UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): February 19, 2020 (February 18, 2020)
TIVITY HEALTH, INC.
(Exact name of registrant as specified in its charter)
Delaware |
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000-19364 |
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62-1117144 |
(State or other jurisdiction
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(Commission File Number) |
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(IRS Employer Identification No.) |
701 Cool Springs Boulevard Franklin, Tennessee |
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37067 |
(Address of principal executive offices) |
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(Zip Code) |
(800) 869-5311
(Registrant's telephone number, including area code)
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
☐ |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
☐ |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
☐ |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
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Trading Symbol |
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Name of each exchange on which registered |
Common Stock - $.001 par value |
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TVTY |
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The Nasdaq Stock Market LLC |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company ☐
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 1.01. Entry into a Material Definitive Agreement.
Effective February 18, 2020, Tivity Health, Inc. (the “Company”) entered into an amendment (the “Amendment”) to its Cooperation Agreement with Daniel Tully, Altaris Partners, LLC, Altaris Capital, L.P. and George Aitken-Davies (collectively, the “Altaris Group”) to increase the percentage of the Company’s outstanding common stock that the Altaris Group is permitted to own pursuant to the terms of that agreement from 10% to 13%.
The foregoing description of the Agreement is qualified in its entirety by reference to the full text of the Amendment, which is attached hereto as Exhibit 10.1 hereto and incorporated herein by reference.
Item 2.02. Results of Operations and Financial Condition.
On February 19, 2020, the Company issued a press release announcing earnings results for the quarter and fiscal year ended December 31, 2019, the text of which is attached hereto as Exhibit 99.1. This information furnished pursuant to this Item 2.02 and Exhibit 99.1 shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and shall not be deemed to be incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act except as shall be expressly set forth by specific reference in such filing.
Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On February 19, 2020, the Company announced that Donato Tramuto was terminated without cause as the Company’s Chief Executive Officer and resigned from the Company’s Board of Directors (the “Board”) effective February 18, 2020. Mr. Tramuto will receive those separation payments and benefits that he is entitled to receive under his amended and restated employment agreement in respect of a termination without cause, which agreement has previously been disclosed. Mr. Tramuto’s decision to step down from the Board is not related to any disagreement between Mr. Tramuto and the Company with respect to the Company’s operations, policies or practices. The Board determined to reduce the size of the Board to ten directors upon the effectiveness of Mr. Tramuto’s termination of employment.
Robert (“Bob”) J. Greczyn, Jr. has been appointed to serve as the Company’s Interim Chief Executive Officer effective February 18, 2020. During his service as Interim Chief Executive Officer, Mr. Greczyn will be entitled to receive $110,000 per month as compensation for his services and will not receive any compensation for serving on the Board. The terms of Mr. Greczyn’s compensation were set by the Compensation Committee of the Board, upon consultation with Frederic W. Cook & Co., Inc., the Compensation Committee’s independent compensation consultant.
Mr. Greczyn, 68, was the Chief Executive Officer of Blue Cross Blue Shield of North Carolina (“BCBSNC”) from 2000 until his retirement in 2010, where he also served on the Board of the Blue Cross Blue Shield Association. Mr. Greczyn has been serving as Principal Manager of Capital Food Group, LLC and RJG Restaurant Group LLC, privately held restaurant franchise operations, since 2010, and he served as the interim President and Chief Executive Officer of Liposcience, Inc. from August 2013 until February 2014. From August 1998 until September 1999, he was the Chief Operating Officer of BCBSNC and became its President in September 1999. From 1990 to 1998, he was the President and CEO of Carolina Physicians Health Plan, a health maintenance organization, which was partially acquired by Healthsource, Inc. in 1991 and fully acquired by Healthsource, Inc. in 1994, at which time it became Healthsource North Carolina. In 1997, Cigna Corporation acquired Healthsource, Inc. From 1986 to 1990, Mr. Greczyn was President and CEO of Health Plan of Delaware, Ltd. (which was acquired by Principal Health Care, Inc. in 1988, at which time it became Principal Health Care of Delaware, Inc.).
A copy of the Company’s press release announcing the foregoing events is attached hereto as Exhibit 99.2 and incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits |
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Exhibit 10.1 |
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Exhibit 99.1 |
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Press Release issued by the Company, dated February 19, 2020 |
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Exhibit 99.2 |
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Press Release issued by the Company, dated February 19, 2020 |
Exhibit 104 |
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Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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TIVITY HEALTH, INC. |
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By: |
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/s/ Adam Holland |
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Name: Adam Holland |
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Title: Chief Financial Officer |
Date: February 19, 2020
Exhibit 10.1
AMENDMENT TO COOPERATION AGREEMENT
This Amendment to Cooperation Agreement (this “Amendment”), dated as of February 18, 2020, is by and among Tivity Health, Inc., a Delaware corporation (the “Company”), and Altaris Capital, L.P., Altaris Partners, LLC, George Aitken-Davies and Daniel Tully (collectively, the “Altaris Group”).
RECITALS
A. |
The Company and the Altaris Group entered into that certain Cooperation Agreement, dated as of August 7, 2019 (the “Cooperation Agreement”). |
B. |
Pursuant to Section 9 of the Cooperation Agreement, the Cooperation Agreement may be amended by an agreement in writing executed by the parties thereto. |
C. |
The Company and the Altaris Group desire to amend the Cooperation Agreement as set forth below. |
NOW, THEREFORE, intending to be legally bound hereby, the parties hereby agree as follows:
1.Amendment. Section 2(a)(iii) of the Cooperation Agreement is hereby amended by replacing reference to 10% in such Section 2(a)(iii) with a reference to 13%.
2.Miscellaneous. Except as expressly modified by this Amendment, all of the terms and conditions of the Cooperation Agreement shall remain in full force and effect. In the event of any conflict or inconsistency between the terms and conditions of the Cooperation Agreement and this Amendment, the terms and conditions of this Amendment shall control and govern. This Amendment may be executed in multiple counterparts which, when taken together, shall constitute one and the same document. The exchange of copies of this Amendment and of signature pages by facsimile, or by .pdf or similar imaging transmission, will constitute effective execution and delivery of this Amendment as to the parties and may be used in lieu of the original agreement for all purposes. Signatures of the parties transmitted by facsimile, or by .pdf or similar imaging transmission, will be deemed to be their original signatures for any purpose whatsoever.
[Remainder of Page Intentionally Left Blank]
Exhibit 10.1
IN WITNESS WHEREOF, each of the parties hereto has executed this Amendment or caused the same to be executed by its duly authorized representative as of the date hereof.
TIVITY HEALTH, INC.
By:/s/ Adam Holland
Name: Adam Holland
Title:Chief Financial Officer
ALTARIS CAPITAL, L.P.
