TIVITY HEALTH, INC. (Form: 10-Q, Received: 05/07/2021 14:54:17)

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Quarterly Period Ended March 31, 2021

☐Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from _____ to _____

Commission file number 000-19364

TIVITY HEALTH, INC.

(Exact name of registrant as specified in its charter)

Delaware		62-1117144
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

701 Cool Springs Boulevard, Franklin, TN 37067

(Address of principal executive offices) (Zip code)

(800) 869-5311

(Registrant's telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading symbol		Name of each exchange on which registered
Common Stock - $.001 par value		TVTY		The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒

No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒

No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☒	Smaller reporting company	☐
Non-accelerated filer	☐			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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐

No ☒

As of May 5, 2021, there were outstanding 49,260,746 shares of the registrant’s common stock, par value $.001 per share (“Common Stock”).

Tivity Health, Inc.

Form 10-Q

Table of Contents

			Page
Part I
	Item 1.	Financial Statements	3
	Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	23
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	34
	Item 4.	Controls and Procedures	34

Part II
	Item 1.	Legal Proceedings	35
	Item 1A.	Risk Factors	35
	Item 6.	Exhibits	35

PART I

Item 1. Financial Statements

TIVITY HEALTH, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

(Unaudited)

	March 31, 2021			December 31, 2020
Current assets:
Cash and cash equivalents	$	52,428		$	100,385
Accounts receivable, net		44,959			25,981
Prepaid expenses		4,154			5,556
Income taxes receivable		779			10,996
Other current assets		19,586			11,336
Total current assets		121,906			154,254

Property and equipment, net of accumulated depreciation of $40,713 and $38,188 respectively		19,981			20,959
Right-of-use assets		16,288			18,139
Long-term deferred tax asset		1,186			3,601
Intangible assets, net		29,049			29,049
Goodwill, net		334,680			334,680
Other assets		16,808			18,301
Total assets	$	539,898		$	578,983

Current liabilities:
Accounts payable	$	18,400		$	19,741
Accrued salaries and benefits		5,264			8,949
Accrued liabilities		31,395			18,424
Deferred revenue		4,351			4,460
Current portion of long-term debt		7,456			7,456
Current portion of lease liabilities		8,064			8,052
Current portion of other long-term liabilities		14,195			14,753
Total current liabilities		89,125			81,835

Long-term debt		397,750			459,250
Long-term lease liabilities		9,460			11,494
Other long-term liabilities		17,309			22,748

Commitments and contingent liabilities

Stockholders' equity:
Preferred stock $.001 par value, 5,000,000 shares authorized, none outstanding		—			—
Common Stock $.001 par value, 120,000,000 shares authorized, 49,246,281 and 48,983,735 shares outstanding, respectively		49			49
Additional paid-in capital		513,923			513,263
Accumulated deficit		(444,949	)		(464,085	)
Treasury stock, at cost, 2,254,953 shares in treasury		(28,182	)		(28,182	)
Accumulated other comprehensive loss		(14,587	)		(17,389	)
Total stockholders' equity		26,254			3,656
Total liabilities and stockholders' equity	$	539,898		$	578,983

See accompanying notes to the consolidated financial statements.

TIVITY HEALTH, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except earnings per share data)

(Unaudited)

	Three Months Ended March 31,
	2021			2020
Revenues	$	108,085		$	159,692
Cost of revenue (exclusive of depreciation of $2,531 and $1,831, respectively included below)		57,285			115,148
Marketing expense		1,231			7,299
Selling, general and administrative expenses		9,696			12,052
Depreciation expense		2,683			2,030
Restructuring and related charges		—			482
Operating income		37,190			22,681

Interest expense		10,756			11,270
Other (income) expense, net		(1,130	)		—
Total non-operating expense, net		9,626			11,270
Income before income taxes		27,564			11,411

Income tax expense		7,620			3,136
Income from continuing operations	$	19,944		$	8,275

Loss from discontinued operations, net of income tax benefit of $277 and $18,282, respectively		(808	)		(206,381	)
Net income (loss)	$	19,136		$	(198,106	)

Earnings (loss) per share - basic:
Continuing operations	$	0.41		$	0.17
Discontinued operations	$	(0.02	)	$	(4.25	)
Net income (loss)	$	0.39		$	(4.08	)

Earnings (loss) per share - diluted:
Continuing operations	$	0.40		$	0.17
Discontinued operations	$	(0.02	)	$	(4.22	)
Net income (loss)	$	0.38		$	(4.05	)

Comprehensive income (loss)	$	21,938		$	(217,935	)

Weighted average common shares and equivalents:
Basic		49,222			48,613
Diluted		50,340			48,855

See accompanying notes to the consolidated financial statements.

TIVITY HEALTH, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands)

(Unaudited)

	Three Months Ended March 31,
	2021		2020
Net income (loss)	$	19,136	$	(198,106	)

Net change in fair value of effective portion of interest rate swaps designated as cash flow hedges, net of tax (expense) benefit of ($882) and $6,802, respectively		2,576		(19,829	)
Reclassification adjustment for previously deferred loss from interest rate swaps included in "Interest expense," net of tax of $78		226		—
Total other comprehensive income (loss), net of tax	$	2,802	$	(19,829	)
Comprehensive income (loss)	$	21,938	$	(217,935	)

See accompanying notes to the consolidated financial statements.

TIVITY HEALTH, INC.

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

For the Three Months Ended March 31, 2021 and 2020

(In thousands)

(Unaudited)

	Preferred Stock		Common Stock		Additional Paid-in Capital			Accumulated Deficit			Treasury Stock			Accumulated Other Comprehensive Loss			Total
Balance, January 1, 2020	$	—	$	48	$	504,419		$	(240,494	)	$	(28,182	)	$	(12,091	)	$	223,700
Comprehensive income (loss)		—		—		—			(198,106	)		—			(19,829	)		(217,935	)
Exercise and vesting of share-based compensation awards		—		—		601			—			—			—			601
Tax withholding for share-based compensation		—		—		(2,795	)		—			—			—			(2,795	)
Share-based employee compensation expense		—		—		824			—			—			—			824
Other		—		—		—			19			—			—			19
Balance, March 31, 2020	$	—	$	48	$	503,049		$	(438,581	)	$	(28,182	)	$	(31,920	)	$	4,414

Balance, January 1, 2021	$	—	$	49	$	513,263		$	(464,085	)	$	(28,182	)	$	(17,389	)	$	3,656
Comprehensive income		—		—		—			19,136			—			2,802			21,938
Exercise and vesting of share-based compensation awards		—		—		164			—			—			—			164
Tax withholding for share-based compensation		—		—		(2,502	)		—			—			—			(2,502	)
Share-based employee compensation expense		—		—		2,998			—			—			—			2,998
Balance, March 31, 2021	$	—	$	49	$	513,923		$	(444,949	)	$	(28,182	)	$	(14,587	)	$	26,254

See accompanying notes to the consolidated financial statements.

TIVITY HEALTH, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Three Months Ended March 31,
	2021			2020
Cash flows from operating activities:
Income from continuing operations	$	19,944		$	8,275
Loss from discontinued operations		(808	)		(206,381	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		2,683			14,763
Amortization and write-off of deferred loan costs		1,183			1,212
Amortization and write-off of debt discount		1,077			1,095
Share-based employee compensation expense		2,998			824
Gain on derivatives		(1,130	)		—
Impairment of goodwill and intangible assets of discontinued operation		—			199,500
Deferred income taxes		1,454			(16,031	)
(Increase) decrease in accounts receivable, net		(18,978	)		16,665
Decrease in income taxes receivable		10,217			—
Decrease in inventory		—			4,057
Decrease in other current assets		529			4,746
(Decrease) increase in accounts payable		(42	)		12,612
Decrease in accrued salaries and benefits		(3,685	)		(4,852	)
Increase in other current liabilities		5,594			5,501
(Decrease) increase in deferred revenue		(109	)		3,247
Other		1,691			1,790
Net cash flows provided by operating activities	$	22,618		$	47,023

Cash flows from investing activities:
Acquisition of property and equipment	$	(1,561	)	$	(4,875	)
Settlement on derivatives not designated as hedges		(1,633	)		—
Net cash flows used in investing activities	$	(3,194	)	$	(4,875	)

Cash flows from financing activities:
Proceeds from issuance of long-term debt	$	—		$	160,325
Payments of long-term debt		(63,600	)		(123,000	)
Payments related to tax withholding for share-based compensation		(2,502	)		(2,795	)
Exercise of stock options		164			601
Change in cash overdraft and other		(1,443	)		3,269
Net cash flows (used in) provided by financing activities	$	(67,381	)	$	38,400

Net (decrease) increase in cash and cash equivalents	$	(47,957	)	$	80,548

Cash and cash equivalents, beginning of period	$	100,385		$	2,486

Cash and cash equivalents, end of period	$	52,428		$	83,034

See accompanying notes to the consolidated financial statements.

TIVITY HEALTH, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1.	Basis of Presentation and Recent Developments

Our financial statements and accompanying notes are prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”). In our opinion, the accompanying consolidated financial statements of Tivity Health, Inc. and its wholly owned subsidiaries (collectively, “Tivity Health,” the “Company,” or such terms as “we,” “us,” or “our”) reflect all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement. We have reclassified certain items in prior periods to conform to current classifications.

Our results from continuing operations do not include the results of Nutrisystem, Inc. (“Nutrisystem”), which we sold effective December 9, 2020. Results of operations for Nutrisystem have been classified as discontinued operations for all periods presented in the accompanying consolidated financial statements.

We have omitted certain financial information that is normally included in financial statements prepared in accordance with U.S. GAAP but that is not required for interim reporting purposes. You should read the accompanying consolidated financial statements in conjunction with the financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2020.

2.	Recent Relevant Accounting Standards

In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-04, “Reference Rate Reform (“ASC 848”): Facilitation of the Effects of Reference Rate Reform on Financial Reporting”. ASC 848 contains temporary optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform, such as a transition away from the use of LIBOR. ASC 848 was effective for the Company as of January 1, 2020. The provisions of ASC 848 are available through December 31, 2022, at which time the reference rate replacement activity is expected to have been completed. The provisions of ASC 848 must be applied at a Topic, Subtopic or Industry Subtopic level for all transactions other than derivatives, which may be applied at a hedging relationship level. The accounting relief provided by ASC 848 is applicable only to legacy contracts if the amendments made to the agreements are solely for reference rate reform activities. Modifications that are unrelated to reference rate reform will scope out a given contract. ASC 848 allows for different elections to be made at different points in time, and the timing of those elections will be documented as applicable. For the avoidance of doubt, we intend to reassess the elections of optional expedients and exceptions included within ASC 848 related to our hedging activities and will document the election of these items on a quarterly basis. In March 2020, we elected the expedient that allows us to assume that our hedged interest payments are probable of occurring regardless of any expected modification in their terms related to reference rate reform. In addition, we have the option to change the method of assessing effectiveness upon a change in the critical terms of the derivative or the hedged transactions and upon the end of relief under ASC 848. In June 2020, we elected to (i) continue the method of assessing effectiveness as documented in the original hedge documentation and (ii) apply the expedient wherein the reference rate on the hypothetical derivative matches the reference rate on the hedging instrument. We will also apply the aforementioned elections to any future designated cash flow hedging relationship.

In October 2018, the FASB issued ASU 2018-16, "Derivatives and Hedging (Topic 815): Inclusion of the Secured Overnight Financing Rate (“SOFR”) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes" (“ASU 2018-16”), which adds the OIS rate based on SOFR as a U.S. benchmark interest rate to facilitate the LIBOR to SOFR transition and provide lead time for entities to prepare for changes to interest rate risk hedging strategies. ASU 2018-16 is effective for fiscal years beginning after December 15, 2018, and interim periods within those years, with early adoption permitted. As of March 31, 2021, the benchmark interest rate in our existing interest rate swap agreements is LIBOR. The adoption of this standard did not have an impact on our financial position, results of operations, or cash flows.

3.	Discontinued Operations

On October 18, 2020, we entered into a Stock Purchase Agreement (“Purchase Agreement”) with Kainos NS Holdings LP, a Delaware limited partnership (“Parent”), and KNS Acquisition Corp., a Delaware corporation and indirect wholly owned subsidiary of Parent (“Purchaser,” and collectively with Parent, “Kainos”) to sell to Kainos all of the issued and outstanding capital stock of Nutrisystem, a wholly owned subsidiary of the Company that included the Nutrisystem® and South Beach Diet® programs, which would result in the disposition of our Nutrition business.

Effective as of December 9, 2020, we completed the sale of Nutrisystem to Kainos for an aggregate purchase price, after giving effect to customary indebtedness and cash adjustments, of approximately $558.9 million, which amount is subject to a customary working capital adjustment post-closing. We estimate such working capital adjustment will result in additional proceeds to be received in 2021 of $2.8 million, which we have recorded in other current assets at March 31, 2021 and December 31, 2020. Additionally, we incurred $11.2 million of transaction costs in 2020 directly related to the disposition of Nutrisystem, resulting in estimated net proceeds, after post-closing adjustment, of $550.5 million.

In accordance with ASC Topic 205, “Presentation of Financial Statements”, the Nutrition business met the criteria for discontinued operations, as it was a component of the Company and the sale represented a strategic shift in the Company’s operations and financial results. Accordingly, the results of operations of the Nutrition business have been classified as discontinued operations for 2020 and 2021.

The following table presents financial results of the Nutrition business included in “loss from discontinued operations" for the three months ended March 31, 2021 and 2020.

	Three Months Ended March 31,
(In thousands)	2021			2020
Revenues	$	—		$	177,963
Cost of revenues		—			84,009
Marketing expenses		—			79,773
Selling, general and administrative expenses ⁽¹⁾		1,085			15,956
Depreciation and amortization		—			12,734
Impairment loss		—			199,500
Restructuring and related charges		—			260
Interest expense ⁽²⁾		—			10,394
Pretax loss from discontinued operations		(1,085	)		(224,663	)
Total pretax loss on discontinued operations	$	(1,085	)	$	(224,663	)
Income tax benefit		(277	)		(18,282	)
Loss from discontinued operations, net of income tax benefit	$	(808	)	$	(206,381	)

(1)

For the three months ended March 31, 2021, expenses from discontinued operations primarily relate to legal fees and separation costs.

(2)

The term loans under our Credit Agreement were originated with the purchase of Nutrisystem on March 8, 2019. Following the disposition of Nutrisystem, we repaid $519.0 million of principal on the term loans under the terms of our credit agreement. In conjunction with the partial debt prepayment, we wrote off a portion of the related deferred loan costs and original issue discount. For the three months ended March 31, 2020, we allocated interest expense to discontinued operations based on the interest expense incurred during the period related to $519.0 million of term loan debt, using our historical interest rates.

The depreciation, amortization and significant operating and investing non-cash items of the discontinued operations were as follows:

	Three Months Ended March 31,
(In thousands)	2021			2020
Impairment of goodwill and intangible assets	$	—		$	199,500
Depreciation and amortization		—			12,734
Capital expenditures on discontinued operations		—			1,682
Deferred income taxes		(277	)		(18,279	)

4.	Revenue Recognition

We account for revenue from contracts with customers in accordance with Accounting Standards Codification (“ASC”) Topic 606. The unit of account in ASC Topic 606 is a performance obligation, which is a promise in a contract to transfer to a customer either a distinct good or service (or bundle of goods or services) or a series of distinct goods or services provided over a period of time. ASC Topic 606 requires that a contract's transaction price, which is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer, is to be allocated to each performance obligation in the contract based on relative standalone selling prices and recognized as revenue when or as the performance obligation is satisfied.

We earn revenue from continuing operations primarily from three programs: SilverSneakers^® senior fitness, Prime Fitness^®, and WholeHealth Living^TM. We provide the SilverSneakers senior fitness program to members of Medicare Advantage, Medicare Supplement, and group retiree plans through our contracts with such plans. We offer Prime Fitness, a fitness facility access program, through contracts with commercial health plans, employers, and other sponsoring organizations that allow their members to individually purchase the program. We sell our WholeHealth Living program primarily to health plans.

Except for Prime Fitness, our customer contracts generally have initial terms of approximately three years. Some contracts allow the customer to terminate early and/or determine on an annual basis to which of their members they will offer our programs. For Prime Fitness, our contracts with commercial health plans, employers, and other sponsoring organizations generally have initial terms of approximately three years, while individuals who purchase the Prime Fitness program through these organizations may cancel at any time (on a monthly basis) after an initial period of one to three months. The significant majority of our customer contracts contain one performance obligation - to stand ready to provide access to our network of fitness locations and fitness programming - which is satisfied over time as services are rendered each month over the contract term. Unsatisfied performance obligations at the end of a particular month primarily relate to certain monthly memberships for our Prime Fitness program, which are recorded as deferred revenue on the consolidated balance sheet and recognized as revenue during the immediately subsequent month. Deferred revenue was $4.4 million and $4.5 million at March 31, 2021 and December 31, 2020, respectively. During the three months ended March 31, 2021, we recognized $3.8 million of revenue that was included in deferred revenue at December 31, 2020 and increased deferred revenue by $3.7 million, excluding amounts recognized as revenue during 2021.

Our fees are variable month to month and are generally billed per member per month (“PMPM”) or billed based on a combination of PMPM and member visits to a network location. We bill PMPM fees by multiplying the contractually negotiated PMPM rate by the number of members eligible for or receiving our services during the month. The average monthly total participation levels of our members were significantly lower for the three months ended March 31, 2021 than for the three months ended March 31, 2020 due to the COVID-19 pandemic. As a result, revenues from PMPM fees represented 53% of SilverSneakers revenue for the three months ended March 31, 2021, compared to 36% for the three months ended March 31, 2020. We bill for member visits approximately one month in arrears once actual member visits are known. Payments from customers are typically due within 30 days of invoice date. When material, we capitalize costs to obtain contracts with customers and amortize them over the expected recovery period. At March 31, 2021 and December 31, 2020, $0.8 million of such costs were

capitalized. During the three months ended March 31, 2021 and 2020, amortization expense related to such capitalized costs was $0.2 million and $0.1 million, respectively.

