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Acadia Healthcare Reports Fourth Quarter Revenue of $724.5 Million, EPS of $0.80 and Adjusted EPS of $0.61
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U.S. Same Facility Revenue Grows 6.6%

Provides 2018 Financial Guidance

FRANKLIN, Tenn.--(BUSINESS WIRE)--Feb. 21, 2018-- Acadia Healthcare Company, Inc. (NASDAQ: ACHC) today announced financial results for the fourth quarter and year ended December 31, 2017. Revenue increased 3.1% for the quarter to $724.5 million from $702.9 million for the fourth quarter of 2016. Net income attributable to Acadia stockholders was $69.6 million, or $0.80 per diluted share, for the fourth quarter of 2017 compared with $41.8 million, or $0.48 per diluted share, for the fourth quarter of 2016. Results for the fourth quarter of 2017 include a non-cash decrease in the provision for income taxes of $20.2 million from the impact of the Tax Cuts and Jobs Act of 2017 on net deferred tax liabilities. This estimate will continue to be evaluated as further information becomes available. Adjusted income from continuing operations attributable to Acadia stockholders per diluted share (“adjusted EPS”) was $0.61 for the fourth quarter of 2017 compared with $0.59 for the fourth quarter of 2016, excluding the impact of a tax benefit of $20.2 million due to the Tax Cuts and Jobs Act of 2017; transaction-related expenses of $5.4 million and $14.8 million for the fourth quarter of 2017 and 2016, respectfully; and debt extinguishment costs of $0.8 million and loss on divestiture of $4.1 million for the fourth quarter of 2016. A reconciliation of all non-GAAP financial results in this release appears beginning on page 8.

Joey Jacobs, Chairman and Chief Executive Officer of Acadia, commented, “We are pleased with our results for the fourth quarter of 2017. We note that the results for the fourth quarter of 2016 include revenue of approximately $30 million and adjusted EPS of approximately $0.05 from 22 facilities in the U.K. that were divested on November 30, 2016.”

Same facility revenue for Acadia’s U.S. operations increased 6.6% for the fourth quarter of 2017 from the fourth quarter of 2016, with a 3.1% increase in patient days and a 3.3% increase in revenue per patient day. U.S. same facility EBITDA margin was 26.3% for the latest quarter, unchanged from the fourth quarter of 2016.

Same facility revenue for Acadia’s U.K. operations increased 3.7% for the fourth quarter of 2017 compared with the fourth quarter of 2016, with a 1.5% increase in patient days and a 2.2% increase in revenue per patient day. U.K. same facility EBITDA margin was 21.1% for the fourth quarter compared with 22.3% for the fourth quarter of 2016. Mr. Jacobs added, “The fourth quarter results for our operations in the U.K. met our revised expectations. Our results still reflect a lower census than normal and continued pressure from higher agency labor expense, primarily for nurses and other clinical staff, due to tightening in the U.K. labor market.”

Total same facility revenue for the fourth quarter of 2017 increased 5.6%, with a 2.4% increase in patient days and a 3.1% increase in revenue per patient day. Total same facility EBITDA margin was 24.5% for the fourth quarter of 2017 compared with 24.9% for the fourth quarter of 2016. The growth in same facility revenue reflected the addition of 750 beds to existing and new facilities in 2017, of which 398 beds opened in the fourth quarter. The Company expects to add more than 800 beds to existing and new facilities in 2018.

Acadia’s consolidated adjusted EBITDA for the fourth quarter of 2017 was $153.5 million, or 21.2% of revenue, compared with $149.5 million, or 21.3% of revenue, for the fourth quarter of 2016.

Acadia today established its financial guidance for 2018 and the first quarter of 2018, as follows:

  • Revenue for 2018 in a range of $3.04 billion to $3.08 billion;
  • Adjusted EBITDA for 2018 in a range of $637 million to $644 million;
  • Adjusted earnings per diluted share for 2018 in a range of $2.42 to $2.48;
  • Adjusted earnings per diluted share for the first quarter of 2018 in a range of $0.47 to $0.49; and
  • An exchange rate of $1.35 per British Pound Sterling and a tax rate of approximately 21%.

The Company’s guidance does not include the impact of any future acquisitions or transaction-related expenses.