By:Altaris Partners, LLC, its
general partner
By:/s/ Daniel Tully
Name:Daniel Tully
Title:Manager
ALTARIS PARTNERS, LLC
By:/s/ Daniel Tully
Name:Daniel Tully
Title:Manager
/s/ George Aitken-Davies
George Aitken-Davies
/s/ Daniel Tully
Daniel Tully
[Signature Page to Amendment to Cooperation Agreement]
Exhibit 99.1
Investor Relations Contact:
Bob East, Westwicke
(443) 213-0500
Tivity@Westwicke.com
TIVITY HEALTH REPORTS FOURTH-QUARTER AND FISCAL YEAR 2019 RESULTS
———————————
REPORTS REVENUES OF APPROXIMATELY $273 MILLION FOR THE QUARTER AND $1.13 BILLION FOR THE YEAR
———————————
ANNOUNCES FINANCIAL GUIDANCE FOR 2020
NASHVILLE, Tenn. (February 19, 2020) - Tivity Health, Inc. (NASDAQ:TVTY) today announced financial results for the fourth quarter and year ended December 31, 2019.
“Our fourth quarter and fiscal year results in our Healthcare segment reflect the inherent strength of our flagship brands SilverSneakers® and Prime® Fitness. We expect the Healthcare segment’s total revenue to grow at a rate of eight to ten percent in 2020,” said Bob Greczyn, Tivity Health’s Interim Chief Executive Officer.
“And while the Nutrition segment had a disappointing end to 2019, it remains profitable, and we believe it will continue to generate significant cash flow. Management and our Board of Directors are committed to making the right investments for this business with a focus on innovation, execution, and new advertising strategies to return the business to growth.”
Fourth-Quarter and Fiscal Year 2019 Financial Highlights
Dollars in millions, except per-share data
See pages 11-13 for a reconciliation of non-GAAP financial measures
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Three Months Ended December 31, |
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Fiscal Year Ended December 31, |
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2019 |
2018 |
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2019 (1) |
2018 |
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Revenues |
$272.8 |
$153.0 |
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$1,131.2 |
$606.3 |
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Net Income (Loss) |
$(323.1) |
$28.5 |
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$(286.8) |
$98.8 |
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Adjusted EBITDA |
$55.5 |
$37.0 |
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$222.1 |
$142.2 |
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Adjusted EBITDA Margin |
20.3% |
24.2% |
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19.6% |
23.4% |
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(Basic) Diluted Earnings (Loss) Per Share |
$(6.69) |
$0.67 |
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$(6.17) |
$2.27 |
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Adjusted Earnings Per Share |
$0.40 |
$0.73 |
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$2.02 |
$2.34 |
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Cash Flows from Operating Activities |
$(2.5) |
$34.2 |
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$82.3 |
$108.7 |
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Free Cash Flow |
$(11.9) |
$31.6 |
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$57.6 |
$99.7 |
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(1)Includes results from the Nutrition segment since its acquisition on March 8, 2019 forward. |
TVTY Reports Fourth-Quarter Results
Page 2
February 19, 2020
Total revenues in the fourth quarter of $272.8 million increased $119.8 million, or 78%, compared to the fourth quarter of 2018 driven by the addition of Nutrition segment revenues of $113.7 million and an increase in Healthcare segment revenues of $6.0 million.
Net loss in the fourth quarter of $(323.1) million included a non-cash impairment charge of $(377.1) million in the Nutrition segment. In connection with its annual impairment test, the Company concluded that the fair values of both goodwill and the Nutrisystem tradename were below their carrying amounts. As a result, the Company recorded non-cash impairment charges to lower the carrying amount of goodwill and the Nutrisystem tradename by $(137.1) million and $(240.0) million, respectively. These impairment losses primarily resulted from a reduction in the Company’s long-term forecast for the Nutrition segment. The Company does not expect the impairment charge to have an impact on future operations, or affect its liquidity, cash flows from operating activities, or compliance with the financial covenants in its credit agreement. In addition, the Company recorded a purchase accounting measurement period adjustment to accelerate amortization of the customer list intangible asset to more closely align with the estimated economic benefit. When compared to the Company’s guidance for 2019, this acceleration resulted in incremental amortization expense of $17.4 million for 2019.
Adjusted EBITDA was $55.5 million and $222.1 million for the fourth quarter and fiscal year 2019, respectively. The Company benefited from cost synergies realized of $5.4 million during the fourth quarter and $9.8 million during the fiscal year. The Company remains on track to deliver on its stated cost synergy and integration goals.
Segment Results
Healthcare Segment
Dollars in millions
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Three Months Ended December 31, |
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Twelve Months Ended December 31, |
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2019 |
2018 |
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2019 |
2018 |
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Healthcare Revenues |
$159.1 |
$153.0 |
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$633.1 |
$606.3 |
Healthcare Adjusted EBITDA |
$41.6 |
$37.0 |
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$142.6 |
$142.2 |
Healthcare Adjusted EBITDA Margin |
26.1% |
24.2% |
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22.5% |
23.4% |
Fourth quarter revenues in the Healthcare segment increased by $6.0 million in 2019 compared to the fourth quarter of 2018, primarily as a result of an increase in Prime Fitness revenue driven by an increase in average subscribers as well as the addition of our new Walmart business, while SilverSneakers revenue was relatively flat. Annual revenues in the Healthcare segment increased by $26.8 million in 2019 compared to 2018, primarily as a result of 1) an increase in Prime Fitness revenue driven by an increase in average subscribers as noted above and 2) a net increase in SilverSneakers revenue despite a decrease in the number of eligible lives, primarily due to an increase in revenue-generating visits.
Adjusted EBITDA for the Healthcare segment in the fourth quarter of 2019 benefited from $1.7 million of cost synergies compared to the fourth quarter of 2018. The $2.8 million beneficial impact of cost synergies for the full year was primarily offset by an increase in cost per visit, as well as a higher number of average visits per member per month in 2019 compared to 2018.
