Can you describe the incentives for the founder physician and Medical Director physician to stay and work in the best interest of the new ownership group?

We have outlined the financial incentives below and are meeting with Dr. Cafaro and Dr. Rago next week to get a fuller sense of what drives them to ensure that their Employee Agreements are well aligned with what they will find personally rewarding.

The financial incentives we have laid out for Dr. Cafaro include:

• 10% Rollover, providing opportunity to benefit from overall Cadence Health Capital – Rollover valued at ~$3m in 2030 in the Base Case
• 20% Seller Note with 10% interest rate and 10-year amortization that aligns and ties him to our success
• Salary of $250K as Chief Medical Officer
• Performance-based bonus of up to $50K/year
• Additional equity of up to 2% of the business as part of the employee equity incentive plan

Career Incentives (Purpose, Meaning, Recognition) for Dr. Cafaro:

In his posted interview with the broker, he said he became a physician because he has a “passion for science, problem-solving, and helping people. He values the stability of the profession and enjoys seeing medical advancements.” He believes BHC “needs a buyer with experience in scaling businesses to take it to the next level. He wants to ensure the practice continues to help patients lead healthier lives” with his mission being “to help patients get off medications (e.g. For diabetes, high blood pressure) rather than stay on them for life.”

Dr. Cafaro chose us as buyers because he believes we will help build a practice aligned with his vision, and that in doing so, that will be a great incentive for him to stay on board and help be a part of what it can become. We aim to keep him engaged in a rewarding career, providing schedule-flexibility aligned with his personal mission.

For Dr. Rago:

• The financial incentives are currently being negotiated with Dr. Rago and are expected to include a competitive salary, performance-based bonus and opportunity to participate in the employee stock option plan.
• In terms of purpose and recognition, Dr. Rago has told us that he is passionate about sharing with other doctors how hormones can help change outcomes for patients. We have proposed to him that he will help lead our in-house and third-party educational modules that are part of our Marketing/Branding plan to help launch new products (such as integrating nutritional supplements into protocols) as well as build a pipeline of new providers and referrers (e.g. via hormone webinars that count towards CMEs).