EBITDA is defined as net income adjusted for net income (loss) attributable to noncontrolling interests, (benefit from) provision for income taxes, net interest expense and depreciation and amortization. Adjusted EBITDA is defined as EBITDA adjusted for equity-based compensation expense, transaction-related expenses, debt extinguishment costs, loss on divestiture and gain on foreign currency derivatives. Adjusted income is defined as net income adjusted for transaction-related expenses, tax reform impact, debt extinguishment costs, loss on divestiture, gain on foreign currency derivatives and income tax effect of adjustments to income.

Acadia will hold a conference call to discuss its fourth quarter financial results at 9:00 a.m. Eastern Time on Thursday, February 22, 2018. A live webcast of the conference call will be available at www.acadiahealthcare.com in the “Investors” section of the website. The webcast of the conference call will be available through March 8, 2018.

Risk Factors

This news release contains forward-looking statements. Generally, words such as “may,” “will,” “should,” “could,” “anticipate,” “expect,” “intend,” “estimate,” “plan,” “continue,” and “believe” or the negative of or other variation on these and other similar expressions identify forward-looking statements. These forward-looking statements are made only as of the date of this news release. We do not undertake to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise. Forward-looking statements are based on current expectations and involve risks and uncertainties and our future results could differ significantly from those expressed or implied by our forward-looking statements. Factors that may cause actual results to differ materially include, without limitation, (i) potential difficulties operating our business in light of political and economic instability in the U.K. and globally following the referendum in the U.K. on June 23, 2016, in which voters approved an exit from the European Union, or Brexit; (ii) the impact of fluctuations in foreign exchange rates, including the devaluation of the British Pound Sterling (GBP) relative to the U.S. Dollar (USD) following the Brexit vote; (iii) Acadia’s ability to complete acquisitions and successfully integrate the operations of acquired facilities; (iv) Acadia’s ability to add beds, expand services, enhance marketing programs and improve efficiencies at its facilities; (v) potential reductions in payments received by Acadia from government and third-party payors; (vi) the occurrence of patient incidents and governmental investigations, which could adversely affect the price of our common stock and result in substantial fines and incremental regulatory burdens; (vii) the risk that Acadia may not generate sufficient cash from operations to service its debt and meet its working capital and capital expenditure requirements; and (viii) potential operating difficulties, labor costs, client preferences, changes in competition and general economic or industry conditions that may prevent Acadia from realizing the expected benefits of its business strategy. These factors and others are more fully described in Acadia’s periodic reports and other filings with the SEC.

About Acadia

Acadia is a provider of behavioral healthcare services. At December 31, 2017, Acadia operated a network of 582 behavioral healthcare facilities with approximately 17,800 beds in 39 states, the United Kingdom and Puerto Rico. Acadia provides behavioral health and addiction services to its patients in a variety of settings, including inpatient psychiatric hospitals, specialty treatment facilities, residential treatment centers and outpatient clinics.

 
Acadia Healthcare Company, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
                 
    Three Months Ended December 31,   Year Ended December 31,
    2017   2016   2017   2016
    (In thousands, except per share amounts)
                 
Revenue before provision for doubtful accounts   $ 733,538     $ 713,784     $ 2,877,234     $ 2,852,823  
Provision for doubtful accounts     (9,026 )     (10,896 )     (40,918 )     (41,909 )
Revenue     724,512       702,888       2,836,316       2,810,914  
                 

Salaries, wages and benefits (including equity-based compensation expense of $4,460, $7,356, $23,467 and $28,345, respectively)

     390,582       384,297       1,536,160       1,541,854  
Professional fees     53,451       47,516       196,223       185,486  
Supplies     29,439       28,976       114,439       117,425  
Rents and leases     19,320       18,335       76,775       73,348  
Other operating expenses     82,666       81,606       331,827       312,556  
Depreciation and amortization     37,754       33,958       143,010       135,103  
Interest expense, net     45,230       46,010       176,007       181,325  
Debt extinguishment costs     -       842       810       4,253  
Loss on divestiture     -       4,070       -       178,809  
Gain on foreign currency derivatives     -       -       -       (523 )
Transaction-related expenses     5,431       14,840       24,267       48,323  
Total expenses     663,873       660,450       2,599,518       2,777,959  
Income before income taxes     60,639       42,438       236,798       32,955  
(Benefit from) provision for income taxes     (9,050 )     1,012       37,209       28,779  
Net income     69,689       41,426       199,589       4,176  
Net (income) loss attributable to noncontrolling interests     (60 )     392       246       1,967  
Net income attributable to Acadia Healthcare Company, Inc.   $ 69,629     $ 41,818     $ 199,835     $ 6,143  
                 