Our customer contracts include variable consideration, which is allocated to each distinct month over the contract term based on eligible members and/or member visits each month. The allocated consideration corresponds directly with the value to our customers of our services completed for the month. Under the majority of our contracts, we recognize revenue each month using the practical expedient available under ASC 606-10-55-18, which provides that revenue is recognized in the amount for which we have the right to invoice. ASC 606-10-50-14(b) provides an optional exemption, which we have elected to apply, from disclosing remaining performance obligations when revenue is recognized from the satisfaction of the performance obligation in accordance with the “right to invoice” practical expedient.

The following table sets forth revenue from continuing operations disaggregated by program. Revenue from our SilverSneakers program is predominantly contracted with Medicare Advantage and Medicare Supplement plans.

(In thousands)	Three Months Ended March 31,
	2021		2020
SilverSneakers	$	79,827	$	121,606
Prime Fitness		22,593		32,810
WholeHealth Living		5,637		5,049
Other		28		227
	$	108,085	$	159,692

Sales and usage-based taxes are excluded from revenues.

5.	Share-Based Compensation

We currently have four types of share-based awards outstanding to our employees and directors: stock options, restricted stock units, performance-based stock units, and market stock units. We believe that our share-based awards align the interests of our employees and directors with those of our stockholders. Vesting terms for each of these award types generally range from one to three years.

For the three months ended March 31, 2021 and 2020, we recognized total share-based compensation costs of $3.0 million and $0.9 million, respectively. We account for forfeitures as they occur.

In March 2021, we granted annual long-term incentive awards consisting of (i) approximately 150,000 stock options with a weighted average exercise price of $26.29 per share and a weighted average grant date fair value of $13.21 per share, and (ii) approximately 83,000 restricted stock units with a weighted average grant date fair value of $23.90 per share. These awards vest over or at the end of three years.

6.	Income Taxes

For the three months ended March 31, 2021 and 2020, we had an effective income tax rate from continuing operations of 27.6% and 27.5%, respectively.

We file income tax returns in the U.S. Federal jurisdiction and in various state and foreign jurisdictions. Tax years remaining subject to examination in the U.S. Federal jurisdiction include 2017 to present.

7. Leases

We maintain lease agreements principally for our office spaces and certain equipment. We maintain two sublease agreements with respect to one of our office locations, each of which continues through the initial term of

our master lease agreement. Such sublease income and payments, while they reduce our rent expense, are not considered in the value of the right-of-use asset or lease liability. With the exception of two finance leases related to a network server and office equipment, all of our leases are classified as operating leases. In the aggregate, our leases generally have remaining lease terms of one to 42 months, some of which include options to extend the lease for additional periods. Such extension options were not considered in the value of the right-of-use asset or lease liability because it is not probable that we will exercise the options to extend. If applicable, allocations among lease and non-lease components would be achieved using relative standalone selling prices.

The following table shows the components of lease expense for the three months ended March 31, 2021 and 2020:

	Three Months Ended March 31,			Three Months Ended March 31,
(In thousands)	2021			2020
Finance lease cost:
Amortization of leased assets	$	158		$	162
Interest of lease liabilities		14			25
Operating lease cost		1,915			1,960
Total lease cost before subleases	$	2,087		$	2,147
Sublease income		(1,344	)		(1,401	)
Total lease cost, net	$	743		$	746

Supplemental cash flow information related to leases is as follows:

	Three Months Ended March 31,			Three Months Ended March 31,
(In thousands)	2021			2020
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flow attributable to operating leases	$	(1,550	)	$	(1,368	)
Operating cash flow attributable to finance leases		(14	)		(25	)
Financing cash flow attributable to finance leases		(157	)		(152	)

Supplemental noncash information:
Right-of-use assets obtained in exchange for operating lease liabilities		—			—
Right-of-use assets obtained in exchange for finance lease liabilities		—			—

Debt

The Company's debt, net of unamortized deferred loan costs and original issue discount, consisted of the following at March 31, 2021 and December 31, 2020:

(In thousands)	March 31, 2021			December 31, 2020
Term Loan A	$	97,785		$	124,035
Term Loan B		334,890			372,240
		432,675			496,275
Less: deferred loan costs and original issue discount		(27,469	)		(29,569	)
Total debt		405,206			466,706
Less: current portion ⁽¹⁾		(7,456	)		(7,456	)
Total long-term debt	$	397,750		$	459,250

(1)

Represents additional term loan principal due upon final settlement of the sale of Nutrisystem based on the estimated post-Closing adjustments.

Credit Facility

In connection with the consummation of our merger with Nutrisystem, on March 8, 2019, we entered into a new Credit and Guaranty Agreement (the “Credit Agreement”) with a group of lenders, Credit Suisse AG, Cayman Islands Branch, as general administrative agent, term facility agent and collateral agent, and SunTrust Bank, as revolving facility agent and swing line lender. The Credit Agreement provides us with (i) a $350.0 million term loan A facility (“Term Loan A”), (ii) an $830.0 million term loan B facility (“Term Loan B” and, together with Term Loan A, the “Term Loans”), (iii) a $125.0 million revolving credit facility that includes a $35.0 million sublimit for swingline loans and a $50.0 million sublimit for letters of credit (the “Revolving Credit Facility”; Term Loan A, Term Loan B and the Revolving Credit Facility are sometimes herein referred to collectively as the “Credit Facilities”), and (iv) uncommitted incremental accordion facilities in an aggregate amount at any date equal to the greater of $125.0 million or 50% of our consolidated EBITDA for the then-preceding four fiscal quarters, plus additional amounts based on, among other things, satisfaction of certain financial ratio requirements. As of March 31, 2021, outstanding debt under the Credit Agreement was $405.2 million, and availability under the revolving credit facility totaled $124.5 million as calculated under the most restrictive covenant.

We are required to repay Term Loan A loans in consecutive quarterly installments, each in the amount of 2.50% of the aggregate initial amount of such loans, payable beginning on June 30, 2019 and on the last day of each succeeding quarter thereafter until maturity on March 8, 2024, at which time the entire outstanding principal balance of such loans is due and payable in full.

We are required to repay Term Loan B loans in consecutive quarterly installments, each in the amount of 0.75% of the aggregate initial amount of such loans, payable beginning on June 30, 2019 and on the last day of each succeeding quarter thereafter until maturity on March 8, 2026, at which time the entire outstanding principal balance of such loans is due and payable in full.

We are permitted to make voluntary prepayments of borrowings under the Term Loans at any time without penalty. From March 8, 2019 through March 31, 2021, we made voluntary prepayments of $228.3 million on the Term Loans, which prepaid all scheduled quarterly installments due on Term Loan A and Term Loan B through September 30, 2022 and June 30, 2023, respectively, excluding any Excess Cash Flow Payments that may be required, as described below. In addition, in December 2020 we used the significant majority of net proceeds from the divestiture of Nutrisystem to pay $519.0 million of principal on the Term Loans, which was applied to the amount due and payable at maturity.

We are required to repay in full any outstanding swingline loans and revolving loans under the Revolving Credit Facility on March 8, 2024. In addition, the Credit Agreement contains provisions that, beginning with fiscal 2019, may require annual excess cash flow (as defined in the Credit Agreement and generally designed to equal cash generated by our business in excess of cash used in the business) to be applied towards the Term Loans. We are required to make prepayments on the Term Loans equal to our excess cash flow for a given fiscal year multiplied by the following excess cash flow percentages (such resulting payment an “Excess Cash Flow Payment”) based on our Net Leverage Ratio (as defined in the Credit Agreement) on the last day of such fiscal year: (a) 75% if the Net Leverage Ratio is greater than 3.75:1, (b) 50% if the Net Leverage Ratio is equal to or less than 3.75:1 but greater than 3.25:1 (c) 25% if the Net Leverage Ratio is equal to or less than 3.25:1 but greater than 2.75:1, and (d) 0% if the Net Leverage Ratio is equal to or less than 2.75:1. Any such potential mandatory prepayments are reduced by voluntary prepayments. We were not required to make an Excess Cash Flow Payment for fiscal 2020 or 2019.

The Credit Agreement contains a financial covenant that requires us to maintain maximum ratios or levels of consolidated total net debt to consolidated adjusted EBITDA, calculated as provided in the Credit Agreement (the “Net Leverage Ratio”), of 5.75:1.00 for all test dates occurring on or after December 31, 2019 but prior to December 31, 2020, 5.25:1.00 for all test dates occurring on or after December 31, 2020 but prior to December 31, 2021, and 4.75:1.00 for all test dates occurring on or after December 31, 2021. As of March 31, 2021, we were in compliance with all of the covenant requirements of the Credit Agreement, and our Net Leverage Ratio was equal to 2.11.

Based on our current assumptions with respect to the COVID-19 pandemic, including, among other things, the outstanding principal on the term loans under our Credit Agreement and the average monthly total participation levels of our members at our fitness partner locations, we currently believe we will be in compliance with the Net Leverage Ratio covenant over the next 12 months. We will continue to monitor our projected ability to comply with all covenants under the Credit Agreement, including the Net Leverage Ratio.

Borrowings under the Credit Agreement bear interest at variable rates based on a margin or spread in excess of either (1) one-month, two-month, three-month or six-month LIBOR (or, with the approval of all lenders holding the particular class of loans, 12-month LIBOR), which may not be less than zero, or (2) the greatest of (a) the prime lending rate of the agent bank for the particular facility, (b) the federal funds rate plus 0.50%, and (c) one-month LIBOR plus 1.00% (the “Base Rate”), as selected by the Company. The LIBOR margin for Term Loan A loans is 4.25%, the LIBOR margin for Term Loan B loans is 5.25% and the LIBOR margin for revolving loans varies between 3.75% and 4.25%, depending on our total Net Leverage Ratio. The Base Rate margin for Term Loan A loans is 3.25%, the Base Rate margin for Term Loan B loans is 4.25% and the Base Rate margin for revolving loans varies between 2.75% and 3.25%, depending on our total Net Leverage Ratio. In May 2019, we entered into eight amortizing interest rate swap agreements, each of which matures in May 2024. Under these agreements, we receive a variable rate of interest based on LIBOR, and we pay a fixed rate of interest equal to approximately 2.2% plus a spread, as described in the preceding sentences. As further explained in Note 11, during the fourth quarter of 2020 we concluded that five of the eight interest rate swaps no longer qualified for hedge accounting treatment, and we de-designated these derivatives. As of March 31, 2021, the eight interest rate swap agreements had current notional amounts totaling $700.0 million, of which $388.9 million related to effective hedges.

The Credit Agreement also provides for annual commitment fees ranging between 0.250% and 0.500% of the unused commitments under the Revolving Credit Facility, depending on our total Net Leverage Ratio, and annual letter of credit fees on the daily outstanding availability under outstanding letters of credit at the applicable LIBOR margin for the Revolving Credit Facility, depending on our total Net Leverage Ratio.

Extensions of credit under the Credit Agreement are secured by guarantees from substantially all of the Company’s active material domestic subsidiaries and by security interests in substantially all of Company’s and such subsidiaries’ assets.

The Credit Agreement also contains various other affirmative and negative covenants customary for financings of this type that, subject to certain exceptions, impose restrictions and limitations on the Company and certain of the Company’s subsidiaries with respect to, among other things, indebtedness; liens; negative pledges; restricted payments (including dividends, distributions, buybacks, redemptions, repurchases with respect to equity interests, and payments, redemptions, retirements, purchases, acquisitions, defeasance, exchange, conversion, cancellation or termination with respect to junior lien, subordinated or unsecured debt); restrictions on subsidiary distributions; loans, advances, guarantees, acquisitions and other investments; mergers and other fundamental changes; sales and other dispositions of assets (including equity interests in subsidiaries); sale/leaseback transactions; transactions with affiliates; conduct of business; amendments and waivers of organizational documents and material junior debt agreements; and changes to fiscal year.

9.	Commitments and Contingencies

Shareholder Lawsuits: Weiner Lawsuit and Consolidated Derivative Lawsuit

On November 6, 2017, United Healthcare issued a press release announcing expansion of its fitness benefits (“United Press Release”), and the market price of the Company's shares of common stock, par value $0.001 per share (“Common Stock”) dropped on that same day. The lawsuits filed in connection with the United Press Release are described below.

On November 20, 2017, Eric Weiner, claiming to be a stockholder of the Company, filed a complaint in the United States District Court for the Middle District of Tennessee (“Weiner Lawsuit”). The Weiner Lawsuit names as defendants the Company, the Company's former chief executive officer, chief financial officer, and a former executive who served as both chief accounting officer and interim chief financial officer. The complaint alleges that the defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and Rule 10b-5 promulgated under the Exchange Act in making false and misleading statements

and omissions related to the United Press Release. On April 3, 2018, the Court appointed the Oklahoma Firefighters Pension and Retirement System as lead plaintiff, and on January 29, 2020, the Court entered an order certifying the class of stockholders who purchased Company Common Stock between March 6, 2017 and November 6, 2017. On April 23, 2021, the parties reached a settlement in principle of the Weiner Lawsuit pursuant to which defendants’ insurers will pay the entire settlement amount in exchange for a release of claims. The settlement is subject to the execution of a definitive settlement agreement and court approval, neither of which can be assured.

On January 26, 2018 and August 24, 2018, individuals claiming to be stockholders of the Company filed shareholder derivative actions, on behalf of the Company, in the United States District Court for the Middle District of Tennessee, naming the Company as a nominal defendant and certain current and former executives and directors as defendants. On October 15, 2018, the two complaints were consolidated (the “Consolidated Derivative Lawsuit”). On May 15, 2019, a consolidated amended complaint was filed. The consolidated amended complaint asserts claims for violation of Section 10(b), 14(a), and 29(b) of the Exchange Act, breach of fiduciary duty, waste of corporate assets, and unjust enrichment. Plaintiffs seek to recover damages on behalf of the Company, certain corporate governance and internal procedural reforms, and other equitable relief. On June 14, 2019, the defendants filed a Motion to Dismiss all claims and the plaintiffs filed their opposition to the Motion to Dismiss on July 17, 2019. On October 22, 2019, the Consolidated Derivative Lawsuit was dismissed with prejudice. On November 20, 2019, plaintiffs filed a notice of appeal with the United States Circuit Court for the Sixth Circuit. After the parties entered into a Memorandum of Understanding (“MOU”) to resolve the Consolidated Derivative Lawsuit, the case was remanded to the District Court. The parties filed a joint stipulation of settlement based on the terms set forth in the MOU and plaintiffs filed a motion to approve settlement on October 12, 2020. The Court granted final approval to the settlement on February 19, 2021.

Shareholder Lawsuits: Strougo, Cobb, and Delaware Lawsuits

On February 25, 2020, Robert Strougo, claiming to be a stockholder of the Company, filed a complaint in the United States District Court for the Middle District of Tennessee (the "Strougo Lawsuit"). On August 18, 2020, the Court appointed Sheet Metal Workers Local No. 33, Cleveland District, Pension Fund as lead plaintiff. Plaintiff filed its amended complaint on November 13, 2020. The amended complaint is on behalf of a putative class of stockholders who purchased Company Common Stock between March 8, 2019 and February 19, 2020 and names as defendants the Company, the Company's chief financial officer, and former chief operating officer. The amended complaint alleges that the defendants violated Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 promulgated under the Exchange Act in making false and misleading statements and omissions related to the performance of and accounting for the Nutrisystem business that the Company acquired on March 8, 2019. The Company filed a motion to dismiss the amended complaint on December 4, 2020, which motion remains pending.

On April 9, 2020, John Cobb, claiming to be a stockholder of the Company, filed a derivative complaint in the United States District Court for the Middle District of Tennessee naming the Company as a nominal defendant and certain current and former directors and officers as defendants (the “Cobb Lawsuit”). The complaint asserts claims for breach of Section 14(a) of the Exchange Act, breach of fiduciary duty, unjust enrichment, and waste of corporate assets, largely tracking the factual allegations in the Strougo Lawsuit. The plaintiff seeks monetary damages on behalf of the Company, restitution, and certain corporate governance and internal procedural reforms. On June 9, 2020, the United States Magistrate Judge approved the parties’ stipulation to stay the case pending the resolution of defendants’ motion to dismiss in the Strougo Lawsuit.

In July 2020, three putative derivative complaints were filed in the United States District Court for the District of Delaware by the following individuals claiming to be stockholders of the Company: Patrick Yerby, Thomas R. Conte, Melvyn Klein, and Mark Ridendour (the “Delaware Derivative Lawsuits”). The complaints largely track the allegations, named defendants, asserted claims, and requested relief of the Cobb Lawsuit. The three Delaware Derivative Lawsuits have been consolidated and stayed on terms similar to those entered in the Cobb Lawsuit.

Given the uncertainty of litigation and the preliminary stage of the Strougo Lawsuit, Cobb Lawsuit, and Delaware Derivative Lawsuits, we are not currently able to predict the probable outcome of the matter or to reasonably estimate a range of potential loss, if any. We intend to vigorously defend ourselves against these lawsuits.

Trademark Lawsuit: Pacific Packaging Lawsuit

On May 31, 2019, Pacific Packaging Concepts, Inc. (“Pacific Packaging”) filed a complaint in the U.S. District Court for the Central District of California, Western Division, naming as defendants two subsidiaries of the Company: Nutrisystem, Inc. and Nutri/System IPHC, Inc. In its complaint, Pacific Packaging alleged that the defendants’ use of Pacific Packaging’s federally registered trademark, Fresh Start, in advertisements for its weight management program and shakes constitutes federal trademark infringement, counterfeit trademark infringement, false designation of origin, federal trademark dilution, unfair competition, false advertising, common law unfair competition, and common law trademark infringement. The complaint seeks injunctive relief and monetary damages in an unspecified amount. On August 29, 2019, the defendants filed their Answer to Complaint. The case is currently set for trial on October 29, 2021. In connection with the sale of Nutrisystem, the Company agreed to indemnify Kainos for losses arising out of this matter and retained the right to control the defense thereof. Given the uncertainty of litigation and the preliminary stage of the case, we are currently not able to predict the probable outcome of the matter or to reasonably estimate a range of potential loss, if any. We intend to vigorously defend ourselves against this complaint.