TVTY Reports Fourth-Quarter Results
Page 3
February 19, 2020
Nutrition Segment
Dollars in millions
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Three Months Ended |
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Fiscal Year 2019 |
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Nutrisystem, Inc. 2019 Prior to Acquisition |
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December 31, 2019 |
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(3/8/19 – 12/31/19) |
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(1/1/19 – 3/7/19) (2) |
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Nutrition Revenues |
$113.7 |
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$498.1 |
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$134.0 |
Nutrition Adjusted EBITDA |
$13.9 |
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$79.6 |
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($8.3) |
Nutrition Adjusted EBITDA Margin |
12.2% |
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16.0% |
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(6.2%) |
(2) Reflects results from January 1, 2019 through March 7, 2019, prior to the Company’s acquisition of Nutrisystem on March 8, 2019. These results are excluded from the Company’s reported results for fiscal year 2019. Adjusted EBITDA for the period January 1, 2019 through March 7, 2019 excludes $17.1 million of acquisition, integration, and project costs. |
Revenues in the Nutrition segment were $113.7 million for the fourth quarter and $498.1 million for the fiscal year since acquisition. Fiscal year 2019 adjusted EBITDA for the Nutrition segment was $79.6 million, which benefited from the timing of certain expenses in relation to the acquisition date of March 8, 2019 as reflected in the table above. Adjusted EBITDA includes $3.7 million and $7.0 million of benefits from cost synergies for the fourth quarter and fiscal year 2019, respectively.
2020 Financial Guidance
Tivity Health announced today the following financial guidance for the first quarter and full year 2020. Guidance includes cost synergy benefits related to the Nutrisystem acquisition, which is how we plan to report the results of future quarters.
Dollars in millions, except per-share data
TVTY Reports Fourth-Quarter Results
Page 4
February 19, 2020
With respect to adjusted EBITDA guidance for 2020, certain items that affect net income on a GAAP basis, such as restructuring expense, acquisition, integration, and project costs, and CEO transition expenses, cannot be reasonably predicted at this time, and the Company is unable to quantify such amounts (some of which may be non-cash) that would be required to be included in the comparable forecasted GAAP measures without unreasonable effort. As such, the Company is unable to provide a reasonable estimate of net income on a GAAP basis, or a corresponding reconciliation of adjusted EBITDA to net income.
Conference Call
Tivity Health will hold a conference call to discuss this release today at 5:00 p.m. Eastern Time. Investors will have the opportunity to listen to the conference call live by dialing 877-683-2218 or 647-689-5447 for international callers and referencing code 6498273 or over the Internet by going to www.tivityhealth.com and clicking “Investors” at least 15 minutes early to register, download, and install any necessary audio software. For those who cannot listen to the live broadcast, a telephonic replay will be available for one week at 800-585-8367 or 416-621-4642 for international callers, code 6498273, and the replay will also be available on the Company's website for the next 12 months.
About Tivity Health
Tivity Health® Inc. (Nasdaq: TVTY) is a leading provider of healthy life-changing solutions, including SilverSneakers®, Nutrisystem®, Prime® Fitness, Wisely WellTM, South Beach Diet®, and WholeHealth Living®. We are actively addressing the social determinants of health, defined as the conditions in which we work, live and play. From improving health outcomes to reversing the narrative on inactivity, food insecurity, social isolation and loneliness, we are making a difference and are transforming the way we do health. Learn more at TivityHealth.com.
Non-GAAP Financial Measures
This press release contains certain non-GAAP financial measures. Reconciliations of certain of these non-GAAP measures to the comparable GAAP measures are included on pages 11-13. Certain of the non-GAAP measures included in this press release are forward-looking, and reconciliations of these forward-looking non-GAAP financial measures (including adjusted EBITDA guidance) to the most directly comparable GAAP financial measures are not provided because the Company is unable to provide such reconciliations without unreasonable effort due to the uncertainty and inherent difficulty of predicting the financial impact of certain items.
Cautionary Statement Regarding Forward-Looking Statements
This press release contains certain statements that are “forward-looking” statements within the meaning of the federal securities laws, including Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are based upon current expectations and include all statements that are not historical statements of fact and those regarding the intent, belief or expectations, including, without limitation, statements that are accompanied by words such as “will,” “expect,” “outlook,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “see,” “will,” “would,” “target,” or other similar words, phrases or expressions and variations or negatives of these words. These forward-looking statements include, but are not limited to, the Company’s financial guidance and statements regarding its future financial performance. Readers of this press release should understand that these statements are not guarantees
TVTY Reports Fourth-Quarter Results
Page 5
February 19, 2020
of performance or results. Many risks and uncertainties could affect actual results and cause them to vary materially from the forward-looking statements.
These risks and uncertainties include, among other things: the market’s acceptance of the Company’s new products and services; the Company’s ability to develop and implement effective strategies and to anticipate and respond to strategic changes, opportunities, and emerging trends in the Company’s industry and/or business, as well as to accurately forecast the related impact on the Company’s revenues and earnings; the risk that expected benefits, synergies and growth opportunities of the Company’s acquisition of Nutrisystem may not be achieved in a timely manner or at all; the Company’s ability to successfully integrate Nutrisystem's business or any other new or acquired businesses, services, technologies, solutions, or products into the Company’s business and to accurately forecast the related costs; the risk that the significant indebtedness incurred in connection with the Company’s acquisition of Nutrisystem may limit the Company’s ability to adapt to changes in the economy or market conditions, expose the Company to interest rate risk for the variable rate indebtedness and require a substantial portion of cash flows from operations to be dedicated to the payment of indebtedness; the Company’s ability to service its debt, make principal and interest payments as those payments become due, and remain in compliance with its debt covenants; the Company’s ability to obtain adequate financing to provide the capital that may be necessary to support its current or future operations; the risks associated with changes in