Earnings per share attributable to Acadia Healthcare Company, Inc. stockholders:

          
Basic   $ 0.80     $ 0.48     $ 2.30     $ 0.07  
Diluted   $ 0.80     $ 0.48     $ 2.30     $ 0.07  
               
Weighted-average shares outstanding:                
Basic     87,052       86,668       86,948       85,701  
Diluted     87,166       86,890       87,060       85,972  
                 

 

         
Acadia Healthcare Company, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
         
    December 31,
    2017   2016
    (In thousands)
         
ASSETS        
Current assets:        
Cash and cash equivalents   $ 67,290     $ 57,063  

Accounts receivable, net of allowance for doubtful accounts of $39,803 and $38,916, respectively

     296,925       263,327  
Other current assets     107,335       107,537  
Total current assets     471,550       427,927  
Property and equipment, net     3,048,130       2,703,695  
Goodwill     2,751,174       2,681,188  
Intangible assets, net     87,348       83,310  
Deferred tax assets - noncurrent     3,731       3,780  
Derivative instruments     12,997       73,509  
Other assets     49,572       51,317  
Total assets   $ 6,424,502     $ 6,024,726  
         
         
LIABILITIES AND EQUITY        
Current liabilities:        
Current portion of long-term debt   $ 34,830     $ 34,805  
Accounts payable     102,299       80,034  
Accrued salaries and benefits     99,047       105,068  
Other accrued liabilities     141,213       122,958  
Total current liabilities     377,389       342,865  
Long-term debt     3,205,058       3,253,004  
Deferred tax liabilities - noncurrent     80,333       78,520  
Other liabilities     166,434       164,859  
Total liabilities     3,829,214       3,839,248  
Redeemable noncontrolling interests     22,417       17,754  
Equity:      
Common stock     871       867  
Additional paid-in capital     2,517,545       2,496,288  
Accumulated other comprehensive loss     (374,118 )     (549,570 )
Retained earnings     428,573       220,139  
Total equity     2,572,871       2,167,724  
Total liabilities and equity   $ 6,424,502     $ 6,024,726  
         

 

 
Acadia Healthcare Company, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
         
    Year Ended December 31,
    2017   2016
    (In thousands)
Operating activities:        
Net income   $ 199,589     $ 4,176  
Adjustments to reconcile net income to net cash provided by continuing operating activities:        
Depreciation and amortization     143,010       135,103  
Amortization of debt issuance costs     9,855       10,324  
Equity-based compensation expense     23,467       28,345  
Deferred income tax expense     31,372       28,647  
Debt extinguishment costs     810       4,253  
Loss on divestiture     -       178,809  
Gain on foreign currency derivatives     -       (523 )
Other     11,412       4,715  
Change in operating assets and liabilities, net of effect of acquisitions:        
Accounts receivable, net     (28,570 )     (15,718 )
Other current assets     20,808       (20,648 )
Other assets     (3,176 )     (4,354 )
Accounts payable and other accrued liabilities     (10,113 )     22,693  
Accrued salaries and benefits     (8,988 )     (8,572 )
Other liabilities     11,794       4,484  
Net cash provided by continuing operating activities     401,270       371,734  
Net cash used in discontinued operating activities     (1,693 )     (10,256 )
Net cash provided by operating activities     399,577       361,478  
         
Investing activities:        
Cash paid for acquisitions, net of cash acquired     (18,191 )     (683,455 )
Cash paid for capital expenditures     (274,177 )     (307,472 )
Cash paid for real estate acquisitions     (41,057 )     (40,757 )
Settlement of foreign currency derivatives     -       523  
Cash received on divestitures     -       373,266  
Other     (3,101 )     (2,470 )
Net cash used in investing activities     (336,526 )     (660,365 )
         