Other

Additionally, from time to time, we are subject to contractual disputes, claims and legal proceedings that arise in the ordinary course of our business. Some of the legal proceedings pending against us as of the date of this report are expected to be covered by insurance policies. As these matters are subject to inherent uncertainties, our view of these matters may change in the future. We expense legal costs as incurred.

10.	Fair Value Measurements

We account for certain assets and liabilities at fair value. Fair value is defined as the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date, assuming the transaction occurs in the principal or most advantageous market for that asset or liability.

Fair Value Hierarchy

The hierarchy below lists three levels of fair value based on the extent to which inputs used in measuring fair value are observable in the market. We categorize each of our fair value measurements in one of these three levels based on the lowest level input that is significant to the fair value measurement in its entirety. These levels are:

Level 1:

Quoted prices in active markets for identical assets or liabilities;

Level 2:

Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-based valuation techniques in which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and

Level 3:

Unobservable inputs that are supported by little or no market activity and typically reflect management's estimates of assumptions that market participants would use in pricing the asset or liability.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following table presents our assets and liabilities measured at fair value on a recurring basis at March 31, 2021 and December 31, 2020.

(In thousands)	Level 2
	March 31, 2021		December 31, 2020
Derivatives designated as effective hedging instruments
Liabilities:
Interest rate swap agreements	$	16,919	$	20,377

Non-designated derivatives
Liabilities:
Interest rate swap agreements	$	13,497	$	16,260

The fair values of interest rate swap agreements are primarily determined based on the present value of future cash flows using internal models and third-party pricing services with observable inputs, including interest rates, yield curves and applicable credit spreads.

Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis

We measure certain assets at fair value on a nonrecurring basis in the fourth quarter of each year, including the following:

•

reporting units measured at fair value as part of a goodwill impairment test; and

•

indefinite-lived intangible assets measured at fair value for impairment assessment.

Each of these assets above is classified as Level 3 within the fair value hierarchy.

The fair value of a reporting unit is the price that would be received upon a sale of the unit as a whole in an orderly transaction between market participants at the measurement date. Following the sale of Nutrisystem effective December 9, 2020, we have a single reporting unit.

We also measure on a non-recurring basis our cost method investments that do not have readily determinable fair values. We have elected the measurement alternative to measure such investments at cost less impairment, adjusted by observable price changes, with any fair value changes recognized in earnings. We own 159,309 shares of common stock of Sharecare, Inc. (“Sharecare”) that we acquired in connection with the sale of our total population health services business to Sharecare in July 2016 and report at their carrying value of $10.8 million in “Other assets” on the consolidated balance sheets. On February 12, 2021, Sharecare announced that it had entered into a merger agreement with Falcon Capital Acquisition Corp. (“FCAC”) and FCAC Merger Sub, Inc. (“Merger Sub”) pursuant to which Sharecare would merge with and into Merger Sub with Sharecare surviving as a wholly owned subsidiary of FCAC (the “Sharecare Transaction”), as further described in the Current Report on Form 8-K filed by FCAC on February 12, 2021 and other filings made by FCAC with the Securities and Exchange Commission, including the Registration Statement on Form S-4 filed on February 16, 2021, as amended by Amendment No. 1 to the Registration Statement on Form S-4 filed on April 8, 2021, none of which shall constitute a part of this report or be incorporated by reference into this report. The Sharecare Transaction is subject to customary closing conditions, including the approval of Sharecare’s and FCAC’s shareholders, and may or may not be consummated. The value of any consideration that we may receive as a shareholder of Sharecare in connection with the Sharecare Transaction is speculative, and any equity consideration we may receive in connection with the Sharecare Transaction will be subject to restrictions on resale.

Fair Value of Other Financial Instruments

The estimated fair value of each class of financial instruments at March 31, 2021 was as follows:

Cash and cash equivalents – The carrying amount of $52.4 million approximates fair value due to the short maturity of those instruments (less than three months).

Debt – The estimated fair value of outstanding borrowings under the Credit Agreement, which includes term loan facilities and a revolving credit facility (see Note 8), is determined based on the fair value hierarchy as discussed above.

The Term Loans are actively traded and therefore are classified as Level 1 valuations. The estimated fair value is based on an average of quotes as of March 31, 2021 from dealers who stand ready and willing to transact at those prices. We use a mid-market pricing convention (i.e., the mid-point of average bid and ask prices) to individually value Term Loan A and Term Loan B. The Revolving Credit Facility is not actively traded and therefore is classified as a Level 2 valuation based on the market for similar instruments. The estimated fair value and carrying amount of outstanding borrowings under the Term Loans (excluding original issue discount and deferred loan costs) at March 31, 2021 were $432.6 million and $432.7 million, respectively. There were no outstanding borrowings under the Revolving Credit Facility at March 31, 2021.

11.	Derivative Instruments and Hedging Activities

We use derivative instruments to manage differences in the amount, timing, and duration of our known or expected cash payments related to our outstanding debt (i.e., interest rate risk). Some of these derivatives are designated and qualify as a hedge of the exposure to variability in expected future cash flows and are therefore considered cash flow hedges. We account for derivatives in accordance with FASB ASC Topic 815, which establishes accounting and reporting standards requiring that derivative instruments be recorded on the balance sheet at fair value as either an asset or liability. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether we have elected to designate a derivative in a hedging relationship and apply hedge accounting, and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Changes in the derivative’s fair value will be recognized currently in earnings unless specific hedge accounting criteria are met. We classify cash flows from settlement of our effective cash flow hedges in the same category as the cash flows from the related hedged items, generally within the operating activities in the consolidated statements of cash flows. We classify cash flows from settlement of our non-designated derivatives within the investing section of the consolidated statements of cash flows.

Cash Flow Hedges of Interest Rate Risk and Non-Designated Derivatives

Our objectives in using interest rate derivatives are to add stability to interest expense and to manage our exposure to interest rate movements. To accomplish this objective, we primarily use interest rate swaps as part of our interest rate risk management strategy. The counterparties to the interest rate swap agreements expose us to credit risk in the event of nonperformance by such counterparties. However, at March 31, 2021, we do not anticipate nonperformance by these counterparties. Our interest rate swap agreements with each of the counterparties contain a provision whereby if we either default or are capable of being declared in default on any of our indebtedness, whether or not such default results in repayment of the indebtedness being accelerated by the lender, then we could also be declared in default on our derivative obligations.

Derivative instruments designated as cash flow hedges must be de-designated as hedges when it is probable the forecasted hedged transaction will not occur in the initially identified time period or within a subsequent two-month time period. Deferred gains and losses in accumulated other comprehensive income or loss ("accumulated OCI") associated with such derivative instruments are reclassified into earnings in the period of de-designation.

Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for our making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. In May 2019, we entered into eight amortizing interest rate swap agreements, each of which matures in May 2024. Under these agreements, we receive a variable rate of interest based on LIBOR, and we pay a fixed rate of interest equal to approximately 2.2% plus a spread (see Note 8). Upon entering into the Purchase Agreement with Kainos on October 18, 2020, we determined that some of our hedged transactions would not materially occur in the initially identified time period since we expected to use the majority of the net proceeds from the sale to pay down a significant portion of outstanding debt. As a result, we concluded that five of our eight

interest rate swaps no longer qualified for hedge accounting treatment. Accordingly, in the fourth quarter of 2020 we de-designated these five derivatives (“de-designated swaps”) and accelerated the reclassification of deferred gains and losses in accumulated OCI to earnings from discontinued operations as a result of the hedged forecasted transactions becoming probable not to occur.

Additionally, upon de-designation in October 2020, we froze $3.2 million of previously deferred losses in accumulated OCI related to forecasted payments that are probable of occurring. We reclassify such deferred losses from accumulated OCI into earnings as an adjustment to interest expense during periods in which the forecasted transactions impact earnings, consistent with hedge accounting treatment. In the event that the related forecasted payments are no longer probable of occurring, the related loss in accumulated OCI will be recognized in earnings immediately.

We continue to maintain the effective hedging relationship between three interest rate swap agreements and the portion of our forecasted payments that is expected to remain highly probable of occurring. During the fourth quarter of 2020 we evaluated the likelihood and extent of potential future losses from the de-designated swaps. Such potential future losses are capped since the variable interest rate of our swaps is subject to a floor of 0%. Based on the LIBOR rates in effect at the time of de-designation, we decided to hold the de-designated swaps as derivative instruments requiring mark-to-market accounting treatment, with any change in fair value recognized each period in current earnings.

At March 31, 2021, our interest rate swap agreements designated as effective cash flow hedges had current notional amounts totaling $388.9 million, and our de-designated interest rate swap agreements had current notional amounts totaling $311.1 million.

We record all derivatives at estimated fair value in the consolidated balance sheet. Gains and losses on derivatives designated as effective cash flow hedges are recorded in accumulated OCI and subsequently reclassified into interest expense in the same period(s) during which the hedged transaction affects earnings. Amounts reported in accumulated OCI related to cash flow hedge derivatives will be reclassified to interest expense as we make interest payments on our variable-rate debt. As of March 31, 2021, we expect to reclassify $8.5 million from accumulated OCI as an increase to interest expense within the next 12 months due to the scheduled payment of interest associated with our debt. Gains and losses on derivatives de-designated as effective cash flow hedges are recorded in the consolidated statement of operations as other (income) expense, net.

The estimated gross fair values of derivative instruments and their classification on the consolidated balance sheet at March 31, 2021 and December 31, 2020 were as follows:

(In thousands)	March 31, 2021		December 31, 2020
Liabilities:
Derivatives designated as effective hedging instruments:
Current portion of long-term liabilities	$	7,895	$	8,205
Other long-term liabilities		9,024		12,172
	$	16,919	$	20,377

Non-designated derivatives:
Current portion of long-term liabilities	$	6,300	$	6,548
Other long-term liabilities		7,197		9,712
	$	13,497	$	16,260

The following table presents the effect of cash flow hedge accounting on accumulated OCI as of March 31, 2021 and 2020:

(In thousands)	For the Three Months Ended
	March 31, 2021			March 31, 2020
Derivatives designated as effective hedging instruments:
(Gain) loss related to effective portion of derivatives recognized in accumulated OCI, gross of tax effect	$	(1,412	)	$	27,752
Loss related to effective portion of derivatives reclassified from accumulated OCI to interest expense, gross of tax effect		(2,046	)		(1,121	)

Non-designated derivatives:
Previously deferred loss on interest rate swap agreements reclassified from accumulated OCI to interest expense, gross of tax effect	$	(304	)	$	—
Total other comprehensive (income) loss, gross of tax	$	(3,762	)	$	26,631

The following table presents the impact that non-designated derivatives had on our consolidated statement of operations for the three months ended March 31, 2021:

(In thousands)	Statement of Operations Classification	Three Months Ended March 31, 2021
Interest rate swap agreements:
Net gain related to ineffective portion of derivatives, gross of tax effect	Other (income) expense, net	$	(1,130	)
Previously deferred loss related to de-designated swaps reclassified from accumulated OCI, gross of tax effect	Interest expense		304
		$	(826	)

12.Earnings (Loss) Per Share

Following is a reconciliation of the numerator and denominator of basic and diluted earnings (loss) per share for the three months ended March 31, 2021 and 2020:

(In thousands except per share data)	Three Months Ended March 31,
	2021			2020
Numerator:
Income from continuing operations - numerator for earnings (loss) per share	$	19,944		$	8,275
Net income (loss) from discontinued operations - numerator for earnings (loss) per share		(808	)		(206,381	)
Net income (loss)	$	19,136		$	(198,106	)

Denominator:
Shares used for basic income (loss) per share		49,222			48,613
Effect of dilutive stock options and stock units outstanding:
Non-qualified stock options		62			44
Restricted stock units		844			165
Performance-based stock units		61			33
Market stock units		151			—
Shares used for diluted income (loss) per share		50,340			48,855

Earnings (loss) per share - basic:
Continuing operations	$	0.41		$	0.17
Discontinued operations	$	(0.02	)	$	(4.25	)
Net income (loss)	$	0.39		$	(4.08	)

Earnings (loss) per share - diluted:
Continuing operations	$	0.40		$	0.17
Discontinued operations	$	(0.02	)	$	(4.22	)
Net income (loss)	$	0.38		$	(4.05	)

Dilutive securities outstanding not included in the computation of earnings per share because their effect is anti-dilutive:
Non-qualified stock options		268			118
Restricted stock units		9			98
Restricted stock awards		—			38

Market stock units and performance-based stock units outstanding are considered contingently issuable shares, and certain of these stock units were excluded from the calculations of diluted earnings per share as the performance criteria had not been met as of the end of the applicable reporting period.

13. Accumulated OCI

The following tables summarize the changes in accumulated OCI, net of tax, for the three months ended March 31, 2021 and 2020:

(In thousands)	Net Change in Fair Value of Interest Rate Swaps
Accumulated OCI, net of tax, as of January 1, 2021	$	(17,389	)
Other comprehensive income (loss) before reclassifications, net of tax of $360		1,052
Amounts reclassified from accumulated OCI, net of tax of $600		1,750
Accumulated OCI, net of tax, as of March 31, 2021	$	(14,587	)

(In thousands)	Net Change in Fair Value of Interest Rate Swaps
Accumulated OCI, net of tax, as of January 1, 2020	$	(12,091	)
Other comprehensive income (loss) before reclassifications, net of tax of $7,088		(20,664	)
Amounts reclassified from accumulated OCI, net of tax of $286		835
Accumulated OCI, net of tax, as of March 31, 2020	$	(31,920	)

The following table presents details about reclassifications out of accumulated OCI for the three months ended March 31, 2021 and 2020:

	Three Months Ended
(In thousands)	March 31, 2021			March 31, 2020			Statement of Operations Classification
Interest rate swaps	$	2,350		$	1,121		Interest expense
		(600	)		(286	)	Income tax expense
Total amounts reclassified from accumulated OCI	$	1,750		$	835		Net of tax

See Note 11 for a further discussion of our interest rate swaps.

14. Subsequent Events

As discussed in Note 9, on April 23, 2021, we reached a settlement in principle related to the Weiner Lawsuit pursuant to which our insurers will pay the entire settlement amount in exchange for a release of claims. Accordingly, we have recorded a current liability (in “Accrued liabilities”) and corresponding current asset (in “Other current assets”) at March 31, 2021 equal to the amount of the settlement.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

As used throughout this Quarterly Report on Form 10-Q, unless the context otherwise indicates, the terms “we,” “us,” “our,” “Tivity Health,” or the “Company” refer collectively to Tivity Health, Inc. and its wholly-owned subsidiaries. Please read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and related notes included under Item 1. “Financial Statements” of this report.

COVID-19

In January 2020, the Secretary of the U.S. Department of Health and Human Services declared a national public health emergency due to a novel strain of coronavirus, which causes the disease known as “COVID-19.” In March 2020, the World Health Organization characterized the outbreak of COVID-19 as a global pandemic. By March 31, 2020, substantially all of the fitness centers in our national network were temporarily closed, which had an adverse impact on our results of operations for the first quarter of 2020 and beyond because a significant portion of revenues from our SilverSneakers program is based on member visits to a fitness partner location. Some locations began reopening in May 2020 and additional locations reopened in June and throughout the remainder of 2020. As of March 31, 2021, a significant majority of our fitness partner locations were open. SilverSneakers in-person visits totaled 11.2 million for the first quarter of 2021, compared to 25.3 million and 9.3 million for the first and fourth quarters of 2020, respectively. In addition, while the number of active subscribers for Prime Fitness declined from April through December 2020, it increased slightly during the first quarter of 2021 and we expect it to stabilize for the rest of 2021.

As fitness locations closed as a result of the pandemic, we quickly adapted to the changing needs of our members and clients by launching a new and dynamic suite of virtual offerings, which we will continue to offer. Virtual visits grew significantly, from 12,000 for the first quarter of 2020 to 1.2 million for the first quarter of 2021. We believe these digital offerings not only allow our currently homebound members to stay active and connected with the help of SilverSneakers but that they will also be a critical contributor to our new digitally-enabled member engagement platform going forward.

Overview

Tivity Health, Inc. was founded and incorporated in Delaware in 1981. Through our four programs, SilverSneakers, Prime Fitness, WholeHealth Living, and Wisely Well^TM, we are focused on becoming the modern destination for healthy living, especially for seniors and older adults.

We offer SilverSneakers to members of Medicare Advantage, Medicare Supplement, and group retiree plans. We also offer Prime Fitness, a fitness facility access program, through commercial health plans, employers, and other sponsoring organizations. Our national network of fitness centers delivers both SilverSneakers and Prime Fitness. Our fitness networks encompass approximately 16,000 partner locations and nearly 1,000 alternative locations that provide classes outside of traditional fitness centers. We also offer virtual fitness experiences, including live instructor-led classes. Through our WholeHealth Living program, which we sell primarily to health plans, we offer a continuum of services related to complementary, alternative, and physical medicine. Our WholeHealth Living network includes relationships with over 17,000 complementary, alternative, and physical medicine practitioner locations to serve individuals through health plans and employers who seek health services such as chiropractic care, acupuncture, physical therapy, occupational therapy, massage therapy, and more. Finally, through our Wisely Well brand, we offer meals designed to support individuals and caregivers who are seeking meal convenience as well as those recovering after a hospitalization or living with chronic conditions.