macroeconomic conditions, geopolitical turmoil and the continuing threat of domestic or international terrorism; the impact of any additional impairment of the Company’s goodwill, intangible assets, or other long-term assets; the risks associated with the potential failures of the Company’s information systems; the risks associated with data privacy or security breaches, computer hacking, network penetration and other illegal intrusions of the Company’s information systems or those of third-party vendors or other service providers, which may result in unauthorized access by third parties, loss, misappropriation, disclosure or corruption of customer, employee or Company information, or other data subject to privacy laws and may lead to a disruption in the Company’s business, costs to modify, enhance, or remediate the Company’s cybersecurity measures, enforcement actions, fines or litigation against the Company, or damage to its business reputation; the impact of any new or proposed legislation, regulations and interpretations relating to Medicare, Medicare Advantage, Medicare Supplement, as well as privacy and security laws; the Company’s ability to attract, hire, or retain key personnel or other qualified employees and to control labor costs; the effectiveness of the reorganization of the Company’s business and its ability to realize the anticipated benefits thereof; the Company’s ability to effectively compete against other entities, whose financial, research, staff, and marketing resources may exceed its resources; the impact of legal proceedings involving the Company and/or its subsidiaries, including any claims related to intellectual property rights; the Company’s ability to enforce its intellectual property rights; the risks associated with deriving a significant concentration of the Company’s revenues from a limited number of its Healthcare segment customers, many of whom are health plans; the Company’s ability and/or the ability of its Healthcare segment customers to enroll participants and to accurately forecast their level of enrollment and participation in the Company’s programs in a manner and within the timeframe anticipated by the Company; the Company’s ability to sign, renew and/or maintain contracts with the Company’s Healthcare segment customers and/or its partner locations under existing terms or restructure these contracts on terms that would not have a material negative impact on the Company’s results of operations; reduction in Medicare Advantage health plan reimbursement rates or changes in plan designs; the ability of the Company’s Healthcare segment customers to maintain the number of covered lives enrolled in the plans during the terms of the Company’s agreements; the impact of severe or adverse weather conditions and the potential emergence of a health pandemic or an infectious disease outbreak on member participation in the Company’s Healthcare segment programs; the impact of healthcare reform on the Company’s business; the effectiveness of the Company’s
TVTY Reports Fourth-Quarter Results
Page 6
February 19, 2020
marketing and advertising programs; loss, or disruption in the business, of any of the Company’s food suppliers or its fulfillment provider, or disruptions in the shipping of the Company’s food products for its Nutrition segment; the impact of any claims that the Company’s Nutrition segment personnel are unqualified to provide proper weight loss advice; the impact of health or advertising related claims by the Company’s Nutrition segment customers; competition from other weight management industry participants or the development of more effective or more favorably perceived weight management methods; loss of any of the Company’s Nutrition segment third-party retailer agreements and any obligations associated with such loss, or a reduction of orders for Company products by any such third-party retailers or reduced promotion by such third-party retailers of Company products; the Company’s ability to continue to develop innovative weight loss and nutrition programs and enhance its existing programs, or the failure of the Company’s programs to continue to appeal to the market; the impact of claims from the Company’s Nutrition segment competitors regarding advertising or other marketing practices; the Company’s ability to develop and commercially introduce new products and services; the Company’s ability to receive referrals from existing Nutrition segment customers, a decline in which could adversely impact customer acquisition costs; failure to attract or negative publicity with respect to any of the Company’s spokespersons; the Company’s ability to anticipate change and respond to emerging trends for customer preferences and the impact of the same on demand for the Company’s services and products; negative publicity with respect to the weight loss industry; the impact of increased governmental regulation on the Company’s Nutrition segment; claims arising from the sale of ingested products; and other risks detailed in the Company’s filings with the Securities and Exchange Commission.
For additional information about factors that could cause actual results to differ materially from those described in the forward-looking statements, please refer to the Company’s filings with the SEC. Except as required by law, the Company undertakes no obligation to update any such forward-looking statements to reflect new information, subsequent events or circumstances.
TVTY Reports Fourth-Quarter Results
Page 7
February 19, 2020
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
(Unaudited)
|
|
December 31, 2019 |
|
|
December 31, 2018 |
|
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Current assets: |
|
|
|
|
|
|
|
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Cash and cash equivalents |
|
$ |
2,486 |
|
|
$ |
1,933 |
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Accounts receivable, net |
|
|
97,596 |
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|
|
67,139 |
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Inventories |
|
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36,407 |
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|
|
274 |
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Prepaid expenses |
|
|
18,255 |
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|
|
3,381 |
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Income taxes receivable |
|
|
— |
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|
|
720 |
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Other current assets |
|
|
6,993 |
|
|
|
4,658 |
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Total current assets |
|
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161,737 |
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|
|
78,105 |
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|
|
|
|
|
|
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|
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Property and equipment, net of accumulated depreciation of $42,510 and $30,711 respectively |
|
|
52,909 |
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|
|
16,341 |
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Right-of-use assets |
|
|
43,198 |
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|
|
— |
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Intangible assets, net |
|
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689,686 |
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|
|
29,049 |
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Goodwill, net |