Financing activities:        
Borrowings on long-term debt     -       1,480,000  
Borrowings on revolving credit facility     -       179,000  
Principal payments on revolving credit facility     -       (337,000 )
Principal payments on long-term debt     (34,805 )     (49,941 )
Repayment of assumed debt     -       (1,348,389 )
Repayment of long-term debt     (22,500 )     (200,594 )
Payment of debt issuance costs     -       (36,649 )
Issuance of common stock, net     -       685,097  
Common stock withheld for minimum statutory taxes, net     (3,455 )     (8,846 )
Other     686       (3,837 )
Net cash (used in) provided by financing activities     (60,074 )     358,841  
         
Effect of exchange rate changes on cash     7,250       (14,106 )
         
Net increase in cash and cash equivalents     10,227       45,848  
Cash and cash equivalents at beginning of the period     57,063       11,215  
Cash and cash equivalents at end of the period   $ 67,290     $ 57,063  
         
Effect of acquisitions:        
Assets acquired, excluding cash   $ 19,649     $ 2,516,880  
Liabilities assumed     (1,458 )     (1,616,543 )
Issuance of common stock in connection with acquisition     -       (216,882 )
Cash paid for acquisitions, net of cash acquired   $ 18,191     $ 683,455  
         

 

 
Acadia Healthcare Company, Inc.
Operating Statistics
(Unaudited, Revenue in thousands)
                           
      Three Months Ended December 31,   Year Ended December 31,
      2017   2016   % Change   2017   2016   % Change
Same Facility Results (a,d)                        
  Revenue   $ 693,619   $ 657,087   5.6%   $ 2,602,315   $ 2,464,289   5.6%
  Patient Days     1,103,891     1,078,217   2.4%     4,173,465     4,027,440   3.6%
  Admissions     39,120     37,031   5.6%     156,437     147,172   6.3%
  Average Length of Stay (b)     28.2     29.1   -3.1%     26.7     27.4   -2.5%
  Revenue per Patient Day   $ 628   $ 609   3.1%   $ 624   $ 612   1.9%
  EBITDA margin     24.5%     24.9%   -40 bps     25.3%     25.6%   -30 bps
                           
U.S. Same Facility Results (a)                        
  Revenue   $ 451,958   $ 424,092   6.6%   $ 1,774,461   $ 1,665,344   6.6%
  Patient Days     607,850     589,457   3.1%     2,429,171     2,318,598   4.8%
  Admissions     36,868     35,029   5.2%     148,611     139,886   6.2%
  Average Length of Stay (b)     16.5     16.8   -2.0%     16.3     16.6   -1.4%
  Revenue per Patient Day   $ 744   $ 719   3.3%   $ 730   $ 718   1.7%
  EBITDA margin     26.3%     26.3%   0 bps     27.0%     27.1%   -10 bps
                           
U.K. Same Facility Results (a,d)                        
  Revenue   $ 241,661   $ 232,995   3.7%   $ 827,854   $ 798,945   3.6%
  Patient Days     496,041     488,760   1.5%     1,744,294     1,708,842   2.1%
  Admissions     2,252     2,002   12.5%     7,826     7,286   7.4%
  Average Length of Stay (b)     220.3     244.1   -9.8%     222.9     234.5   -5.0%
  Revenue per Patient Day   $ 487   $ 477   2.2%   $ 475   $ 468   1.5%
  EBITDA margin     21.1%     22.3%   -120 bps     21.7%     22.5%   -80 bps
                           
                           
                           
U.S. Facility Results (c)                        
  Revenue   $ 454,529   $ 426,811   6.5%   $ 1,809,844   $ 1,683,776   7.5%
  Patient Days     608,353     589,656   3.2%     2,461,512     2,321,908   6.0%
  Admissions     36,952     35,070   5.4%     151,467     140,691   7.7%
  Average Length of Stay (b)     16.5     16.8   -2.1%     16.3     16.5   -1.5%
  Revenue per Patient Day   $ 747   $ 724   3.2%   $ 735   $ 725   1.4%
  EBITDA margin     25.5%     25.7%   -20 bps     26.3%     26.4%   -10 bps
                           