Effective as of December 9, 2020, we completed the sale of Nutrisystem to Kainos pursuant to terms of the Purchase Agreement. At the closing (the “Closing”) of the transactions contemplated by the Purchase Agreement, Nutrisystem, Inc. and its subsidiaries were acquired by, and became wholly owned subsidiaries of, Kainos. Pursuant to the terms of the Purchase Agreement, Kainos paid to the Company an aggregate purchase price, after giving effect to customary indebtedness and cash adjustments, of approximately $559 million, which amount is subject to a customary working capital adjustment post-Closing. We used the significant majority of the net proceeds from the divestiture to pay down $519 million of principal on the term loans under our Credit

Agreement. Results of operations for Nutrisystem have been classified as discontinued operations for all periods presented in the consolidated financial statements.

Forward-Looking Statements

This report contains forward-looking statements, which are based upon current expectations, involve a number of risks and uncertainties, and are subject to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include all statements that are not historical statements of fact and those regarding the intent, belief, or expectations of the Company, including, without limitation, all statements regarding the Company's future earnings, revenues, and results of operations. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and involve significant risks and uncertainties, and that actual results may vary from those in the forward-looking statements as a result of various factors, including, but not limited to:

•

impacts from the COVID-19 pandemic (including the response of governmental authorities to combat and contain the pandemic, the closure of fitness centers in our national network (or operational restrictions imposed on such fitness centers), reclosures, and potential additional reclosures as a result of surges in positive COVID-19 cases) on our business, operations or liquidity;

•

the risks associated with changes in macroeconomic conditions (including the impacts of any recession or changes in consumer spending resulting from the COVID-19 pandemic), widespread epidemics, pandemics (such as the current COVID-19 pandemic) or other outbreaks of disease, geopolitical turmoil, and the continuing threat of domestic or international terrorism;

•

our ability to collect accounts receivable from our customers and amounts due under our sublease agreements;

•

the market’s acceptance of our new products and services;

•

our ability to develop and implement effective strategies and to anticipate and respond to strategic changes, opportunities, and emerging trends in our industry and/or business, as well as to accurately forecast the related impact on our revenues and earnings;

•

the impact of any impairment of our goodwill, intangible assets, or other long-term assets;

•

our ability to attract, hire, or retain key personnel or other qualified employees and to control labor costs;

•

the effectiveness of the reorganization of our business and our ability to realize the anticipated benefits;

•

our ability to effectively compete against other entities, whose financial, research, staff, and marketing resources may exceed our resources;

•

the impact of legal proceedings involving us and/or our subsidiaries, products, or services, including any claims related to intellectual property rights, as well as our ability to maintain insurance coverage with respect to such legal proceedings and claims on terms that would be favorable to us;

•

the impact of severe or adverse weather conditions, the current COVID-19 pandemic, and the potential emergence of additional health pandemics or infectious disease outbreaks on member participation in our programs;

•

the risks associated with deriving a significant concentration of our revenues from a limited number of our customers, many of whom are health plans;

•

our ability and/or the ability of our customers to enroll participants and to accurately forecast their level of enrollment and participation in our programs in a manner and within the timeframe we anticipate;

•

our ability to sign, renew and/or maintain contracts with our customers and/or our fitness partner locations under existing terms or to restructure these contracts on terms that would not have a material negative impact on our results of operations;

•

the ability of our health plan customers to maintain the number of covered lives enrolled in those health plans during the terms of our agreements;

•

our ability to add and/or retain active subscribers in our Prime Fitness program;

•

the impact of any changes in tax rates, enactment of new tax laws, revisions of tax regulations, or any claims or litigation with taxing authorities;

•

the impact of a reduction in Medicare Advantage health plan reimbursement rates or changes in plan design;

•

the impact of any new or proposed legislation, regulations and interpretations relating to Medicare, Medicare Advantage, Medicare Supplement and privacy and security laws;

•

the impact of healthcare reform on our business;

•

the risks associated with potential failures of our information systems or those of our third-party vendors, including as a result of telecommuting issues associated with personnel working remotely, which may include a failure to execute on policies and processes in a work-from-home or remote model;

•

the risks associated with data privacy or security breaches, computer hacking, network penetration and other illegal intrusions of our information systems or those of third-party vendors or other service providers, including those risks that result from the increase in personnel working remotely, which may result in unauthorized access by third parties, loss, misappropriation, disclosure or corruption of customer, employee or our information, or other data subject to privacy laws and may lead to a disruption in our business, costs to modify, enhance, or remediate our cybersecurity measures, enforcement actions, fines or litigation against us, or damage to our business reputation;

•

the risks associated with changes to traditional office-centered business processes and/or conducting operations out of the office in a work-from-home or remote model by us or our third-party vendors during adverse situations (e.g., during a crisis, disaster, or pandemic), which may result in additional costs and/or may negatively impact productivity and cause other disruptions to our business;

•

our ability to enforce our intellectual property rights;

•

the risk that our indebtedness may limit our ability to adapt to changes in the economy or market conditions, expose us 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;

•

our ability to service our debt, make principal and interest payments as those payments become due, and remain in compliance with our debt covenants;

•

our ability to obtain adequate financing to provide the capital that may be necessary to support our current or future operations;

•

counterparty risk associated with our interest rate swap agreements; and

•

other risks detailed in this report and our other filings with the Securities and Exchange Commission.

We undertake no obligation to update or revise any such forward-looking statements.

Business Strategy

Our strategy is to become the modern destination for healthy living. We will expand beyond fitness by establishing an engagement platform that enables personalized member interaction with all of our offerings, and we will partner with other payors and service providers to aggregate services to members under the SilverSneakers umbrella. We plan to accelerate growth in our core SilverSneakers and Prime Fitness businesses by expanding and strengthening our fitness partner network, continuing to grow and scale our new virtual offerings, and expanding our popular community-based offerings. The continued development of our suite of digital offerings will enable a more tailored, interactive, and impactful experience across a variety of areas, including fitness, social connection, community involvement, volunteering, and enrichment. In addition, we plan to accelerate growth in our WholeHealth Living offering through market share expansion and improved technology.

Critical Accounting Policies

We describe our significant accounting policies in Note 1 to the consolidated financial statements in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 (“2020 Form 10-K”). We prepare the consolidated financial statements in conformity with generally accepted accounting principles in the United States (“U.S. GAAP”), which requires us to make estimates and judgments that affect the reported amounts of assets and liabilities and related disclosures at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from those estimates.

We believe the following accounting policies are the most critical in understanding the estimates and judgments that are involved in preparing our financial statements and the uncertainties that could impact our results of operations, financial condition, and cash flows.

Revenue Recognition

We account for revenue from contracts with customers in accordance with Accounting Standards Codification (“ASC”) Topic 606 “Revenue from Contracts with Customers” (“ASC Topic 606”). The unit of account in ASC Topic 606 is a performance obligation, which is a promise in a contract to transfer to a customer either a distinct good or service (or bundle of goods or services) or a series of distinct goods or services provided over a period of time. ASC Topic 606 requires that a contract’s transaction price, which is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer, is to be allocated to each performance obligation in the contract based on relative standalone selling prices and recognized as revenue when or as the performance obligation is satisfied.

We earn revenue from continuing operations primarily from three programs: SilverSneakers senior fitness, Prime Fitness and WholeHealth Living. We provide the SilverSneakers senior fitness program to members of Medicare Advantage, Medicare Supplement, and group retiree plans through our contracts with those plans. We offer Prime Fitness, a fitness facility access program, through contracts with commercial health plans, employers, and other sponsoring organizations that allow their members to individually purchase the program. We sell our WholeHealth Living program primarily to health plans.

The significant majority of our customer contracts contain one performance obligation - to stand ready to provide access to our network of fitness locations and fitness programming - which is satisfied over time as services are rendered each month over the contract term. Unsatisfied performance obligations at the end of a particular month primarily relate to certain monthly memberships for our Prime Fitness program, which are recorded as deferred revenue on the consolidated balance sheet and recognized as revenue during the immediately subsequent month. There was no material revenue recognized during the three months ended March 31, 2021 from performance obligations satisfied in a prior period.

Although we evaluate our financial performance and make resource allocation decisions based upon the results of our single operating and reportable segment, we believe the following information depicts how our revenues and cash flows are affected by economic factors. For the three months ended March 31, 2021, revenue from our SilverSneakers program, which is predominantly contracted with Medicare Advantage and Medicare Supplement plans, comprised approximately 74% of revenues from continuing operations, while revenue from our Prime Fitness and WholeHealth Living programs comprised approximately 21% and 5%, respectively, of revenues from continuing operations.

Sales and usage-based taxes are excluded from revenues.

Impairment of Intangible Assets and Goodwill

We review goodwill for impairment at the reporting unit level (operating segment or one level below an operating segment) on an annual basis (during the fourth quarter of our fiscal year) or more frequently whenever events or circumstances indicate that the carrying value may not be recoverable. Following the sale of Nutrisystem in December 2020, we have a single reporting unit.

As part of the annual impairment test, we may elect to perform a qualitative assessment to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying value. If we elect not to perform a qualitative assessment or we determine that it is more likely than not that the fair value of the reporting unit is less than its carrying value, we perform a quantitative review as described below.

During a quantitative review of goodwill, we estimate the fair value of the reporting unit based on our market capitalization and compare such fair value to the carrying value of the reporting unit. If the fair value of the reporting unit exceeds its carrying amount, no impairment is indicated. If the fair value of the reporting unit is less than its carrying amount, impairment of goodwill is measured as the excess of the carrying amount over fair value.

Except for a tradename that has an indefinite life and is not subject to amortization, we amortize identifiable intangible assets over their estimated useful lives on a straight-line or accelerated basis based on the period for which the economic benefits of the asset are expected to be realized. We assess the potential impairment of intangible assets subject to amortization whenever events or changes in circumstances indicate that the carrying values may not be recoverable. If we determine that the carrying value of other identifiable intangible assets may not be recoverable, we calculate any impairment using an estimate of the asset's fair value based on the estimated price that would be received to sell the asset in an orderly transaction between market participants.

We review indefinite-lived intangible assets for impairment on an annual basis (during the fourth quarter of our fiscal year) or more frequently whenever events or circumstances indicate that the carrying value may not be recoverable. We estimate the fair value of our indefinite-lived tradename using the relief-from-royalty method, which requires us to estimate significant assumptions such as the long-term growth rates of future revenues associated with the tradename, the royalty rate for such revenue, the terminal growth rate of revenue, the tax rate, and a discount rate. Changes in these estimates and assumptions could materially affect the estimates of fair value for the tradename.

Key Performance Indicators

In managing our business, we regularly review and analyze a number of key performance indicators (“KPIs”), including revenues, adjusted EBITDA (both in dollars and as a percentage of revenues), and free cash flow.

Adjusted EBITDA and free cash flow are not calculated in accordance with U.S. GAAP (“non-GAAP”). These KPIs help us monitor our performance, identify trends affecting our business, determine the allocation of resources, and assess the quality and potential variability of our cash flows and earnings. We believe they are useful to investors in evaluating and understanding our business.

Following the divestiture of Nutrisystem, we have only one reportable segment and therefore no longer review and analyze revenues on a segment-level basis or adjusted EBITDA on a segment-level basis as KPIs. Instead, we review and analyze revenues from continuing operations and adjusted EBITDA from continuing operations. We updated our definition of adjusted EBITDA during the first quarter of 2021 to exclude other (income)/expense related to de-designated swaps. We consider such (income)/expense to be outside the performance of our ongoing core business operations and believe that presenting Adjusted EBITDA excluding other (income)/expense provides increased transparency as to the operating costs of our current business performance. We did not revise the prior period’s Adjusted EBITDA amounts because there were no costs similar in nature to these items.

Additionally, beginning in the fourth quarter of 2020, we revised the definition of free cash flow such that it is reduced by settlement on derivatives not designated as hedges, a new item for 2020 that did not exist in prior periods. Settlement on derivatives not designated as hedges arose in 2020 due to the de-designation of certain interest rate swaps in the fourth quarter of 2020 in connection with the repayment of a portion of the principal on the term loans under our Credit Agreement, as further described in Note 11 of the notes to consolidated financial statements included in this report. We believe it is appropriate to exclude settlement on derivatives not designated as hedges from free cash flow because these payments are similar to interest payments (which are reflected in cash flow from operating activities) and they reduce our cash available to repay debt or make other investments.

(In $000s)	Three Months Ended March 31,
	2021			2020
Revenues from continuing operations	$	108,085		$	159,692
Adjusted EBITDA from continuing operations		41,194			30,242
Adjusted EBITDA as a percentage of revenues from continuing operations		38.1	%		18.9	%

•

Revenues – we review year-over-year changes in revenue from continuing operations as a key measure of our success in growing our business. In addition to measuring revenue in total, we also measure and report revenue by program type or source of revenue, as detailed in Note 4 of the notes to the consolidated financial statements included in this report, i.e., SilverSneakers, Prime Fitness, WholeHealth Living, and Other. Evaluating revenue by program type or source helps us identify and address changes in product mix, broad market factors that may affect our revenues, and opportunities for future growth.

•

Adjusted EBITDA is a non-GAAP measure and is defined by the Company as earnings before interest, taxes, depreciation and amortization, acquisition, integration, and project costs, CEO transition costs, restructuring charges, and other (income)/expense. We believe adjusted EBITDA provides investors a helpful measure for comparing our operating performance with our historical operating results as well as the performance of other companies that may have different financing and capital structures or tax rates. We believe it is a useful indicator of the operational strength and performance of our business. Because adjusted EBITDA may be defined differently by other companies in our industry, the financial measure presented herein may not be comparable to similarly titled measures of other companies. A reconciliation of adjusted EBITDA to net income (the most comparable U.S. GAAP measure) is set forth below.

	Year Ended March 31,
(In thousands)	2021			2020
Income from continuing operations, GAAP basis	$	19,944		$	8,275
Income tax expense		7,620			3,136
Interest expense		10,756			11,270
Depreciation expense		2,683			2,030
EBITDA from continuing operations, non-GAAP basis ⁽¹⁾	$	41,003		$	24,711
Acquisition, integration, project and CEO transition costs ⁽²⁾		1,321			5,049
Restructuring charges ⁽³⁾		—			482
Other (income)/expense ⁽⁴⁾		(1,130	)		—
Adjusted EBITDA from continuing operations, non-GAAP basis ⁽⁵⁾	$	41,194		$	30,242

(1)

EBITDA from continuing operations is a non-GAAP financial measure. We believe it is useful to investors to provide disclosures of our operating results and guidance on the same basis as that used by management. You should not consider EBITDA from continuing operations in isolation or as a substitute for income from continuing operations determined in accordance with U.S. GAAP.

(2)

Acquisition, integration, project, and CEO transition costs consist of pre-tax charges of $1,321 and $5,049 for the three months ended March 31, 2021 and 2020, respectively, primarily incurred in connection with the acquisition and integration of Nutrisystem and with the termination of our former CEO in February 2020 and the hiring of our new CEO in June 2020.

(3)

Restructuring charges consist of pre-tax charges of $482 for the three months ended March 31, 2020, primarily related to a restructuring of corporate support infrastructure and of executive leadership.

(4)

Other (income)/expense consists of pre-tax income of $1,130 related to certain interest rate swap agreements that no longer qualify for hedge accounting treatment (“de-designated swaps”) and require changes in fair value to be recognized each period in current earnings, as further described in Note 11 of the notes to consolidated financial statements included in this report.

(5)

Adjusted EBITDA from continuing operations is a non-GAAP financial measure. We exclude acquisition, integration, project, and CEO transition costs, restructuring charges, and other (income)/expense from this measure because of its comparability to our historical operating results. We believe it is useful to investors to provide disclosures of our operating results on the same basis as that used by management. You should not consider Adjusted EBITDA from continuing operations in isolation or as a substitute for income from continuing operations determined in accordance with U.S. GAAP. Additionally, because Adjusted EBITDA from continuing operations 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.

•

Free cash flow is a non-GAAP measure and is defined by the Company as net cash flows provided by operating activities less acquisition of property and equipment and settlement on derivatives not designated as hedges. We believe free cash flow is useful to management and investors to measure (i) our performance, (ii) the strength of the Company and its ability to generate cash, and (iii) the amount of cash that is available to repay debt or make other investments. A reconciliation of free cash flow to cash flows from operating activities (the most comparable GAAP measure) is set forth below.

(In thousands)	Three Months Ended March 31,
	2021			2020
Net cash flows provided by operating activities	$	22,618		$	47,023
Acquisition of property and equipment		(1,561	)		(4,875	)
Settlement on derivatives not designated as hedges		(1,633	)		—
Free cash flow	$	19,424		$	42,148

Outlook

Although there is significant uncertainty relating to the potential impacts of the COVID-19 pandemic on our business going forward, including the duration of the outbreak, the timing and duration of any operational restrictions applicable to our fitness partner locations, the impact on member participation in our SilverSneakers programs, our ability to continue to attract subscribers for our Prime Fitness program, and the ultimate medium- and long-term impact of the pandemic on the global economy, we expect our results from continuing operations for the short term to continue to be adversely impacted by COVID-19.

Executive Overview of Results

The key financial results for the three months ended March 31, 2021 are:

•

Revenues from continuing operations of $108.1 million compared to $159.7 million for the three months ended March 31, 2020; and

•

Pre-tax income from continuing operations of $19.9 million compared to $8.3 million for the three months ended March 31, 2020. Pre-tax income for the three months ended March 31, 2021 includes:

$10.8 million of interest expense compared to $11.3 million for the same period in 2020;

$1.3 million of acquisition, integration, project, and CEO transition costs compared to $5.0 million for the same period in 2020;

$1.2 million of marketing expenses compared to $7.3 million for the same period in 2020; and

$0.0 million of restructuring and related charges compared to $0.5 million for the same period in 2020.

Results of Operations

The following table sets forth the components of the consolidated statements of operations for the three months ended March 31, 2021 and 2020 expressed as a percentage of revenues from continuing operations.