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|
654,635 |
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|
|
334,680 |
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Other assets |
|
|
23,740 |
|
|
|
23,904 |
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Total assets |
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$ |
1,625,905 |
|
|
$ |
482,079 |
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|
|
|
|
|
|
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|
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Current liabilities: |
|
|
|
|
|
|
|
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Accounts payable |
|
$ |
46,480 |
|
|
$ |
29,103 |
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Accrued salaries and benefits |
|
|
13,071 |
|
|
|
6,512 |
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Accrued liabilities |
|
|
56,068 |
|
|
|
42,563 |
|
Deferred revenue |
|
|
12,037 |
|
|
|
582 |
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Current portion of debt |
|
|
— |
|
|
|
57 |
|
Current portion of lease liabilities |
|
|
13,755 |
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|
|
— |
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Current portion of long-term liabilities |
|
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4,947 |
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|
|
2,255 |
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Total current liabilities |
|
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146,358 |
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|
81,072 |
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Long-term debt |
|
|
1,048,127 |
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|
|
30,589 |
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Long-term lease liabilities |
|
|
31,401 |
|
|
|
— |
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Long-term deferred tax liability |
|
|
160,846 |
|
|
|
319 |
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Other long-term liabilities |
|
|
12,263 |
|
|
|
1,098 |
|
|
|
|
|
|
|
|
|
|
Stockholders' equity: |
|
|
|
|
|
|
|
|
Preferred stock $.001 par value, 5,000,000 shares authorized, none Outstanding |
|
|
— |
|
|
|
— |
|
Common stock $.001 par value, 120,000,000 shares authorized, 48,156,786 and 41,049,418 shares outstanding, respectively |
|
|
48 |
|
|
|
41 |
|
Additional paid-in capital |
|
|
504,419 |
|
|
|
347,487 |
|
Retained earnings |
|
|
(237,284 |
) |
|
|
49,655 |
|
Treasury stock, at cost, 2,254,953 shares in treasury |
|
|
(28,182 |
) |
|
|
(28,182 |
) |
Accumulated other comprehensive loss |
|
|
(12,091 |
) |
|
|
— |
|
Total stockholders' equity |
|
|
226,910 |
|
|
|
369,001 |
|
Total liabilities and stockholders' equity |
|
$ |
1,625,905 |
|
|
$ |
482,079 |
|
|
|
|
|
|
|
|
|
|
TVTY Reports Fourth-Quarter Results
Page 8
February 19, 2020
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(In thousands, except earnings per share data)
(Unaudited)
|
Three Months Ended |
|
Fiscal Year Ended |
|
|||||||||
|
December 31, |
|
December 31, |
|
|||||||||
|
2019 |
|
|
2018 |
|
2019 |
|
2018 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||
Revenues |
$ |
272,789 |
|
|
$ |
153,037 |
|
$ |
1,131,157 |
|
$ |
606,299 |
|
Cost of revenue (exclusive of depreciation and amortization of $26,667, $1,069, $43,908, and $4,109, respectively, included below) |
|
164,320 |
|
|
|
104,842 |
|
|
678,057 |
|
|
418,333 |
|
Marketing expenses |
|
32,536 |
|
|
|
3,547 |
|
|
158,006 |
|
|
14,417 |
|
Selling, general & administrative expenses |
|
26,230 |
|
|
|
10,941 |
|
|
110,038 |
|
|
35,077 |
|
Depreciation and amortization |
|
28,409 |
|
|
|
1,206 |
|
|
50,775 |
|
|
4,667 |
|
Impairment loss |
|
377,100 |
|
|
|
— |
|
|
377,100 |
|
|
— |
|
Restructuring and related charges |
|
2,799 |
|
|
|
— |
|
|
7,024 |
|
|
124 |
|
Operating income (loss) |
|
(358,605 |
) |
|
|
32,501 |
|
|
(249,843 |
) |
|
133,681 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
22,232 |
|
|
|
784 |
|
|
76,566 |
|
|
8,733 |
|
Income (loss) before income taxes |
|
(380,837 |
) |
|
|
31,717 |
|
|
(326,409 |
) |
|
124,948 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense (benefit) |
|
(57,745 |
) |
|
|
3,191 |
|
|
(39,588 |
) |
|
27,046 |
|
Income (loss) from continuing operations |
|
(323,092 |
) |
|
|
28,526 |
|
|
(286,821 |
) |
|
97,902 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from discontinued operations, net of income tax |
|
— |
|
|
|
— |
|
|
— |
|
|
901 |
|
Net income (loss) |
|
(323,092 |
) |
|
|
28,526 |
|
|
(286,821 |
) |
|
98,803 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per share - basic: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations |
$ |
(6.69 |
) |
|
$ |
0.70 |
|
$ |
(6.17 |
) |
$ |
2.44 |
|
Discontinued operations |
$ |
— |
|
|
$ |
— |
|
$ |
— |
|
$ |
0.02 |
|
Net income (1) |
$ |
(6.69 |
) |
|
$ |
0.70 |
|
$ |
(6.17 |
) |
$ |
2.47 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per share - diluted: (2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing operations |
$ |
(6.69 |
) |
|
$ |
0.67 |
|
$ |
(6.17 |
) |
$ |
2.27 |
|
Discontinued operations |
$ |
— |
|
|
$ |
— |
|
$ |
— |
|
$ |
0.02 |
|
Net income |
$ |
(6.69 |
) |
|
$ |
0.67 |
|
$ |
(6.17 |
) |
$ |
2.29 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income (loss) |
$ |
(319,108) |
|
|
$ |
28,526 |
|
$ |
(298,912 |
) |
$ |
98,803 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares |
|
|
|
|
|
|
|
|
|
|
|
|
|
and equivalents: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
48,298 |
|
|
|
40,611 |
|
|
46,509 |
|
|
40,078 |
|
Diluted (2) |
|
48,298 |
|
|
|
42,586 |
|
|
46,509 |
|
|
43,073 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)Figures may not add due to rounding. |
|
|
|
|
|
|
|
|
|
|
|
|
|
(2)The impact of potentially dilutive securities for the three and twelve months ended December 31, 2019 was not considered because the impact would be anti-dilutive. |
|
TVTY Reports Fourth-Quarter Results
Page 9
February 19, 2020
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
|
|
Fiscal Year Ended December 31, |
|
|||||
|
|
2019 |
|
|
2018 |
|
||
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
Income from continuing operations |
|
$ |
(286,821 |
) |
|
$ |
97,902 |
|
Income from discontinued operations |
|
|
— |
|
|
|
901 |
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
50,775 |
|
|
|
4,667 |
|
Amortization and write-off of deferred loan costs |
|
|
4,487 |
|
|
|
1,152 |
|
Amortization of debt discount |
|
|
3,711 |
|
|
|
4,140 |
|
Share-based employee compensation expense |
|
|
18,832 |
|
|
|
6,097 |
|
Impairment of intangible assets |
|
|
377,100 |
|
|
|
— |
|
Gain on sale of MeYou Health |
|
|
— |
|
|
|
(1,416 |
) |
Loss on sale of TPHS business |
|
|
— |
|
|
|
112 |
|
Deferred income taxes |
|
|
(52,076 |
) |
|
|
25,485 |
|
Increase in accounts receivable, net |
|
|
(8,283 |
) |
|
|
(12,311 |
) |
Decrease in inventory |
|
|
2,087 |
|
|
|
— |
|
(Increase) decrease in other current assets |
|
|
(426 |
) |
|
|
1,610 |
|
Decrease in accounts payable |
|
|
(10,052 |
) |
|
|
(95 |
) |
Increase (decrease) in accrued salaries and benefits |
|
|
3,608 |
|
|
|
(10,314 |
) |
Decrease in other current liabilities |
|
|
(21,495 |
) |
|
|
(11,802 |
) |
Decrease in deferred revenue |
|
|
(1,198 |
) |
|
|
— |
|
Other |
|
|
2,056 |
|
|
|
2,611 |
|
Net cash flows provided by operating activities |
|
$ |
82,305 |
|
|
$ |
108,739 |
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
Acquisition of property and equipment |
|
$ |
(24,713 |
) |
|
$ |
(9,053 |
) |
Proceeds from sale of MeYou Health |