U.K. Facility Results (c,d)                        
  Revenue   $ 269,983   $ 261,393   3.3%   $ 1,026,472   $ 917,841   11.8%
  Patient Days     686,708     691,560   -0.7%     2,735,132     2,476,178   10.5%
  Admissions     2,554     2,306   10.8%     10,222     8,765   16.6%
  Average Length of Stay (b)     268.9     299.9   -10.3%     267.6     282.5   -5.3%
  Revenue per Patient Day   $ 393   $ 378   4.0%   $ 375   $ 371   1.2%
  EBITDA margin     19.1%     20.6%   -150 bps     19.3%     20.8%   -150 bps
                           
Total Facility Results (c,d)                        
  Revenue   $ 724,512   $ 688,204   5.3%   $ 2,836,316   $ 2,601,617   9.0%
  Patient Days     1,295,061     1,281,216   1.1%     5,196,644     4,798,086   8.3%
  Admissions     39,506     37,376   5.7%     161,689     149,456   8.2%
  Average Length of Stay (b)     32.8     34.3   -4.4%     32.1     32.1   0.1%
  Revenue per Patient Day   $ 559   $ 537   4.2%   $ 546   $ 542   0.7%
  EBITDA margin     23.1%     23.8%   -70 bps     23.8%     24.4%   -60 bps
                           
(a) Same-facility results for the periods presented exclude the 22 facilities in the U.K. sold on November 30, 2016, the elderly care division of our U.K. operations and other closed services.
(b) Average length of stay is defined as patient days divided by admissions.
(c) Total Facility results for the periods presented exclude the 22 facilities in the U.K. sold on November 30, 2016 and other closed services.
(d) Revenue and revenue per patient day for the three months and year ended December 31, 2016 is adjusted to reflect the foreign currency exchange rate for the comparable periods of 2017 in order to eliminate the effect of changes in the exchange rate. The exchange rate used in the adjusted revenue and revenue per patient day amounts for the three months and year ended December 31, 2016 is 1.33 and 1.29, respectively.
 

 

 
Acadia Healthcare Company, Inc.
Reconciliation of Net Income Attributable to Acadia Healthcare Company, Inc. to Adjusted EBITDA
(Unaudited)
                 
    Three Months Ended December 31,   Year Ended December 31,
    2017   2016   2017   2016
    (in thousands)
                 
Net income attributable to Acadia Healthcare Company, Inc.   $ 69,629     $ 41,818     $ 199,835     $ 6,143  
Net income (loss) attributable to noncontrolling interests     60       (392 )     (246 )     (1,967 )
(Benefit from) provision for income taxes     (9,050 )     1,012       37,209       28,779  
Interest expense, net     45,230       46,010       176,007       181,325  
Depreciation and amortization     37,754       33,958       143,010       135,103  
EBITDA     143,623       122,406       555,815       349,383  
                 
Adjustments:                
Equity-based compensation expense (a)     4,460       7,356       23,467       28,345  
Transaction-related expenses (b)     5,431       14,840       24,267       48,323  
Debt extinguishment costs (c)     -       842       810       4,253  
Loss on divestiture (d)     -       4,070       -       178,809  
Gain on foreign currency derivatives (e)     -       -       -       (523 )
Adjusted EBITDA   $ 153,514     $ 149,514     $ 604,359     $ 608,590  
                 
See footnotes on page 10.                
                 

 

 
Acadia Healthcare Company, Inc.
Reconciliation of Adjusted Income Attributable to Acadia Healthcare Company, Inc. to
Net Income Attributable to Acadia Healthcare Company, Inc.
(Unaudited)
                 
    Three Months Ended December 31,   Year Ended December 31,
    2017   2016   2017   2016
    (in thousands, except per share amounts)
                 
Net income attributable to Acadia Healthcare Company, Inc.   $ 69,629     $ 41,818     $ 199,835     $ 6,143  
                 
Adjustments to income:                
Transaction-related expenses (b)     5,431       14,840       24,267       48,323  
Tax reform impact (f)     (20,188 )     -       (20,188 )     -  
Debt extinguishment costs (c)     -       842       810       4,253  
Loss on divestiture (d)     -       4,070       -       178,809  
Gain on foreign currency derivatives (e)     -       -       -       (523 )
Income tax effect of adjustments to income (g)     (1,978 )     (10,229 )     (4,492 )     (26,760 )
Adjusted income attributable to Acadia Healthcare Company, Inc.   $ 52,894     $ 51,341     $ 200,232     $ 210,245  
                 
Weighted-average shares outstanding - diluted     87,166       86,890       87,060       85,972  
                 

Adjusted income attributable to Acadia Healthcare Company, Inc. per diluted share

   $ 0.61     $ 0.59     $ 2.30     $ 2.45  
                 
See footnotes on page 10.                
                 