	Three Months Ended March 31,
	2021			2020
Revenues		100.0	%		100.0	%
Cost of revenue (exclusive of depreciation included below)		53.0	%		72.1	%
Marketing expenses		1.1	%		4.6	%
Selling, general and administrative expenses		9.0	%		7.5	%
Depreciation expense		2.5	%		1.3	%
Restructuring and related charges		0.0	%		0.3	%
Operating income ⁽¹⁾		34.4	%		14.2	%

Interest expense		10.0	%		7.1	%
Other (income) expense, net		(1.0	)%		0.0	%
Total non-operating expense, net ⁽¹⁾		8.9	%		7.1	%
Income before income taxes ⁽¹⁾		25.5	%		7.1	%

Income tax expense		7.1	%		2.0	%
Income from continuing operations ⁽¹⁾		18.5	%		5.2	%

(1)	Figures may not add due to rounding.

Revenues

Revenues from continuing operations were $108.1 million for the three months ended March 31, 2021 compared to $159.7 million for the same period in 2020, a decrease of $51.6 million, primarily as a result of a net decrease in SilverSneakers revenue of $41.8 million driven by a decrease in revenue-generating visits beginning

in March 2020 due to the COVID-19 pandemic. As a result, revenues from PMPM fees represented 53% of SilverSneakers revenue for the three months ended March 31, 2021, compared to 36% for the same period in 2020. In addition, revenue from Prime Fitness decreased by $10.2 million due to a decrease in active subscribers for the three months ended March 31, 2021 compared to the same period in 2020.

Cost of Revenue

Cost of revenue from continuing operations (excluding depreciation) as a percentage of revenues decreased from the three months ended March 31, 2020 (72.1%) to the three months ended March 31, 2021 (53.0%), primarily due to a higher mix of revenues from PMPM fees in the first quarter of 2021, as noted above, coupled with a decrease in visit costs due to a decline in participation levels (compared to such levels prior to the COVID-19 pandemic).

Marketing Expenses

Marketing expenses from continuing operations as a percentage of revenues decreased from the three months ended March 31, 2020 (4.6%), to the three months ended March 31, 2021 (1.1%), primarily due to decreased spending in the first quarter of 2021 on SilverSneakers television advertising, due in part to the COVID-19 pandemic as well as a shift in our media mix towards more targeted digital marketing.

Selling, General and Administrative Expenses

Selling, general and administrative expenses from continuing operations as a percentage of revenues increased from the three months ended March 31, 2020 (7.5%) to the three months ended March 31, 2021 (9.0%) primarily due to (i) the fixed nature of certain costs that cannot be reduced proportionately with reductions in revenue, and (ii) an increase in share-based compensation expense due to (a) the timing and design of annual long-term incentive awards, and (b) grants of long-term incentive awards in May 2020 and August 2020 to the Company’s Board of Directors, executive officers, and certain other employees, all of whose cash compensation was reduced for a significant portion of 2020 in order to preserve liquidity and manage cash flow in response to the COVID-19 pandemic, with the value of such grants being equal as closely as reasonably possible to the amount of the cash compensation reduction. These increases were partially offset by decreases in (i) transition, acquisition, and integration costs, and (ii) CEO transition-related expenses associated with the termination of our former CEO in February 2020 and the hiring of a new CEO in June 2020.

Restructuring and Related Charges

During the first quarter of 2019, we began a reorganization primarily related to integrating the Nutrisystem business and streamlining our corporate and operations support (the "2019 Restructuring Plan"). The 2019 Restructuring Plan concluded during the first quarter of 2020. For the three months ended March 31, 2020, we incurred restructuring charges from continuing operations of $0.5 million related to the 2019 Restructuring Plan. To date, we have incurred restructuring charges from continuing operations of $2.4 million related to the 2019 Restructuring Plan. These expenses consist entirely of severance and other employee-related costs.

Depreciation Expense

Depreciation expense from continuing operations increased $0.7 million for the three months ended March 31, 2021 compared to the same period in 2020, primarily due to an increase in the amount of depreciable computer software.

Interest Expense

Interest expense from continuing operations did not change materially from the three months ended March 31, 2020 to the three months ended March 31, 2021.

Other (Income) Expense, Net

Other (income) expense, net increased $1.1 million for the three months ended March 31, 2021 compared to the same period in 2020 due to mark-to-market adjustments on certain interest rate swap agreements that, effective in the fourth quarter of 2020, no longer qualify for hedge accounting treatment (“de-designated swaps”). Changes in fair value of the de-designated swaps are required to be recognized each period in current earnings.

Income Tax Expense

See Note 6 of the notes to consolidated financial statements in this report for a discussion of income tax expense from continuing operations.

Liquidity and Capital Resources

Overview

As of March 31, 2021, outstanding debt under the Credit Agreement was $405.2 million, which represented $432.7 million of principal on the Term Loans less deferred loan costs and original issue discount, and we had $52.4 million of cash and cash equivalents.

As of March 31, 2021, we had working capital of $32.8 million. While the COVID-19 pandemic has created significant uncertainty as to general economic and market conditions for the remainder of 2021 and beyond, as of the date of this report, we believe our cash on hand, expected cash flows from operations, and anticipated available credit under the Credit Agreement will be sufficient to fund our operations, principal and interest payments, and capital expenditures for the next 12 months. We cannot assure you that we will be able to secure additional financing if needed and, if such funds are available, whether the terms or conditions will be favorable to us. With the uncertainty surrounding COVID-19, our ability to engage in financing transactions may be constrained by (i) volatile or tight economic, capital, credit and/or financial market conditions, (ii) moderated investor and/or lender interest or capacity, (iii) restrictions under our Credit Agreement, and/or (iv) our liquidity, leverage and net worth, and we can provide no assurance as to successfully completing, the costs of, or the operational limitations arising from, any one or series of such transactions. As of March 31, 2021, availability under the Revolving Credit Facility totaled $124.5 million as calculated under the most restrictive covenant.

Credit Facility

In connection with the consummation of the acquisition of Nutrisystem, on March 8, 2019, we entered into the Credit Agreement. The Credit Agreement provides us with (i) a $350.0 million Term Loan A, (ii) an $830.0 million Term Loan B, (iii) a $125.0 million revolving credit facility that includes a $35.0 million sublimit for swingline loans and a $50.0 million sublimit for letters of credit, and (iv) uncommitted incremental accordion facilities in an aggregate amount at any date equal to the greater of $125.0 million or 50% of our consolidated EBITDA for the then-preceding four fiscal quarters, plus additional amounts based on, among other things, satisfaction of certain financial ratio requirements.

Payments that may be required, as described below. In addition, in December 2020 we used the significant majority of the net proceeds from the divestiture of Nutrisystem to pay $519.0 million of principal on the Term Loans, which was applied to the amount due and payable at maturity.

The Credit Agreement contains a financial covenant that requires us to maintain maximum ratios or levels of consolidated total net debt to consolidated adjusted EBITDA, calculated as provided in the Credit Agreement (the “Net Leverage Ratio”), of 5.25:1.00 for all test dates occurring on or after December 31, 2020 but prior to December 31, 2021 and 4.75:1.00 for all test dates occurring on or after December 31, 2021. As of March 31, 2021, we were in compliance with all of the covenant requirements of the Credit Agreement, and our Net Leverage Ratio was equal to 2.11.

Cash Flows Provided by Operating Activities

Operating activities during the three months ended March 31, 2021 provided cash of $22.6 million compared to $47.0 million during the three months ended March 31, 2020. The decrease is primarily due to (i) reduced cash flows from operating activities from Nutrisystem, which we sold in December 2020, and (ii) reduced cash collections on accounts receivable. These decreases were partially offset by lower interest payments and the receipt of tax refunds in the first quarter of 2021.

Cash Flows Used in Investing Activities

Investing activities during the three months ended March 31, 2021 used $3.2 million in cash, compared to $4.9 million during the three months ended March 31, 2020. This change is primarily due to a decrease in capital expenditures, partially offset by settlement payments on non-designated derivatives.

Cash Flows Provided by Financing Activities

Financing activities during the three months ended March 31, 2021 used $67.4 million of cash, compared to cash provided of $38.4 million during the three months ended March 31, 2020. This decrease is primarily due to voluntary prepayments under the Credit Agreement of $63.6 million during the first quarter of 2021, compared to net borrowings of $37.3 million for the same period in 2020.

Recent Relevant Accounting Standards

See Note 2 of the notes to consolidated financial statements included in this report for discussion of recent relevant accounting standards.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are subject to market risk related to interest rate changes, primarily as a result of the Credit Agreement and certain interest rate swap agreements that, effective October 2020, no longer qualify for hedge accounting treatment (see further discussion below).

Borrowings under the Credit Agreement bear interest at variable rates based on a margin or spread in excess of either (1) one-month, two-month, three-month or six-month LIBOR (or, with the approval of all lenders holding the particular class of loans, 12-month LIBOR), which may not be less than zero, or (2) the greatest of (a) the prime lending rate of the agent bank for the particular facility, (b) the federal funds rate plus 0.50%, and (c) one-month LIBOR plus 1.00% (the “Base Rate”), as selected by the Company. The LIBOR margin for Term Loan A loans is 4.25%, the LIBOR margin for Term Loan B loans is 5.25%, and the LIBOR margin for revolving loans varies between 3.75% and 4.25%, depending on our total Net Leverage Ratio. The Base Rate margin for Term Loan A loans is 3.25%, the Base Rate margin for Term Loan B loans is 4.25%, and the Base Rate margin for revolving loans varies between 2.75% and 3.25%, depending on our total Net Leverage Ratio. Effective May 31, 2019, we maintain eight amortizing interest rate swap agreements with current notional amounts totaling $700.0 million, through which we receive a variable rate of interest based on LIBOR, and we pay a fixed rate of interest equal to approximately 2.2% plus a spread. All of these interest rate swap agreements were designated as cash flow hedges from their inception through October 18, 2020. Upon entering into the Purchase Agreement with Kainos on October 18, 2020, we determined that some of our hedged transactions would not materially occur in the initially identified time period since we expected to use the majority of the net proceeds from the sale to pay down a significant portion of outstanding debt. As a result, we concluded that five of the eight interest rate swaps no longer qualified for hedge accounting treatment, and we discontinued the related hedging designation (“de-designated swaps”).

For the three months ended March 31, 2021, we estimate that a 100-basis point increase in LIBOR would have increased our net cash flows by $0.6 million, which reflects decreased payments on our interest rate swaps (for which we pay a fixed interest rate of approximately 2.2% and receive a variable interest rate based on LIBOR), partially offset by higher payments on variable rate debt outstanding under the Credit Agreement. The Credit Agreement and each of the interest rate swap agreements contain a zero percent “floor” with respect to LIBOR (i.e., if the LIBOR rate is negative it will be deemed to be zero). Therefore, a 100-basis point decrease in LIBOR would not have had a material impact on our net cash flows for the first quarter of 2021 since the actual LIBOR rate under these agreements during the quarter ranged between 0.10% and 0.15%. We estimate that a 100-basis point decrease in LIBOR would have decreased our net cash flows by $0.1 million for the three months ended March 31, 2021.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company's principal executive officer and principal financial officer have reviewed and evaluated the effectiveness of the Company's disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) promulgated under the Exchange Act) as of March 31, 2021. Based on that evaluation, the principal executive officer and principal financial officer have concluded that the Company's disclosure controls and procedures are effective as of March 31, 2021. They are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the U.S. Securities and Exchange Commission’s rules and forms and to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company's management, including the principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There were no changes in the Company's internal controls over financial reporting during the three months ended March 31, 2021 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

Part II Other Information

Item 1. Legal Proceedings

See Note 9 of the notes to consolidated financial statements included in this report for discussion of recent legal proceedings.

Item 1A. Risk Factors

In addition to the risks and uncertainties described below and other information set forth in this report, you should carefully consider the risks and uncertainties previously reported under the caption Part I, Item 1A. “Risk Factors” in the 2020 Form 10-K, the occurrence of which could materially and adversely affect our business, prospects, financial condition and operating results. The risks previously reported and described in the 2020 Form 10-K and in this report do not describe all risks applicable to us and are intended only as a summary of certain material factors that could impact our operations in the industry in which we operate. In addition to our risk factors previously disclosed in our 2020 Form 10-K, our risk factors also include the following additional risk factor.

Legislative, regulatory, and legal developments involving taxes could adversely affect our business and results of operations.

We are subject to U.S. federal and state income, payroll, property, sales and use, and other types of taxes in numerous jurisdictions. Significant judgment is required in determining our provisions for income taxes. Changes in tax rates, enactments of new tax laws, revisions of tax regulations, and claims or litigation with taxing authorities could result in substantially higher taxes. For example, on March 31, 2021, President Biden unveiled his infrastructure plan, which includes a proposal to increase the federal corporate tax rate from 21% to 28% and to impose a new alternative minimum tax on book income as part of a package of tax reforms to help fund the spending proposals in the plan. If these proposals are ultimately enacted, they could materially impact our tax provision, cash tax liability, and effective tax rate.

Item 6. Exhibits

(a)

Exhibits

10.1		Offer of Employment Letter between the Company and Thomas Lewis dated as of October 4, 2018*

10.2		Amendment No.1 to Offer of Employment Letter between the Company and Thomas Lewis dated as of April 1, 2019*

10.3		Amendment No. 2 to Offer of Employment Letter between the Company and Thomas Lewis dated as of October 30, 2020*

10.4		Amended and Restated Offer of Employment Letter between the Company and Raymond Bilbao dated as of October 30, 2020*

10.5		Change of Control Agreement between the Company and Raymond Bilbao dated as of July 3, 2018*

10.6		Form of Restricted Stock Unit Award Agreement (for Executive Officers) for May 11, 2020 under the Company’s Second Amended and Restated 2014 Stock Incentive Plan*

10.7		Form of Restricted Stock Unit Award Agreement (for Directors) for May 11, 2020 under the Company’s Second Amended and Restated 2014 Stock Incentive Plan*

10.8		Form of Restricted Stock Unit Award Agreement (for Richard Ashworth) for July 1, 2020 under the Company’s Second Amended and Restated 2014 Stock Incentive Plan*

10.9		Form of Restricted Stock Unit Award Agreement (for Executive Officers) for August 24, 2020 under the Company’s Second Amended and Restated 2014 Stock Incentive Plan*

10.10		Form of Restricted Stock Unit Award Agreement (for Directors) for August 24, 2020 under the Company’s Second Amended and Restated 2014 Stock Incentive Plan*

31.1		Certification pursuant to section 302 of the Sarbanes-Oxley Act of 2002 made by Richard Ashworth, Chief Executive Officer*

31.2		Certification pursuant to section 302 of the Sarbanes-Oxley Act of 2002 made by Adam Holland, Chief Financial Officer*

32		Certification Pursuant to 18 U.S.C section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 made by Richard Ashworth, Chief Executive Officer, and Adam Holland, Chief Financial Officer*

101		The following financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2021, formatted in Inline XBRL: (i) Consolidated Balance Sheets; (ii) Consolidated Statements of Operations (iii) Consolidated Statements of Comprehensive Income (Loss), (iv) Consolidated Statement of Changes in Stockholders' Equity; (v) Consolidated Statements of Cash Flows; and (vi) Notes to Consolidated Financial Statements

104		The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2021, formatted in Inline XBRL (included in Exhibit 101 hereto)

*		Filed herewith

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.

			Tivity Health, Inc.
			(Registrant)

Date:	May 7, 2021	By	/s/ Adam C. Holland

			Chief Financial Officer
			(Principal Financial Officer)

Exhibit 10.1

October 4, 2018

Tommy Lewis

Address on file

Dear Tommy,

We are delighted to confirm our offer to you to join Tivity Health! We anticipate your start date to be no later than October 12, 2018. Your role at Tivity Health will be SVP of Investor Relations and Transformation, reporting to Donato Tramuto. In this position, you will play a pivotal role in delivering on our purpose: To empower older adults to live their best lives – with vitality, dignity and purpose.

Our culture is one that fosters empowerment, excellence and engagement. We are transforming the aging experience – reducing the burden of chronic conditions among older adults, enabling these to be their best years, and inspiring the next generation that the best is yet to come. Our collective commitment to this vision is foundational to our culture. It motivates us, connects us and makes Tivity Health a meaningful and fun place to work.

As part of your commitment to your position, you will be expected to follow all Tivity Health policies and procedures, including our Code of Business Conduct.

We are excited that you are joining our team, and look forward to working with you.

Now, the good stuff:

Compensation and Benefits

•

Your base salary will be $260,000 or $10,000.00 payable bi−weekly.

•

Your role makes you eligible to participate in Tivity Health’s Colleague Bonus Program consistent with your position and plan provisions.* The bonus target for your new position is 30% of your fiscal year eligible base pay earnings. Payout is not guaranteed, but is contingent upon achievement of company and individual performance objectives. Should your role change during the year, your bonus eligibility and target may be adjusted accordingly. All colleagues must be actively employed through the end of the performance period to be eligible.

Tommy Lewis offer letter, page 2

SVP of Investor Relations and Transformation

•

Eligibility for our Long Term Incentive (LTI) plan, currently with a target of $100,000. Our LTI plan may consist of stock options, restricted stock units, performance stock units, market stock units, restricted cash and/or performance cash depending on the annual determination of the Compensation Committee of the Board of Directors.

•

As a full−time, exempt employee, you will be eligible to receive our full benefits package following your eligibility waiting period for each of the plans. We have enclosed a summary of our benefits for your review.

•

If you’re at least 21 years old, you are eligible to participate in our 401(k) program on your first day of employment. In support of your financial well-being, you will automatically be enrolled in the plan after 90 days of employment if you haven’t already made elections. You may enroll at www.401k.com to select or change your deferral rate at any time.

Like all responsible companies, Tivity Health has a few conditions that come along with this offer.