|
|
— |
|
|
|
1,416 |
|
Business acquisitions, net of cash acquired |
|
|
(1,062,818 |
) |
|
|
— |
|
Net cash flows used in investing activities |
|
$ |
(1,087,531 |
) |
|
$ |
(7,637 |
) |
|
|
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
Proceeds from issuance of long-term debt |
|
$ |
1,611,970 |
|
|
$ |
253,425 |
|
Payments of long-term debt |
|
|
(574,329 |
) |
|
|
(373,536 |
) |
Proceeds from settlement of cash convertible notes hedges |
|
|
— |
|
|
|
141,246 |
|
Payments related to settlement of cash conversion derivative |
|
|
— |
|
|
|
(141,246 |
) |
Payments related to tax withholding for share-based compensation |
|
|
(4,733 |
) |
|
|
(9,762 |
) |
Exercise of stock options |
|
|
989 |
|
|
|
1,910 |
|
Deferred loan costs |
|
|
(30,189 |
) |
|
|
— |
|
Principal payments related to finance leases |
|
|
(274 |
) |
|
|
— |
|
Change in cash overdraft and other |
|
|
2,357 |
|
|
|
410 |
|
Net cash flows provided by (used in) financing activities |
|
$ |
1,005,791 |
|
|
$ |
(127,553 |
) |
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash |
|
$ |
(12 |
) |
|
$ |
(56 |
) |
Less: net (decrease) increase in discontinued operations cash and cash equivalents |
|
|
— |
|
|
|
— |
|
Net increase (decrease) in cash and cash equivalents |
|
$ |
553 |
|
|
$ |
(26,507 |
) |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, beginning of period |
|
|
1,933 |
|
|
|
28,440 |
|
Cash and cash equivalents, end of period |
|
$ |
2,486 |
|
|
$ |
1,933 |
|
TVTY Reports Fourth-Quarter Results
Page 10
February 19, 2020
Segment Information
(In thousands)
(Unaudited)
|
|
Three Months Ended December 31, 2019 |
|
|
|
Fiscal Year Ended December 31, 2019 |
|
||||||||||||||||||
|
|
Healthcare |
|
|
Nutrition |
|
|
Total |
|
|
|
Healthcare |
|
|
Nutrition |
|
|
Total |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
$ |
159,080 |
|
|
$ |
113,709 |
|
|
$ |
272,789 |
|
|
|
$ |
633,066 |
|
|
$ |
498,091 |
|
|
$ |
1,131,157 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
$ |
41,574 |
|
|
$ |
13,890 |
|
|
$ |
55,464 |
|
|
|
$ |
142,561 |
|
|
$ |
79,563 |
|
|
$ |
222,124 |
|
Acquisition, integration, and project costs |
|
|
|
|
|
|
|
|
|
$ |
5,761 |
|
|
|
|
|
|
|
|
|
|
|
$ |
37,068 |
|
Impairment loss |
|
|
|
|
|
|
|
|
|
|
377,100 |
|
|
|
|
|
|
|
|
|
|
|
|
377,100 |
|
Restructuring and related charges |
|
|
|
|
|
|
|
|
|
|
2,799 |
|
|
|
|
|
|
|
|
|
|
|
|
7,024 |
|
Interest expense |
|
|
|
|
|
|
|
|
|
|
22,232 |
|
|
|
|
|
|
|
|
|
|
|
|
76,566 |
|
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
|
28,409 |
|
|
|
|
|
|
|
|
|
|
|
|
50,775 |
|
Income (loss) before income taxes |
|
|
|
|
|
|
|
|
|
$ |
(380,837 |
) |
|
|
|
|
|
|
|
|
|
|
$ |
(326,409 |
) |
TVTY Reports Fourth-Quarter Results
Page 11
February 19, 2020
TIVITY HEALTH, INC.
RECONCILIATION OF NON-GAAP MEASURES TO GAAP MEASURES
(Unaudited)
Reconciliation of Adjusted EBITDA, Non-GAAP Basis
to Income from Continuing Operations, GAAP Basis (in thousands)
|
|
|
|
Three Months Ended December 31, 2019 |
|
|
% of Revenue |
|
Three Months Ended December 31, 2018 |
|
% of Revenue |
Adjusted EBITDA, non-GAAP basis (1) |
|
|
$ |
55,464 |
|
|
20.3% |
$ |
36,976 |
|
24.2% |
Acquisition, integration, and project costs (2) |
|
|
|
(5,761 |
) |
|
|
|
(3,269 |
) |
|
Restructuring charges (3) |
|
|
|
(2,799 |
) |
|
|
|
— |
|
|
Impairment loss (4) |
|
|
|
(377,100 |
) |
|
|
|
— |
|
|
EBITDA, non-GAAP basis (5) |
|
|
$ |
(330,196 |
) |
|
|
$ |
33,307 |
|
|
Depreciation and amortization |
|
|
|
(28,409 |
) |
|
|
|
(1,206 |
) |
|
Interest expense |
|
|
|
(22,232 |
) |
|
|
|
(784 |
) |
|
Income tax (expense) benefit |
|
|
|
57,745 |
|
|
|
|
(3,191 |
) |
|
Income from continuing operations, GAAP basis |
|
|
$ |
(323,092 |
) |
|
|
$ |
28,526 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended December 31, 2019 |
|
|
% of Revenue |
|
Fiscal Year Ended December 31, 2018 |
|
% of Revenue |
Adjusted EBITDA, non-GAAP basis (1) |
|
|
$ |
222,124 |
|
|
19.6% |
$ |
142,168 |
|
23.4% |
Acquisition, integration, and project costs (2) |
|
|
|
(37,068 |
) |
|
|
|
(3,696 |
) |
|
Restructuring charges (3) |
|
|
|
(7,024 |
) |
|
|
|
(124 |
) |
|
Impairment loss (4) |
|
|
|
(377,100 |
) |
|
|
|
— |
|
|
EBITDA, non-GAAP basis (5) |
|
|
$ |
(199,068 |
) |
|
|
$ |
138,348 |
|
|
Depreciation and amortization |
|
|
|
(50,775 |
) |
|
|
|
(4,667 |
) |
|
Interest expense |
|
|
|
(76,566 |
) |
|
|
|
(8,733 |
) |
|
Income tax (expense) benefit |
|
|
|
39,588 |
|
|
|
|
(27,046 |
) |
|
Income from continuing operations, GAAP basis |
|
|
$ |
(286,821 |
) |
|
|
$ |
97,902 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
Adjusted EBITDA is a non-GAAP financial measure. The Company excludes acquisition, integration, and project costs, restructuring charges, and impairment loss from this measure because of its comparability to the Company's historical operating results. The Company believes it is useful to investors to provide disclosures of its operating results on the same basis as that used by management. You should not consider Adjusted EBITDA in isolation or as a substitute for income from continuing operations determined in accordance with U.S. GAAP. Additionally, because Adjusted EBITDA may be defined differently by other companies in the Company’s industry, the non-GAAP financial measure presented here may not be comparable to similarly titled measures of other companies. |
|
(2) |
Acquisition, integration, and project costs consists of pre-tax charges of $5,761 and $3,269 for the three months ended December 31, 2019 and 2018, respectively, and $37,068 and $3,696 for the fiscal years ended December 31, 2019 and 2018, respectively, incurred in connection with the acquisition and integration of Nutrisystem and other strategic projects. |
|
(3) |
Restructuring charges consists of pre-tax charges of $2,799 and $0 for the three months ended December 31, 2019 and 2018, respectively, and $7,024 and $124 for the fiscal years ended December 31, 2019 and 2018, respectively, primarily related to a restructuring of corporate support infrastructure and of executive leadership. |
|
(4) |
Impairment loss consists of pre-tax charges of $240,000 and $137,100 for the three and twelve months ended December 31, 2019 related to an impairment of the Nutrisystem tradename and goodwill allocated to the Nutrition segment, respectively. |
|
(5) |
EBITDA is a non-GAAP financial measure. The Company believes it is useful to investors to provide disclosures of its |
TVTY Reports Fourth-Quarter Results
Page 12
February 19, 2020
|
operating results and guidance on the same basis as that used by management. You should not consider EBITDA in isolation or as a substitute for income from continuing operations determined in accordance with U.S. GAAP. |
Reconciliation of Free Cash Flow, Non-GAAP Basis
to Net Cash Flows Provided by Operating Activities, GAAP Basis (in thousands)
|
|
|
|
Three Months Ended December 31, 2019 |
|
|
|
Three Months Ended December 31, 2018 |
|
|
Fiscal Year Ended December 31, 2019 |
|
|
Fiscal Year Ended December 31, 2018 |
Free cash flow, non-GAAP basis (6) |
|
|
$ |
(11,877 |
) |
|
$ |
31,615 |
|
$ |
57,592 |
|
$ |
99,686 |
Acquisition of property and equipment |
|
|
|
9,359 |
|
|
|
2,597 |
|
|
24,713 |
|
|
9,053 |
Net cash flows provided by operations, GAAP basis |
|
|
$ |
(2,518 |
) |
|
$ |
34,212 |
|
$ |
82,305 |
|
$ |
108,739 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(6) |
