	☒




Item 5.02.	Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.


•	continued base salary at the annualized rate of $904,203 and benefits at current levels for the duration of his service as Chief Executive Officer; and


•	continued health, life and disability benefits at the same levels as provided to active employees until such time that Mr. Carlucci becomes eligible for comparable benefits from a different employer, or, if provision of such benefits is not practicable, a monthly cash payment in an amount equal to the Company’s normal monthly cost of coverage for an active employee; and


•	a pro-rated annual cash incentive bonus in respect of the calendar year during which the Transition Date occurs, subject to the delivery of final audited financial statements for the Company with respect to such year.



		AMERICAN RENAL ASSOCIATES HOLDINGS, INC.

Dated:	March 16, 2020	By:	/s/ Mark Herbers
		Name:	Mark Herbers
		Title:	Interim Chief Financial Officer