Prior Employment

You represent that you are not subject to any non-competition provisions or restrictive covenants that would prevent or affect your acceptance of this offer of employment and the performance of your employment obligations at Tivity Health. You further represent that the performance of your employment obligations will not violate or breach any other agreement or arrangement with a prior employer. In your work for the company, you will be expected not to use or disclose any confidential or proprietary information or trade secrets of any prior employer or other person to whom you have an obligation of confidentiality.

Restrictive Covenants

Upon acceptance of this offer, you understand and agree that your employment is contingent upon your execution of and delivery to the company of a Trade Secret and Proprietary Information Agreement enclosed. To translate, that means you need to protect our proprietary information. You also agree to comply with all policies related to the acceptable use of all systems and information assets of the company during your employment.

At-Will Employment

You understand that your employment with Tivity Health is for an unspecified duration that constitutes at-will employment and that either you or the company can terminate this relationship at any time, with or without cause.

Company Events and Activities

While here, you’ll have the opportunity to participate in a number of engaging activities and events. During these events, we take photos and share them across our sites. Sometimes those photos, stories, and videos are used for other purposes, such as recruiting videos,

sales or client meetings, and even Board meetings.

Tommy Lewis offer letter, page 3

SVP of Investor Relations and Transformation

Background Check

You understand that this offer is contingent upon the successful completion of our background check process.

Please return a signed copy of this offer letter to your Talent Acquisition Partner. Feel free to contact them directly should you have any questions or need assistance with the enclosed materials.

Welcome!

Talent Acquisition Team

Tivity Health

Acknowledged and Agreed:

/s/ Tommy Lewis

Tommy Lewis

October 5, 2018

DATE

*Colleagues who are bonus-eligible and begin employment prior to October 1 will participate in the current year's plan. Colleagues who are bonus-eligible and hired on or after October 1 will be eligible to participate in the following year's plan, which is subject to approval (including targets) by the Compensation Committee of the Board of Directors.

Addendum to Offer Letter for Tommy Lewis dated October 4, 2018

Termination Provisions:

If your employment is terminated at any time without Cause⁽¹⁾or if you terminate your employment for Good Reason⁽²⁾, you will be entitled to receive:

•

All base salary and benefits due through the date of termination payable within thirty (30) days of the date of termination, with the date of such payment determined by the Company in its sole discretion.

Upon your execution of a full release of claims in favor of the Company, provided that such release must be executed and become effective and any revocation period must expire within sixty (60) days of the date of termination, you will also be entitled to receive:

•

An amount equal to your base salary for a total of six (6) months following the date of termination.⁽³⁾

•

Group medical benefits for six (6) months after the date of termination. The costs of the Company's portion of any premiums due will be included in your gross income to the extent the provision of such benefits is deemed to be discriminatory under Section 105(h) of the Internal Revenue Code of 1986, as amended.⁽³⁾

⁽¹⁾ The following events constitute “Cause” for termination:

•

Continued failure to substantially perform your duties after written notice and failure to cure within sixty (60) days;

•

Arrest relating to a felony or engaging in misconduct that is materially injurious to the Company, monetarily or to its reputation or otherwise, or that would damage your ability to effectively perform your duties;

•

Theft or dishonesty by you;

•

Intoxication while on duty; or

•

Willful violation of Company policies or procedures after written notice and failure to cure within thirty (30) days.

⁽²⁾ You may terminate your employment by written notice of your resignation delivered within sixty (60) days after the occurrence of any of the following events, each of which shall constitute "Good Reason" for resignation and together shall be "Good Reason Events":

a. a material reduction in your base salary (unless such reduction is part of an across-the-board reduction affecting all Company executives with a comparable role or title); and

b. a requirement by the Company to relocate your residence, unless such relocation is mutually agreed upon by you and the Company.

You shall give the Company written notice of your intention to resign for Good Reason within sixty (60) days after the occurrence of one of the Good Reason Events. The notice must state with reasonable specificity the Good Reason Event. Thereafter, the Company shall have sixty (60) days (the "Cure Period") to rescind the Good Reason Event(s). If the Company rescinds the Good Reason Event(s) within the Cure Period, you no longer shall have the right to resign for Good Reason. If the Company fails to rescind the Good Reason Event(s) before the expiration of the Cure Period, then you may resign for Good Reason as long as the resignation for Good Reason occurs within thirty (30) days following the expiration of the Cure Period; otherwise the right to resign on the basis of such Good Reason Event(s) shall be deemed to have been waived.

⁽³⁾These amounts will be paid to you periodically at the Company's regular payroll dates commencing within sixty (60) days following the date of termination (the commencement date will be determined by the Company, in its sole discretion). This amount may cease prior to the 6-month period if you have access to your partner’s health insurance coverage.

Exhibit 10.2

April 1, 2019

Tommy Lewis

Address on file

Dear Tommy,

This letter agreement serves to amend your original offer letter dated October 4, 2018 (“Offer Letter”) by extending the duration of the termination benefits outlined in the addendum to the Offer Letter from six months to one year. An amended and restated addendum immediately follows. All other terms of the Offer Letter remain in effect.

Thank you for your ongoing commitment to Tivity Health.

/s/ Donato Tramuto

Donato Tramuto

Tivity Health

Acknowledged and Agreed:

/s/ Tommy Lewis

Tommy Lewis

April 12, 2019

DATE

Addendum to Offer Letter for Tommy Lewis, effective April 1, 2019

Termination Provisions:

If your employment is terminated at any time without Cause⁽¹⁾or if you terminate your employment for Good Reason⁽²⁾, you will be entitled to receive:

•

An amount equal to your base salary for a total of one year following the date of termination.⁽³⁾

•

Group medical benefits for one year after the date of termination. The costs of the Company's portion of any premiums due will be included in your gross income to the extent the provision of such benefits is deemed to be discriminatory under Section 105(h) of the Internal Revenue Code of 1986, as amended.⁽³⁾

⁽¹⁾ The following events constitute “Cause” for termination:

•

Continued failure to substantially perform your duties after written notice and failure to cure within sixty (60) days;

•

Theft or dishonesty by you;

•

Intoxication while on duty; or

•

Willful violation of Company policies or procedures after written notice and failure to cure within thirty (30) days.

a. a material reduction in your base salary (unless such reduction is part of an across-the-board reduction affecting all Company executives with a comparable role or title); and

b. a requirement by the Company to relocate your residence, unless such relocation is mutually agreed upon by you and the Company.

⁽³⁾These amounts will be paid to you periodically at the Company's regular payroll dates commencing within sixty (60) days following the date of termination (the commencement date will be determined by the Company, in its sole discretion). These amounts may cease prior to the 6-month period if you have access to your partner’s health insurance coverage.

Exhibit 10.3

October 30, 2020

Tommy Lewis Address on file

Dear Tommy,

I'm delighted to confirm your position with Tivity Health as SVP, Chief Operating Officer, reporting directly to me.

The following compensation will apply:

•

Effective December 1, 2020, your base salary will be $380,000.00, or $14,615.38 payable bi-weekly, which represents an increase of $30,000.00 ("Base Salary Increase") over your current base salary of $350,000.00 ("Current Base Salary"). Your Current Base Salary will remain subject to the current 25% salary reduction, which remains in effect through December 31, 2020. Your Base Salary Increase will not be impacted by the 25% salary reduction. Your full base salary of $380,000.00 will be instated on January 1, 2021.

•

Your bonus award target will be 50% of your eligible base earnings. Payout is not guaranteed but is contingent upon achievement of company and individual performance objectives. Should your role change during the year, your bonus eligibility and target may be adjusted accordingly.

•

Continued eligibility for our Long-term Incentive (LTI) plan, with a target value of $400,000.00. Individual LTI eligibility, target values, and design are determined annually by the Compensation Committee of the Board of Directors and may consist of stock options, restricted stock units, performance stock units, market stock units, restricted cash and/or performance cash.

•

Continued eligibility to receive our full benefits package.

•

Continued eligibility to participate in our 401(k) program.

Like all responsible companies, Tivity Health has a few conditions that come along with this offer.

Restrictive Covenants

Upon acceptance of this offer, you understand and agree that your employment is contingent upon your execution of and delivery to the company of a Trade Secret and Proprietary Information Agreement, enclosed. To translate, that means you need to protect our proprietary information. You also agree to comply with all policies relating to the acceptable use of all systems and information assets of the company during your employment.

At-Will Employment

Company Events and Activities

While here, you'll have the opportunity to participate in a number of engaging activities and events. We take photos at events and share them across our sites. Sometimes those photos, stories, and videos are so great that we use them for other purposes, such as recruiting videos, sales or client meetings, and even Board meetings. You accept that your image may be used by Tivity Health.

Page 1 of 2

Tommy Lewis offer letter, page 2 SVP, Chief Operating Officer

Please return a signed copy of this offer letter to me. Feel free to contact me directly should you have any questions or need assistance with the enclosed materials.

Tommy, we are grateful for your contributions and dedication to Tivity Health and are excited to have you as a key part of our organization going forward.

Best,

Richard Ashworth

President & Chief Executive Officer

Acknowledged and Agreed:

/s/ Tommy LewisNov. 2, 2020

Tommy LewisDate

Page 2 of 2

Exhibit 10.4

October 30, 2020

Ray Bilbao

Address on file

Dear Ray,

I’m delighted to offer you the position with Tivity Health as SVP, General Counsel, reporting directly to me. The following compensation will apply:

•

Effective December 1, 2020, your base salary will be $300,000.00, or $11,538.46 payable bi−weekly, which represents an increase of $30,000.00 (“Base Salary Increase”) over your current base salary of $270,000.00 (“Current Base Salary”). Your Current Base Salary will remain subject to the current 25% salary reduction, which remains in effect through December 31, 2020. Your Base Salary Increase will not be impacted by the 25% salary reduction. Your full base salary of $300,000.00 will be instated on January 1, 2021.

•

Continued eligibility for our Long-term Incentive (LTI) plan, with a target value of $245,000.00. Individual LTI eligibility, target values, and design are determined annually by the Compensation Committee of the Board of Directors and may consist of stock options, restricted stock units, performance stock units, market stock units, restricted cash and/or performance cash.

•

Continued eligibility to receive our full benefits package.

•

Continued eligibility to participate in our 401(k) program.

Like all responsible companies, Tivity Health has a few conditions that come along with this offer.

Restrictive Covenants

Upon acceptance of this offer, you understand and agree that your employment is contingent upon your execution of and delivery to the company of a Trade Secret and Proprietary Information Agreement, enclosed. To translate, that means you need to protect our proprietary information. You also agree to comply with all policies relating to the acceptable use of all systems and information assets of the company during your employment.

At-Will Employment

Company Events and Activities

While here, you’ll have the opportunity to participate in a number of engaging activities and events. We take photos at events and share them across our sites. Sometimes those photos, stories, and videos are so great that we use them for other purposes, such as recruiting videos, sales or client meetings, and even Board meetings. You accept that your image may be used by Tivity Health.

Page 1 of 2

Ray Bilbao offer letter, page 2 SVP, General Counsel

Please return a signed copy of this offer letter to me. Feel free to contact me directly should you have any questions or need assistance with the enclosed materials.

Ray, we are grateful for your contributions and dedication to Tivity Health and are excited to have you as a key part of our organization going forward. Congratulations on your promotion!

Best,

Richard Ashworth

President & Chief Executive Officer

Acknowledged and Agreed:

/s/ Ray Bilbao11/1/2020

Ray BilbaoDate

Page 2 of 2

Exhibit 10.5

CHANGE OF CONTROL AGREEMENT

THIS CHANGE OF CONTROL AGREEMENT (this “Agreement”), dated as of the date signed by the Executive whose name appears on the signature page of this Agreement (the “Executive”) is made by and between the Executive and Tivity Health, Inc., a Delaware corporation (the “Company”).

WHEREAS, the Company has determined that it is in the best interests of the Company and its stockholders to secure the Executive’s continued services and to ensure the Executive’s continued dedication and objectivity in the event of any threat or occurrence of, or negotiation or other action that could lead to, or create the possibility of, a Change in Control of the Company, without concern as to whether the Executive might be hindered or distracted by personal uncertainties and risks created by any such possible or actual Change in Control, and to encourage the Executive’s full attention and dedication to the Company.

THEREFORE, intending to be legally bound, the parties agree as follows:

1.Term. Except as otherwise terminated as provided for herein, the term of this Agreement (the “Term”) shall be for the period in which the Executive remains an employee of the Company.

2.Change of Control. For the purposes of this Agreement, a “Change in Control” shall mean any of the following events:

(a)any person or entity, including a “group” as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), other than the Company or a wholly-owned subsidiary thereof or any employee benefit plan of the Company or any of its subsidiaries, becomes the beneficial owner of the Company’s securities having 35% or more of the combined voting power of the then outstanding securities of the Company that may be cast for the election of directors of the Company (other than as a result of an issuance of securities initiated by the Company in the ordinary course of business); or

(b)as the result of, or in connection with, any cash tender or exchange offer, merger or other business combination, sales of assets or contested election, or any combination of the foregoing transactions, less than a majority of the combined voting power of the then outstanding securities of the Company or any successor corporation or entity entitled to vote generally in the election of the directors of the Company or such other corporation or entity after such transaction are held in the aggregate by the holders of the Company’s securities entitled to vote generally in the election of directors of the Company immediately prior to such transaction.

3.Termination of Agreement. This Agreement shall terminate immediately at such time as the Executive no longer is an employee of the Company.

4.Benefits Pursuant to Change of Control. If, due to a Change of Control, the Executive's employment is terminated by the Company or Executive is demoted or his/her title is reduced within twelve (12) months of the Change of Control for any reason other than for cause,

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as defined herein, or, if within twelve (12) months of a Change of Control the Executive Resigns for Good Reason, as defined herein, the Executive shall be entitled to receive:

(a)An amount equal to the greater of (i) Executive’s Monthly Base Salary (as of the Notice of Termination) for a total of six (6) months following the Date of Termination (herein defined as the date designated by the Company) or ii) severance benefits to which the Executive may be entitled under a separation agreement between the Executive and the Company.

(b)Provided Executive is eligible to continue group medical insurance and s/he timely elects to continue coverage under COBRA, the Company will subsidize Executive’s COBRA monthly premiums for a period of six (6) months. The subsidy will approximate the percentage the Company pays for medical insurance for active employees. If Executive becomes ineligible for coverage under COBRA during the six-month period, then the Company will have no obligation to continue the benefit described herein. The costs of the Company’s subsidy under this Section 4(b) shall be included in the Executive’s gross income if required by Section 105(h) of the Internal Revenue Code of 1986, as amended.

(c)In the event the receipt of amounts payable pursuant to this Section 4 within six (6) months of the Date of Termination would cause the Executive to incur any penalty under Section 409A of the IRC, then payment of such amounts shall be delayed until the date that is six

(6) months following the Date of Termination.

(d)All outstanding stock options, restricted stock, restricted stock units and any other vested equity incentives shall remain exercisable solely in accordance with the terms of the stock option agreements or restricted stock agreements to which the Company and the Executive are parties on the Date of Termination. All unvested equity incentives shall vest in accordance with the terms of the stock option agreements or restricted stock agreements.

(e)All amounts contributed by the Company to the Capital Accumulation Plan ("CAP") for the benefit of the Executive, shall immediately vest and thereafter be paid out in accordance with the terms of the CAP as in effect on the Date of Termination.

5.Assignment; Binding Agreement. This Agreement shall inure to the benefit of and be enforceable by the Executive and his/her personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If the Executive should die while any amount would still be payable to him/her hereunder had the Executive continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to his/her devisee, legatee or other designee or, if there is no such designee, to his/her estate.

Confidentiality; Non-Competition; Non-Solicitation.

(a)The Executive acknowledges that: (i) the business of providing healthcare and/or well-being support services, coaching or management in which the Company is engaged (the “Business”) is intensely competitive and that the Executive’s employment by the Company will require that the Executive have access to and knowledge of confidential information of the Company relating to its business plans, financial data, marketing programs, client information, contracts and other trade secrets, in each case other than as and to the extent such information is

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generally known or publicly available through no violation of this Agreement by the Executive,

(ii) the use or disclosure of such information other than in furtherance of the Business may place the Company at a competitive disadvantage and may do damage, monetary or otherwise, to the Business; and (iii) the engaging by the Executive in any of the activities prohibited by this Section shall constitute improper appropriation and/or use of such information. The Executive expressly acknowledges the trade secret status of the Company’s confidential information and that the confidential information constitutes a protectable business interest of the Company. Other than as may be required in the performance of his/her duties, the Executive expressly agrees not to divulge such confidential information to anyone outside the Company without prior permission.

(b)The “Company” (which shall be construed to include the Company, its subsidiaries and their respective affiliates) and the Executive agree that for a period of six (6) months after the Date of Termination of the Executive’s employment for any reason, the Executive shall not:

(i)engage in Competition, as defined below, with the Company or its subsidiaries within any market where the Company is conducting the Business as of termination of the Executive’s employment. For purposes of this Agreement, “Competition” by the Executive shall mean the Executive’s being employed by or acting as a consultant or lender to, or being a director, officer, employee, principal, agent, stockholder, member, owner or partner of, or permitting his/her name to be used in connection with the activities of any entity engaged in the Business, provided that, it shall not be a violation of this sub-paragraph for the Executive to become the registered or beneficial owner of less than five percent (5%) of any class of the capital stock of any one or more competing corporations registered under the 1934 Act, provided that, the Executive does not participate in the business of such corporation until such time as this covenant expires; and

(ii)Executive further agrees that he/she will not, directly or indirectly, for his/her benefit or for the benefit of any other person or entity, do any of the following:

(A)solicit from any customer doing business with the Company as of the Executive’s termination, business of the same or of a similar nature to the Business of the Company with such customer; (B) solicit from any known potential customer of the Company business of the same or of a similar nature to that which, to the knowledge of the Executive, has been the subject of a written or oral bid, offer or proposal by the Company, or of substantial preparation with a view to making such a bid, proposal or offer, within twelve (12) months prior to the Date of Termination; or (C) recruit or solicit the employment or services of any person who was employed by the Company on the Date of Termination of the Executive’s employment and is employed by the Company at the time of such recruitment or solicitation.