Free cash flow is a non-GAAP financial measure and is defined by the Company as net cash flows provided by operating activities less acquisition of property and equipment. The Company believes free cash flow is a useful measure of performance and an indication of the strength of the Company and its ability to generate cash. The Company believes it is useful to investors to provide disclosures of its results on the same basis as that used by management. You should not consider free cash flow in isolation or as a substitute for net cash flows provided by operating activities determined in accordance with U.S. GAAP. Additionally, because free cash flow may be defined differently by other companies in the Company’s industry, the non-GAAP financial measure presented here may not be comparable to similarly titled measures of other companies. |
Reconciliation of Free Cash Flow Guidance, Non-GAAP Basis
to Net Cash Flows Provided by Operating Activities Guidance, GAAP Basis (in millions)
|
|
|
|
Fiscal Year Ending December 31, 2020 |
|
|
Free cash flow guidance, non-GAAP basis (7) |
|
|
$ |
60 - 75 |
|
|
Acquisition of property and equipment guidance |
|
|
|
25 - 30 |
|
|
Net cash flows provided by operations guidance, GAAP basis |
|
|
$ |
85 - 105 |
|
|
|
|
|
|
|
|
|
|
(7) |
Free cash flow guidance is a non-GAAP financial measure and is defined by the Company as net cash flows provided by operating activities less acquisition of property and equipment. The Company believes free cash flow is a useful measure of performance and an indication of the strength of the Company and its ability to generate cash. The Company believes it is useful to investors to provide disclosures of its results and guidance on the same basis as that used by management. You should not consider free cash flow guidance in isolation or as a substitute for net cash flows provided by operating activities guidance determined in accordance with U.S. GAAP. Additionally, because free cash flow may be defined differently by other companies in the Company’s industry, the non-GAAP financial measure presented here may not be comparable to similarly titled measures of other companies. |
TVTY Reports Fourth-Quarter Results
Page 13
February 19, 2020
Reconciliation of Adjusted Earnings Per Share (“EPS”), Non-GAAP Basis
to EPS, GAAP Basis (footnote amounts in thousands)
|
|
|
Three Months Ended December 31, 2019 |
|
|
Three Months Ended December 31, 2018 |
|
|
Fiscal Year Ended December 31, 2019 |
|
|
Fiscal Year Ended December 31, 2018 |
|
|
Adjusted EPS, non-GAAP basis (8) |
|
$ |
0.40 |
|
$ |
0.73 |
|
$ |
2.02 |
|
$ |
2.34 |
|
|
Net loss attributable to acquisition, integration, proiect, and restructuring costs (9) (14) |
|
|
(0.13 |
) |
|
(0.06 |
) |
|
(0.71 |
) |
|
(0.06 |
) |
|
Net loss attributable to impairment loss (10) (14) |
|
|
(6.61 |
) |
|
— |
|
|
(6.86 |
) |
|
— |
|
|
Net loss attributable to amortization of intangible assets (11) (14) |
|
|
(0.34 |
) |
|
— |
|
|
(0.52 |
) |
|
— |
|
|
Loss attributable to tax adjustments (12) (14) |
|
|
(0.01 |
) |
|
— |
|
|
(0.11 |
) |
|
— |
|
|
EPS, GAAP basis (13) (14) |
|
$ |
(6.69 |
) |
$ |
0.67 |
|
$ |
(6.17 |
) |
$ |
2.27 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(8) |
Adjusted EPS is a non-GAAP financial measure. The Company excludes net loss attributable to acquisition, integration, project, and restructuring costs, impairment loss, amortization of intangible assets, and tax adjustments from this measure because of its comparability to the Company's historical operating results. The Company believes it is useful to investors to provide disclosures of its operating results on the same basis as that used by management. You should not consider adjusted EPS in isolation or as a substitute for EPS determined in accordance with U.S. GAAP. Additionally, because adjusted EPS may be defined differently by other companies in the Company’s industry, the non-GAAP financial measures presented here may not be comparable to similarly titled measures of other companies. |
|
(9) |
Net loss attributable to acquisition, integration, project, and restructuring costs consists of pre-tax charges of $8,560 and $3,269 for the three months ended December 31, 2019 and 2018, respectively, and $44,092 and $3,820 for the fiscal year ended December 31, 2019 and 2018, respectively. These costs primarily related to the acquisition and integration of Nutrisystem and other strategic projects, as well as a restructuring of our corporate support infrastructure and executive leadership. The tax rates applied to these charges were 25% in 2019 and 26.53% in 2018, which represented the combined estimated U.S. federal and state statutory tax rate. |
|
(10) |
Net loss attributable to impairment loss consists of pre-tax charges totaling $377,100 for the three and twelve months ended December 31, 2019 related to an impairment of the Nutrisystem tradename and goodwill allocated to the Nutrition segment. Of this amount, $240,096 is a temporary difference with a corresponding deferred tax liability established in purchase accounting. The tax benefit rate applied to the temporary portion of the charge was 24.1%, which represented the combined estimated U.S. federal and state statutory tax rate for the Nutrition segment. No tax benefit is recorded for the permanent portion of the charge. |
|
(11) |
Net loss attributable to amortization of intangible assets consists of pre-tax charges of $22,024 and $32,363 for the three and twelve months ended December 31, 2019, respectively, related to the amortization of certain definite-lived intangible assets recorded as part of the acquisition of Nutrisystem. The tax rate applied to these expenses was 25%, which represented the combined estimated U.S. federal and state statutory tax rate. |
|
(12) |
Loss attributable to tax adjustments represents the estimated impact on the Company’s effective tax rate for the three months and twelve months ended December 31, 2019 arising from both the revaluation of deferred tax assets and the impact of certain nondeductible expenses related to the acquisition of Nutrisystem. |
|
(13) |
Figures may not add due to rounding and due to the exclusion of potentially dilutive securities when calculating EPS on a GAAP basis in 2019 and the inclusion of such securities when calculating adjusted EPS in 2019 (see note 14). |
|
(14) |
The impact of potentially dilutive securities for the three and twelve months ended December 31, 2019 was not considered because the impact would be anti-dilutive. |
Exhibit 99.2
Tivity Health Announces Departure of CEO Donato J. Tramuto and Appoints Healthcare Veteran as Interim CEO
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• |
Director Bob Greczyn Named Interim CEO While Board Conducts Comprehensive Search to Identify Next CEO |
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• |
Current COO Tommy Lewis Appointed Interim President of the Nutrition Business Unit |
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• |
Director Ben Kirshner to Provide Board Support for Nutrition Business Unit Digital Marketing Efforts |
NASHVILLE, Tenn., Feb. 19, 2020 -- Tivity Health® (Nasdaq: TVTY), a leading provider of fitness, nutrition and social engagement solutions, today announced that Donato J. Tramuto will depart as Chief Executive Officer (“CEO”) and resign from the Board, effective immediately. The Board has appointed current Director Robert (“Bob”) J. Greczyn, Jr. Interim CEO while it conducts a comprehensive CEO search with the assistance of a leading executive search firm. Greczyn has been a member of the Board since 2015 and has over 30 years of experience in leadership roles in managed care and healthcare at some of the nation’s leading organizations.