 

 
Acadia Healthcare Company, Inc.
Footnotes
     
We have included certain financial measures in this press release, including EBITDA, Adjusted EBITDA, and Adjusted income, which are “non-GAAP financial measures” as defined under the rules and regulations promulgated by the SEC. We define EBITDA as net income adjusted for net income (loss) attributable to noncontrolling interests, (benefit from) provision for income taxes, net interest expense and depreciation and amortization. We define Adjusted EBITDA as EBITDA adjusted for equity-based compensation expense, transaction-related expenses, debt extinguishment costs, loss on divestiture and gain on foreign currency derivatives. We define Adjusted income as net income adjusted for transaction-related expenses, tax reform impact, debt extinguishment costs, loss on divestiture, gain on foreign currency derivatives and income tax effect of adjustments to income.
     
EBITDA, Adjusted EBITDA, and Adjusted income are supplemental measures of our performance and are not required by, or presented in accordance with, generally accepted accounting principles in the United States (“GAAP”). EBITDA, Adjusted EBITDA, and Adjusted income are not measures of our financial performance under GAAP and should not be considered as alternatives to net income or any other performance measures derived in accordance with GAAP or as an alternative to cash flow from operating activities as measures of our liquidity. Our measurements of EBITDA, Adjusted EBITDA, and Adjusted income may not be comparable to similarly titled measures of other companies. We have included information concerning EBITDA, Adjusted EBITDA, and Adjusted income in this press release because we believe that such information is used by certain investors as measures of a company’s historical performance. We believe these measures are frequently used by securities analysts, investors and other interested parties in the evaluation of issuers of equity securities, many of which present EBITDA, Adjusted EBITDA, and Adjusted income when reporting their results. Our presentation of EBITDA, Adjusted EBITDA, and Adjusted income should not be construed as an inference that our future results will be unaffected by unusual or nonrecurring items.
     
The Company is not able to provide a reconciliation of projected Adjusted EBITDA and adjusted earnings per diluted share, where provided, to expected results due to the unknown effect, timing and potential significance of transaction-related expenses and the tax effect of such expenses.
     
(a) Represents the equity-based compensation expense of Acadia.
     
(b) Represents transaction-related expenses incurred by Acadia related to acquisitions and integration efforts.
     
(c) Represents debt extinguishment costs recorded in connection with the Amended and Restated Credit Agreement, including the discount and write-off of deferred financing costs.
     
(d) As part of divestitures in the U.K. and U.S., the loss on divestiture includes an allocation of goodwill to the disposal groups of approximately $106.9 million, loss on the sale of properties of approximately $45.0 million, transaction-related expenses of approximately $26.8 million and write-off of intangible assets of approximately $0.1 million.
     
(e) Represents the change in fair value of foreign currency derivatives purchased by Acadia related to (i) acquisitions in the U.K. and (ii) certain transfers of cash between the U.S. and U.K. under the Company’s cash management and foreign currency risk management programs.
     
(f) Represents the Company’s estimate of the one-time remeasurement of deferred taxes pursuant to the enactment of the Tax Cuts and Jobs Act. The estimate of the tax reform impact may be revised as further information is evaluated.
     
(g) Represents the income tax effect of adjustments to income based on tax rates of 19.87% and 17.96% for the three months ended December 31, 2017 and 2016, respectively, and 23.65% and 20.90% for the year ended December 31, 2017 and 2016, respectively. The adjusted income tax provision for the year ended December 31, 2017 excludes the impact of adopting ASU 2016-09 "Improvements to Employee Share-Based Payment Accounting” of approximately $1.7 million.

 

Source: Acadia Healthcare Company, Inc.

Acadia Healthcare Company, Inc.
Gretchen Hommrich, 615-861-6000
Director, Investor Relations