(c)The Executive acknowledges that a breach or threatened breach of any part of this Section 6 could cause a loss of significant value to the Company, which loss may not be reasonably or adequately compensated for by damages in an action at law, and that a breach or threatened breach by Executive of any of the provisions contained in this Section will cause the

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Company irreparable injury. The Executive therefore agrees that the Company will be entitled, in addition to any other right or remedy, to a temporary, preliminary and permanent injunction, without the necessity of proving the inadequacy of monetary damages or the posting of any bond or security, enjoining or restraining the Executive from any violation or threatened violations. The Executive acknowledges that the terms of this Section and its obligations are reasonable and will not prohibit Executive from being employed or employable in the health care industry.

(d)If any one or more of the provisions contained in this Agreement shall be held to be excessively broad as to duration, activity or subject, such provisions shall be construed by limiting and reducing them so as to be enforceable to the fullest extent permitted by law.

Termination for Cause; Termination by Executive for Good Reason.

(a)Within twelve (12) months of a change of Control, the Executive's employment may be terminated by the Company, acting in good faith, by written notice to the Executive specifying the event(s) relied upon for such termination upon the occurrence of any of the following events (each of which shall constitute “Cause” for termination):

(i)the continued failure by the Executive to substantially perform his/her duties after written notice and failure to cure within sixty (60) days;

(ii)conviction of a felony or engaging in misconduct which is materially injurious to the Company, monetarily or to its reputation or otherwise, or which would damage Executive's ability to effectively perform his/her duties;

(iii)

theft or dishonesty by the Executive;

(iv)

intoxication while on duty; or

(v)willful violation of Company policies or procedures after written notice and failure to cure within thirty (30) days.

(b)Within twelve (12) months of a Change of Control, the Executive's employment may be terminated by the Executive by written notice of his/her resignation delivered within sixty (60) days after the occurrence of any of the following events, each of which shall constitute “Good Reason” for resignation:

(i)a reduction in the Executive's Base Salary (unless such reduction is part of an across the board reduction affecting all Company executives with a comparable title); or

(ii)a requirement by the Company to relocate the Executive to a location that is greater than twenty-five (25) miles from the location of the office in which the Executive performs his/her duties at the time of such relocation.

8.Entire Agreement. This Agreement contains all the understandings between the parties pertaining to a Change of Control, and supersedes any other undertakings and agreements, whether oral or written, previously entered into by them with respect thereto. The Executive

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represents that, in executing this Agreement, he/she does not rely and has not relied upon any representation or statement not set forth herein made by the Company with regard to the subject matter or effect of this Agreement or otherwise and that Executive has had the opportunity to be represented by counsel of his/her choosing. In the event any of the provisions of this Agreement conflict with or are inconsistent with the provisions of an employment agreement between the Executive and the Company in force as of the date of a Change of Control event occurs, the employment agreement controls.

9.Amendment or Modification; Waiver. No provision of this Agreement may be amended or waived, unless such amendment or waiver is agreed to in writing, signed by the Executive and by a duly authorized officer of the Company. No waiver by any party hereto of any breach by another party hereto of any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of a similar or dissimilar condition or provision at the same time, any prior time or any subsequent time.

10.Notices Any notice to be given hereunder shall be in writing and shall be deemed given when delivered personally, sent by courier, facsimile or registered or certified mail, postage prepaid, return receipt requested, addressed to the party concerned at the address indicated on the signature page or to such other address as such party may subsequently give notice in writing. Any notice delivered personally or by courier shall be deemed given on the date delivered. Any notice sent by facsimile, registered or certified mail, postage prepaid, return receipt requested, shall be deemed given on the date transmitted by facsimile or mailed.

11.Severability. If any provision of this Agreement or the application of any such provision to any party or circumstances shall be determined by any court of competent jurisdiction to be invalid and unenforceable to any extent, the remainder of this Agreement or the application of such provision to such person or circumstances other than those to which it is so determined to be invalid and unenforceable, shall not be affected thereby, and each provision hereof shall be validated and shall be enforced to the fullest extent permitted by law.

12.Survivorship. The respective rights and obligations of the parties hereunder shall survive any termination of this Agreement to the extent necessary to the intended preservation of such rights and obligations.

13.Governing Law. This Agreement will be governed by and construed in accordance with the laws of the State of Tennessee, without regard to the principles of conflicts of law thereof.

14.Headings. All descriptive headings of sections and paragraphs in this Agreement are intended solely for convenience, and no provision of this Agreement is to be construed by reference to the heading of any section or paragraph.

15.Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective as of date set forth above.


	TIVITY HEALTH, INC.
	By: /s/ Mary Flipse 7/3/2018

	EXECUTIVE
	/s/ J. Raymond Bilbao

Addresses for Notice:

Mr. Joseph Raymond Bilbao Address on file

Tivity Health, Inc.

701 Cool Springs Blvd. Franklin, TN 37067 Attn: CEO

w/copy to Chief Legal Officer

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Exhibit 10.6

TIVITY HEALTH, INC.

SECOND AMENDED AND RESTATED 2014 STOCK INCENTIVE PLAN

2020 RESTRICTED STOCK UNIT AWARD AGREEMENT

This 2020 RESTRICTED STOCK UNIT AWARD AGREEMENT (the “Agreement”), dated GRANT DATE (the “Grant Date”), is by and between Tivity Health, Inc., a Delaware corporation (the “Company”), and PARTICIPANT NAME (the “Grantee”), under the Company’s Second Amended and Restated 2014 Stock Incentive Plan (the “Plan”). Terms not otherwise defined herein shall have the meanings given to them in the Grantee’s employment agreement or offer letter with the Company (as may be amended from time to time, the “Employment Agreement”), if applicable, or in the absence of an Employment Agreement or if not defined in an Employment Agreement, then the meanings given to them in the Plan.

Section 1.Restricted Stock Unit Award. The Grantee is hereby granted NUMBER OF UNITS restricted stock units (the “Restricted Stock Units”). Each Restricted Stock Unit represents the right to receive one share of the Company's Common Stock, $.001 par value (the “Stock”), subject to the terms and conditions of this Agreement and the Plan.

Section 2.Vesting of the Award. Except as otherwise provided in Section 3 and Section 5 below, the Restricted Stock Units will vest on the first anniversary of the Grant Date (the “Vesting Date”), as long as the Grantee is serving as an employee of the Company on the Vesting Date. The Company shall issue one share of Stock (in the aggregate, such shares, the “Distributed Shares”) to the Grantee in settlement of each vested Restricted Stock Unit at the time the Restricted Stock Unit vests pursuant to any provision of this Agreement. The Distributed Shares shall be represented by a certificate or by a book-entry.

Section 3.Forfeiture on Termination of Employment.

3.1.Termination by the Company for Cause. If the Grantee’s employment with the Company is involuntarily terminated for Cause, then all Restricted Stock Units that have not vested prior to the date of termination of Grantee’s employment will be forfeited and the Grantee shall have no further rights with respect to such Restricted Stock Units.

3.2.Termination by the Company without Cause or by the Grantee for Good Reason. If Grantee’s employment with the Company (a) is involuntarily terminated by the Company for any reason other than termination for Cause, or (b) is terminated by the Grantee for Good Reason (provided that this subsection (b) shall apply only if Grantee is a party to an Employment Agreement that provides rights to Grantee upon a termination for Good Reason), and such termination occurs on or after August 23, 2020 but prior to the Vesting Date as set forth in Section 2, then, subject to Grantee’s execution of the release of claims in the form attached to the Employment Agreement, if applicable, or, in the absence of an Employment Agreement, in the form acceptable to the Company, the Vesting Date shall be the effective date of Grantee’s termination of employment, and all of the Restricted Stock Units shall vest on such date of termination. If such termination occurs prior to August 23, 2020, then on the date of such termination, the Grantee shall become vested in a pro rata portion of the Restricted Stock Units. The pro rata portion shall be the product of (i) the number of Restricted Stock Units as set forth in Section 1, multiplied by (ii) a fraction, (A) the numerator of which is the number of days of continuous service provided by the Grantee to the Company between April 20, 2020 and the date of termination, and (B) the denominator of which is the lesser of (x) the number of days between the date the Grantee’s employment with the Company began and August 23, 2020, or (y) 126. All Restricted Stock Units that have not vested following such acceleration will be forfeited and the Grantee shall have no further rights with respect to such Restricted Stock Units.

For purposes of this Agreement, the terms “Cause” and “Good Reason” shall have the meanings set forth in the Employment Agreement, if applicable, or, with respect to “Cause” only, in the absence of an Employment Agreement, in the Plan. Any Restricted Stock Units that vest pursuant to this Section 3.2 shall be settled promptly following the Vesting Date (as modified) as provided in Section 2.

3.3.Termination by Reason of Retirement. If the Grantee’s employment by the Company terminates by reason of Retirement (as defined in the Plan), the Restricted Stock Units granted hereunder shall not be forfeited but shall continue to vest and be settled in Stock to the Grantee on the same schedule as provided in Section 2 (or otherwise) as if the Grantee had continued employment through each such Vesting Date (or such other vesting event pursuant to Section 3.4 or Section 5.2).

3.4.Termination by Death or Disability. If the Grantee’s employment by the Company terminates by reason of death or Disability (as defined in the Plan), all of the Restricted Stock Units granted hereunder shall immediately vest.

3.5.Other Termination. If the Grantee’s employment by the Company is terminated for any reason other than as described in Sections 3.1 through 3.4 above, then all Restricted Stock Units that have not vested prior to the date on which Grantee’s employment is terminated will immediately thereupon be forfeited and the Grantee shall have no further rights with respect to such Restricted Stock Units.

Section 4.Voting Rights and Dividends. The Grantee shall be credited with cash dividend equivalents with respect to each Restricted Stock Unit outstanding at the time (and in the amount) of any payment of dividends to stockholders on a share of Stock in accordance with the terms set forth in the Plan, and such dividend equivalents shall accumulate and be paid (in cash, without interest) to the Grantee when and only if the Restricted Stock Units to which they relate become vested and are settled in accordance with this Agreement. The Grantee shall not have any voting rights with respect to the Stock underlying the Restricted Stock Units prior to the issuance of the Distributed Shares. A holder of Distributed Shares shall have full dividend and voting rights as a holder of Stock.

Section 5.Restrictions on Transfer; Change in Control.

5.1.General Restrictions. The Restricted Stock Units shall not be transferable by the Grantee (or his or her legal representative or estate) other than by will or by the laws of descent and distribution. The terms of this Agreement shall be binding on the executors, administrators, heirs and successors of the Grantee.

5.2.Change in Control. If in connection with a Change in Control, the acquiring corporation (or other successor to the Company in the Change in Control) assumes the Restricted Stock Units, Grantee shall continue to vest in (and receive settlement of) the Restricted Stock Units as provided in Sections 2 and 3 hereof; provided, that if Grantee’s employment with the Company (or its successor company) (a) is involuntarily terminated within 12 months following a Change in Control for any reason other than termination for Cause, (b) is terminated by the Grantee for Good Reason within 12 months following a Change in Control and Grantee is a party to an Employment Agreement that provides rights to Grantee upon a termination for Good Reason, or (c) has previously terminated by reason of Retirement as of the date of the Change in Control, all restrictions imposed on the Restricted Stock Units shall thereupon lapse, the Restricted Stock Units will become fully vested, and the Company (or its successor company) shall thereupon settle the Restricted Stock Units in accordance with Section 2. If in connection with a Change in Control, the acquiring corporation (or other successor to the Company in the Change in Control) does not assume the Restricted Stock Units, then the Restricted Stock Units shall vest and be settled in Stock issued to the Grantee immediately prior to the Change in Control.

Section 6.Restrictive Agreement. As a condition to the receipt of any Distributed Shares, the Grantee (or his or her legal representative or estate or any third party transferee), if the Company so requests, will execute an agreement in form satisfactory to the Company in which the Grantee or such other recipient of the shares represents that he or she is purchasing the shares for investment purposes, and not with a view to resale or distribution.

Section 7.Restricted Stock Units Award Subject to Recoupment Policy. If Grantee is an executive officer of the Company, the award of Restricted Stock Units is subject to the Tivity Health, Inc. Compensation Recoupment Policy (the “Policy”), and such Restricted Stock Units, or any amount traceable to the award of Restricted Stock Units, shall be subject to the recoupment obligations described in the Policy.

Section 8.Adjustment. In the event of any merger, reorganization, consolidation, recapitalization, extraordinary cash dividend, stock dividend, stock split or other change in corporate structure affecting the Stock, the number of Restricted Stock Units subject to this Agreement shall be equitably and proportionately adjusted by the Committee in accordance with the Plan without duplication of Section 4.

Section 9.Tax Withholding. The Company shall have the right to require the Grantee to remit to the Company, or to withhold from wages or other amounts payable to the Grantee, an amount necessary to satisfy any federal, state and local withholding tax requirements attributable to the vesting and payment of the Restricted Stock Units prior to the delivery of the Distributed Shares, or may withhold from the Distributed Shares an amount of Stock having a Fair Market Value equal to such federal, state or local taxes as shall be required to be withheld pursuant to any applicable law or regulation.

Section 10.Plan. This Agreement is made under and subject to the provisions of the Plan, and all of the provisions of the Plan that do not conflict with this Agreement are also provisions of this Agreement. If there is a difference or conflict between the provisions of this Agreement and the provisions of the Plan, the provisions of this Agreement will govern. By signing this Agreement, the Grantee confirms that he or she has received a copy of the Plan.

Section 11.Confidentiality, Non-Solicitation and Non-Compete.

(a)

This Section 11(a) shall apply if Grantee has an Employment Agreement or a Nondisclosure and Noncompete Agreement with the Company that contains confidentiality, non-solicitation or non-compete covenants. In the event Grantee breaches any such confidentiality, non-solicitation or non-compete covenants, the Restricted Stock Units shall immediately thereupon expire and be forfeited, and the Company shall be entitled to seek other appropriate remedies it may have available in connection with such breach.

(b)

This Section 11(b) shall apply if Grantee does not have an Employment Agreement or a Nondisclosure and Noncompete Agreement with the Company that contains confidentiality, non-solicitation or non-compete covenants. It is in the interest of all colleagues to protect and preserve the assets of the Company. In this regard, in consideration for granting the Restricted Stock Units and as conditions of Grantee’s ability to receive the Distributed Shares, Grantee acknowledges and agrees that:

(i)

Confidentiality. In the course of Grantee's employment, Grantee will have access to trade secrets and other confidential information of the Company and its clients. Accordingly, Grantee agrees that, without the prior written consent of the Company, Grantee will not, other than in the normal conduct of the Company’s business affairs, divulge, furnish, publish or use for personal benefit or for the direct or indirect benefit of any other person or business

entity, whether or not for monetary gain, any trade secrets or confidential or proprietary information of the Company or its clients, including, without limitation, any information relating to any business methods, marketing and business plans, financial data, systems, customers, suppliers, policies, procedures, techniques or research developed for the benefit of the Company or its clients. Proprietary information includes, but is not limited to, information developed by the Grantee for the Company while employed by the Company. The obligations of the Grantee under this paragraph will continue after the Grantee has left the employment of the Company. Grantee agrees that upon leaving the employment of the Company, Grantee will return to the Company all property and confidential information in the Grantee's possession and agrees not to copy or otherwise record in any way such information.

(ii)

Non-Solicitation. While employed by the Company and for a period of two years thereafter, Grantee shall not, upon Grantee's own behalf or on behalf of any other person or entity, directly or indirectly:

hire or solicit to leave the employ of the Company any person employed by or under contract as an independent contractor to the Company; or

contact, solicit, entice away, or divert any healthcare and/or well-being support services, coaching or management business from any person or entity who is a client or with whom the Company was engaged in discussions as a potential client within one year prior to the date of termination of Grantee.

(iii)

Non-Compete. While employed by the Company and continuing during the period while any amounts are being paid to Grantee by the Company and for a period of 18 months thereafter, Grantee will not own or be employed by or assist anyone else in the conduct of any business (i) which is in competition with any business conducted by the Company or (ii) which Grantee knows the Company was actively evaluating for possible entry, in either case in the United States or in any other jurisdiction in which the Company is engaged in business or has been engaged in business during Grantee’s employment by the Company, or in such jurisdictions where Grantee knows the Company is actively pursuing business opportunities at the time of Grantee’s termination of employment with the Company; provided that ownership of five percent (5%) or less of the voting stock or other ownership interests of any business entity that is listed on a national securities exchange shall not constitute a violation hereof.

In the event Grantee breaches any provisions of this Section 11(b), the Restricted Stock Units shall immediately expire, and the Company shall be entitled to seek other appropriate remedies it may have available in connection with such breach.

Section 12.Miscellaneous.

12.1.Entire Agreement. This Agreement, the Employment Agreement, if applicable, and the Plan contain the entire understanding and agreement between the Company and the Grantee concerning the Restricted Stock Units granted hereby, and supersede any prior or contemporaneous negotiations and understandings. The Company and the Grantee have made no promises, agreements, conditions, or understandings relating to the Restricted Stock Units, either orally or in writing, that are not included in this Agreement, the Employment Agreement, if applicable, or the Plan.

12.2.Employment. By establishing the Plan, granting awards under the Plan, and entering into this Agreement, the Company does not give the Grantee any right to continue to be employed by the Company or to be entitled to any remuneration or benefits not set forth in this Agreement or the Plan.

12.3.Captions. The captions and section numbers appearing in this Agreement are inserted only as a matter of convenience. They do not define, limit, construe, or describe the scope or intent of the provisions of this Agreement.

12.4.Counterparts. This Agreement may be executed in counterparts, each of which when signed by the Company and the Grantee will be deemed an original and all of which together will be deemed the same Agreement.