In addition, Tommy Lewis, who was recently promoted to Chief Operating Officer, has been appointed Interim President of the Nutrition Business Unit to replace Keira Krausz, who resigned, effective February 18, 2020. Lewis will be supported by current Director and digital marketing and transformation expert Benjamin (“Ben”) A. Kirshner, who will provide Board support for the Nutrition Business Unit’s digital marketing efforts.
Kevin Wills, Chairman of the Board, commented, “On behalf of the Board, I would like to thank Donato for his dedication to Tivity Health. We appreciate his many contributions to the Company since he joined in 2013, including serving as a director and as Chairman of the Board before he was appointed CEO in 2015.”
Wills continued, “We are fortunate that Bob, with his deep leadership experience in healthcare, is able to step in as Interim CEO as we search for a new CEO. Bob has been a leader on our Board for several years and we are confident that he will provide stability for the business, our partners and customers, as we continue to focus on increasing shareholder value. The search for our new CEO is underway and we are very optimistic that we will find the right individual, a person with fresh perspectives who will drive profitable growth across the business.”
Greczyn stated, “We are grateful for Donato’s leadership and years of service to Tivity Health. We have an experienced team at all levels within Tivity Health to carry the business forward as we transition to a new CEO. In addition to supporting the ongoing success of the Healthcare Business Unit, I will be focused in particular on working with Tommy, Ben and the rest of the team to return the Nutrition Business Unit to profitable growth while continuing to provide the highest quality
solutions to our customers. I believe Tivity Health has a bright future and many opportunities to create value for all our stakeholders.”
Tramuto added, “Since I became CEO in 2015, the organization has evolved and improved significantly. We transformed the culture to one that empowers our colleagues with a focus on accountability, and we took bold steps to reposition the Company by exiting the unprofitable population health business, growing the core fitness business, and diversifying the model. I’m confident Tivity Health will continue improving the lives of millions of people through its unique offerings in the years ahead.”
Bob Greczyn Biography
Mr. Greczyn has been a member of the Tivity Health Board since 2015 and has over 30 years of experience in leadership roles in some of the nation’s leading healthcare organizations. Mr. Greczyn currently serves on the Board of Vidant Medical Center, the 21st largest hospital in the U.S., and the system Board of Vidant Health, a nine-hospital system based in Greenville, NC. Previously, he served as the President/CEO of Blue Cross and Blue Shield of North Carolina for over a decade, the President and CEO of HealthSource North Carolina, and the President and CEO of Principal Health Plan of Delaware. He was also a member of the Board of Blue Cross and Blue Shield Association, Chairman of the Board of CAQH and the Founding Chair of Blue Health Intelligence, one of the largest normalized healthcare databases in the U.S. Mr. Greczyn also served on the Board of Directors of LipoScience, Inc. from 2011 to 2014 and as its Interim President and CEO from 2013 to 2014.
Ben Kirshner Biography
Mr. Kirshner has been a member of the Tivity Health Board since 2019 when he joined from Nutrisystem Inc., where he was a director from October 2018 until March 2019. He has over 20 years of experience in entrepreneurial and leadership roles related to Digital Marketing and Digital Transformation. In January 2019, Mr. Kirshner became chairman of the Board of Tinuiti, an award-winning performance digital marketing agency that he founded in 2004. In 2019, Tinuiti was ranked in the Forrester Wave as one of the leading digital agencies in North America. From its founding until December 2018, Mr. Kirshner served as Tinuiti’s CEO. Under his leadership, Tinuiti grew to over 500 employees, has more than 800 clients and manages over $1 billion in advertising spend. Mr. Kirshner is also the founder of CoffeeForLess.com Inc., an e-commerce coffee company that he founded in 1998.
Tommy Lewis Biography
As Tivity Health’s Chief Operating Officer, Tommy Lewis is responsible for enterprise operations, transformation, information and technology, investor relations and communications. Mr. Lewis joined Tivity Health in 2018 and was previously the Chief Transformation Officer and Chief of Staff to the CEO. He has a successful track record of leading enterprise initiatives, operations, customer experience, marketing and communications for healthcare organizations, and he has been instrumental in the integration efforts following the acquisition of Nutrisystem by Tivity Health in March 2019. Prior to joining Tivity Health, Mr. Lewis served as Senior Vice President of Strategic
2
Initiatives at Change Healthcare. He has also previously held several leadership positions focused on technology, customer experience, marketing and growth initiatives. In 2018, Mr. Lewis was named HIMSS National Chapter Leader of the Year. In 2017, he earned the Investor Relations Charter (IRC®) credential awarded by the Certification Council of the National Investor Relations Institute (NIRI), and in 2016 he was awarded the Spirit of the Chamber award for the Nashville Chamber of Commerce.
Tivity Health® (Nasdaq: TVTY) is a leading provider of healthy life-changing solutions, including SilverSneakers®, Nutrisystem®, Prime® Fitness, Wisely Well™, South Beach Diet® and WholeHealth Living®. We are actively addressing the social determinants of health, defined as the conditions in which we work, live and play. From improving health outcomes to reversing the narrative on inactivity, food insecurity, social isolation and loneliness, we are making a difference and are transforming the way we do health. Learn more at TivityHealth.com