12.5.Notice. All notices required to be given under this Agreement shall be deemed to be received if delivered or mailed as provided for herein, to the parties at the following addresses, or to such other address as either party may provide in writing from time to time.

To the Company:Tivity Health, Inc.

701 Cool Springs Blvd

Franklin, Tennessee 37067


To the Grantee:	PARTICIPANT NAME
(Grantee name and address)	Address on File
	at Tivity Health

12.6.Amendment. Subject to the restrictions contained in the Plan, the Committee may amend the terms of this Agreement, prospectively or retroactively, but, subject to Section 8 above, no such amendment shall impair the rights of the Grantee hereunder without the Grantee's consent.

12.7.Governing Law. This Agreement shall be governed and construed exclusively in accordance with the law of the State of Delaware applicable to agreements to be performed in the State of Delaware to the extent it may apply.

12.8.Validity; Severability. If, for any reason, any provision hereof shall be determined to be invalid or unenforceable, the validity and effect of the other provisions hereof shall not be affected thereby. Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or any other jurisdiction, but this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein. If any court determines that any provision of this Agreement is unenforceable but has the power to reduce the scope or duration of such provision, as the case may be, such provision, in its reduced form, shall then be enforceable.

12.9.Interpretation; Resolution of Disputes; Section 409A.

(a)It is expressly understood that the Committee is authorized to administer, construe and make all determinations necessary or appropriate to the administration of the Plan and this Agreement, all of which shall be binding upon the Grantee. Any dispute or disagreement which may arise under, or as a result of, or in any way related to, the interpretation, construction or application of this

Agreement shall be determined by the Board. Any determination made hereunder shall be final, binding and conclusive on the Grantee and the Company for all purposes.

(b)Notwithstanding anything herein to the contrary, to the maximum extent permitted by applicable law, the settlement of the Restricted Stock Units (including any dividend equivalent rights) to be made to the Grantee pursuant to this Agreement is intended to qualify as a “short-term deferral” pursuant to Section 1.409A-1(b)(4) of the U.S. Treasury Regulations and this Agreement shall be interpreted consistently therewith. However, under certain circumstances, settlement of the Restricted Stock Units or any dividend equivalent rights may not so qualify, and in that case, the Committee shall administer the grant and settlement of such Restricted Stock Units and any dividend equivalent rights in strict compliance with Section 409A of the Code. Further, notwithstanding anything herein to the contrary, if at the time of a Grantee’s termination of employment with the Company, the Grantee is a “specified employee” as defined in Section 409A of the Code, and the deferral of the commencement of any payments or benefits otherwise payable hereunder as a result of such termination of service is necessary in order to prevent the imposition of any accelerated or additional tax under Section 409A of the Code, then the Company will defer the commencement of the payment of any such payments or benefits hereunder (without any reduction in such payments or benefits ultimately paid or provided to the Grantee) to the minimum extent necessary to satisfy Section 409A of the Code until the date that is six months and one day following the Grantee’s termination of employment with the Company (or the earliest date as is permitted under Section 409A of the Code), if such payment or benefit is payable upon a termination of employment. Application of the term “termination of employment” or similar terms shall be interpreted consistently with the definition of “separation from service” within the meaning of Section 1.409A-1(h) of the U.S. Treasury Regulations. Each payment of Restricted Stock Units (and related dividend equivalent rights) constitutes a “separate payment” for purposes of Section 409A of the Code. If the Restricted Stock Units constitute deferred compensation and are subject to Section 409A of the Code, if a release is required for settlement of Restricted Stock Units and if the period in which to consider and revoke the release begins in one taxable year and ends in a second taxable year, such settlement shall not occur until the second taxable year. Notwithstanding anything in this Agreement to the contrary, Grantee is solely responsible and liable for the satisfaction of all taxes and penalties that may be imposed on him, or in respect of any payment or benefit delivered in connection with this Agreement (including any taxes and penalties under Section 409A of the Code), and the Company shall not have any obligation to indemnify or otherwise hold Grantee harmless from any or all such taxes or penalties.

12.10.Successors in Interest. This Agreement shall inure to the benefit of and be binding upon any successor to the Company. This Agreement shall inure to the benefit of the Grantee’s legal representative and permitted assignees. All obligations imposed upon the Grantee and all rights granted to the Company under this Agreement shall be binding upon the Grantee’s heirs, executors, administrators, successors and assignees.

[remainder of page intentionally left blank; signature page follows]

IN WITNESS WHEREOF, the parties have caused the Restricted Stock Unit Award Agreement to be duly executed as of the day and year first written above.

TIVITY HEALTH, INC.

/s/ Robert J. Greczyn, Jr.

Name:Robert J. Greczyn, Jr.

Title:Interim Chief Executive Officer

GRANTEE: PARTICIPANT NAME

Online Grant Acceptance Satisfies

Signature Requirement

Exhibit 10.7

TIVITY HEALTH, INC.

SECOND AMENDED AND RESTATED 2014 STOCK INCENTIVE PLAN

2020 RESTRICTED STOCK UNIT AWARD AGREEMENT

(DIRECTORS)

This 2020 RESTRICTED STOCK UNIT AWARD AGREEMENT (the "Agreement"), dated GRANT DATE (“Grant Date”), is by and between Tivity Health, Inc., a Delaware corporation (the "Company"), and PARTICIPANT NAME (the "Director"), under the Company's Second Amended and Restated 2014 Stock Incentive Plan (the "Plan"). Terms not otherwise defined herein shall have the meanings given to them in the Plan.

Section 1.Restricted Stock Unit Award. The Director is hereby granted NUMBER OF SHARES restricted stock units (the "Restricted Stock Units"). Each Restricted Stock Unit represents the right to receive one share of the Company's Common Stock, $.001 par value (the "Stock"), subject to the terms and conditions of this Agreement and the Plan.

Section 2.Vesting of the Award. Except as otherwise provided in Section 3 below, the Restricted Stock Units will vest on the first anniversary of the Grant Date (the "Vesting Date"), as long as the Director is serving as a director of the Company on the Vesting Date.

The Company shall issue one share of the Stock to the Director for each vested Restricted Stock Unit (in the aggregate, such shares, the “Distributed Shares”) at the time the Restricted Stock Unit vests pursuant to any provision of this Agreement. The Distributed Shares shall be represented by a certificate or by a book-entry.

Section 3.Termination or Expiration of Director’s Position on the Board

3.1 Termination or Resignation from Board. If the Director shall cease to serve as a director of the Company on or after September 1, 2020 but prior to the Vesting Date as set forth in Section 2 for any reason other than involuntary removal by the stockholders for cause, then the Vesting Date shall be the effective date of such cessation of service as a director of the Company, and all of the Restricted Stock Units shall vest on such date of cessation of service. If such cessation of service as a director occurs prior to September 1, 2020, then on the date of such cessation of service, the Director shall become vested in a pro rata portion of the Restricted Stock Units. The pro rata portion shall be the product of (i) the number of Restricted Stock Units as set forth in Section 1, multiplied by (ii) a fraction, (A) the numerator of which is the number of days of continuous service as a director of the Company between May 1, 2020 and the date of cessation of service as a director, and (B) the denominator of which is 123. All Restricted Stock Units that have not vested following such acceleration will be forfeited and the Director shall have no further rights with respect to such Restricted Stock Units. Any Restricted Stock Units that vest pursuant to this Section 3.1 shall be settled promptly following the Vesting Date (as modified) as provided in Section 2.

3.2 Termination by Reason of Death or Disability. If the Director shall cease to serve as a director of the Corporation by reason of death or Disability (as defined in the Plan),

the Restricted Stock Units granted hereunder shall immediately vest.

3.3 Termination for any Other Reason. If the Director shall cease to be a director of the Company as a result of removal by the stockholders for cause or any other reason other than as set forth in Section 3.1 or Section 3.2 above, all Restricted Stock Units that have not vested prior to the date the Director ceases to be a director of the Company will be forfeited and the Director shall have no further rights with respect to such Restricted Stock Units.

Section 4.Voting Rights and Dividends. The Director shall be credited with cash dividend equivalents with respect to each Restricted Stock Unit outstanding at the time (and in the amount) of any payment of dividends to stockholders on a share of Stock in accordance with the terms set forth in the Plan, and such dividend equivalents shall accumulate and be paid (in cash, without interest) to the Director when the Restricted Stock Units to which they relate vest in accordance with this Agreement. The Director shall not have any voting rights with respect to the Stock underlying the Restricted Stock Units prior to the vesting of the Restricted Stock Units and the issuance of Stock as set forth in Section 2. A holder of Distributed Shares shall have full dividend and voting rights as a holder of Stock.

Section 5.Restrictions on Transfer; Change in Control.

5.1 General Restrictions. The Restricted Stock Units shall not be transferable by the Director (or his or her legal representative or estate) other than by will or by the laws of descent and distribution. The terms of this Agreement shall be binding on the executors, administrators, heirs and successors of the Director.

5.2 Change in Control. All restrictions imposed on the Restricted Stock Units shall expire automatically and the Restricted Stock Units granted hereby shall be deemed fully vested upon a Change in Control, as such term is defined in the Plan, and the Distributed Shares related thereto shall be outstanding at the effective time of such Change in Control.

Section 6.Restrictive Agreement. As a condition to the receipt of any Distributed Shares, the Director (or his or her legal representative or estate or any third party transferee), if the Company so requests, will execute an agreement in form satisfactory to the Company in which the Director or such other recipient of the shares represents that he or she is purchasing the shares for investment purposes, and not with a view to resale or distribution.

Section 7.Adjustment. In the event of any merger, reorganization, consolidation, recapitalization, extraordinary cash dividend, stock dividend, stock split or other change in corporate structure affecting the Stock, the number of Restricted Stock Units subject to this Agreement shall be equitably and proportionately adjusted (without duplication of Section 4) by the Committee in accordance with the Plan.

Section 8.[Intentionally Omitted]

Section 9.Plan. This Agreement is made under and subject to the provisions of the Plan, and all of the provisions of the Plan are also provisions of this Agreement. If there is a

difference or conflict between the provisions of this Agreement and the provisions of the Plan, the provisions of the Plan will govern. By signing this Agreement, the Director confirms that he or she has received a copy of the Plan.

Section 10.Miscellaneous.

10.1Entire Agreement. This Agreement and the Plan contain the entire understanding and agreement between the Company and the Director concerning the Restricted Stock Units granted hereby, and supersede any prior or contemporaneous negotiations and understandings. The Company and the Director have made no promises, agreements, conditions, or understandings relating to the Restricted Stock Units, either orally or in writing, that are not included in this Agreement or the Plan.

10.2Captions. The captions and section numbers appearing in this Agreement are inserted only as a matter of convenience. They do not define, limit, construe, or describe the scope or intent of the provisions of this Agreement.

10.3Counterparts. This Agreement may be executed in counterparts, each of which when signed by the Company and the Director will be deemed an original and all of which together will be deemed the same Agreement.

10.4Notice. All notices required to be given under this Agreement shall be deemed to be received if delivered or mailed as provided for herein, to the parties at the following addresses, or to such other address as either party may provide in writing from time to time.

To the Company:Tivity Health, Inc.

701 Cool Springs Blvd

Franklin, Tennessee 37067


To the Director:	PARTICIPANT NAME
(Director name and address)	Address on File
	at the Company

10.5Amendment. Subject to the restrictions contained in the Plan, the Committee may amend the terms of this Agreement, prospectively or retroactively, but, subject to Section 7 above, no such amendment shall impair the rights of the Director hereunder without the Director's consent.

10.6Governing Law. This Agreement shall be governed and construed exclusively in accordance with the law of the State of Delaware applicable to agreements to be performed in the State of Delaware to the extent it may apply.

10.7Validity; Severability. If, for any reason, any provision hereof shall be determined to be invalid or unenforceable, the validity and effect of the other provisions hereof

shall not be affected thereby. Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or any other jurisdiction, but this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein. If any court determines that any provision of this Agreement is unenforceable but has the power to reduce the scope or duration of such provision, as the case may be, such provision, in its reduced form, shall then be enforceable.

10.8 Interpretation; Resolution of Disputes. It is expressly understood that the Committee is authorized to administer, construe and make all determinations necessary or appropriate to the administration of the Plan and this Agreement, all of which shall be binding upon the Director. Any dispute or disagreement which may arise under, or as a result of, or in any way related to, the interpretation, construction or application of this Agreement shall be determined by the Board. Any determination made hereunder shall be final, binding and conclusive on the Director and the Company for all purposes.

10.9Successors in Interest. This Agreement shall inure to the benefit of and be binding upon any successor to the Company. This Agreement shall inure to the benefit of the Director’s legal representative and permitted assignees. All obligations imposed upon the Director and all rights granted to the Company under this Agreement shall be binding upon the Director's heirs, executors, administrators, successors and assignees.

[remainder of page intentionally left blank; signature page follows]

IN WITNESS WHEREOF, the parties have caused the Restricted Stock Unit Agreement to be duly executed as of the day and year first written above.


		TIVITY HEALTH, INC.
		/s/ Robert J. Greczyn, Jr. Name:Robert J. Greczyn, Jr. Title:Interim Chief Executive Officer

DIRECTOR: PARTICIPANT NAME

Online Grant Acceptance Satisfies

Signature Requirement

Exhibit 10.8

TIVITY HEALTH, INC.

SECOND AMENDED AND RESTATED 2014 STOCK INCENTIVE PLAN

2020 RESTRICTED STOCK UNIT AWARD AGREEMENT

Section 3.Forfeiture on Termination of Employment.

3.2.Termination by the Company without Cause or by the Grantee for Good Reason. If Grantee’s employment with the Company (a) is involuntarily terminated by the Company for any reason other than termination for Cause, or (b) is terminated by the Grantee for Good Reason (provided that this subsection (b) shall apply only if Grantee is a party to an Employment Agreement that provides rights to Grantee upon a termination for Good Reason), and such termination occurs on or after December 31, 2020 but prior to the Vesting Date as set forth in Section 2, then, subject to Grantee’s execution of the release of claims in the form attached to the Employment Agreement, if applicable, or, in the absence of an Employment Agreement, in the form acceptable to the Company, the Vesting Date shall be the effective date of Grantee’s termination of employment, and all of the Restricted Stock Units shall vest on such date of termination. If such termination occurs prior to December 31, 2020, then on the date of such termination, the Grantee shall become vested in a pro rata portion of the Restricted Stock Units. The pro rata portion shall be the product of (i) the number of Restricted Stock Units as set forth in Section 1, multiplied by (ii) a fraction, (A) the numerator of which is the number of days of continuous service provided by the Grantee to the Company between July 1, 2020 and the date of termination, and (B) the denominator of which is 184. All Restricted Stock Units that have not vested following such acceleration will be forfeited and the Grantee shall have no further rights with respect to such Restricted Stock Units. For purposes of this Agreement, the terms “Cause” and “Good Reason” shall have the meanings set forth in the Employment Agreement, if

applicable, or, with respect to “Cause” only, in the absence of an Employment Agreement, in the Plan. Any Restricted Stock Units that vest pursuant to this Section 3.2 shall be settled promptly following the Vesting Date (as modified) as provided in Section 2.

Section 5.Restrictions on Transfer; Change in Control.

Section 11.Confidentiality, Non-Solicitation and Non-Compete.

(a)

(b)

(i)

(ii)

hire or solicit to leave the employ of the Company any person employed by or under contract as an independent contractor to the Company; or

(iii)

Section 12.Miscellaneous.

To the Company:Tivity Health, Inc.

701 Cool Springs Blvd

Franklin, Tennessee 37067


To the Grantee:	PARTICIPANT NAME
(Grantee name and address)	Address on File
	at Tivity Health

12.9.Interpretation; Resolution of Disputes; Section 409A.

conclusive on the Grantee and the Company for all purposes.

[remainder of page intentionally left blank; signature page follows]

IN WITNESS WHEREOF, the parties have caused the Restricted Stock Unit Award Agreement to be duly executed as of the day and year first written above.

TIVITY HEALTH, INC.

/s/ Mary S. Flipse

Name:Mary S. Flipse

Title:Chief Legal Officer

GRANTEE: PARTICIPANT NAME

Online Grant Acceptance Satisfies

Signature Requirement

Exhibit 10.9

TIVITY HEALTH, INC.

SECOND AMENDED AND RESTATED 2014 STOCK INCENTIVE PLAN

2020 RESTRICTED STOCK UNIT AWARD AGREEMENT

Section 3.Forfeiture on Termination of Employment.

3.2.Termination by the Company without Cause or by the Grantee for Good Reason. If Grantee’s employment with the Company (a) is involuntarily terminated by the Company for any reason other than termination for Cause, or (b) is terminated by the Grantee for Good Reason (provided that this subsection (b) shall apply only if Grantee is a party to an Employment Agreement that provides rights to Grantee upon a termination for Good Reason), and such termination occurs on or after December 31, 2020 but prior to the Vesting Date as set forth in Section 2, then, subject to Grantee’s execution of the release of claims in the form attached to the Employment Agreement, if applicable, or, in the absence of an Employment Agreement, in the form acceptable to the Company, the Vesting Date shall be the effective date of Grantee’s termination of employment, and all of the Restricted Stock Units shall vest on such date of termination. If such termination occurs prior to December 31, 2020, then on the date of such termination, the Grantee shall become vested in a pro rata portion of the Restricted Stock Units. The pro rata portion shall be the product of (i) the number of Restricted Stock Units as set forth in Section 1, multiplied by (ii) a fraction, (A) the numerator of which is the number of days of continuous service provided by the Grantee to the Company between August 24, 2020 and the date of termination, and (B) the denominator of which is the lesser of (x) the number of days between the date the Grantee’s employment with the Company began and December 31, 2020, or (y) 130. All Restricted Stock Units that have not vested following such acceleration will be forfeited and the Grantee shall have no further rights with respect to such Restricted Stock Units.

Section 5.Restrictions on Transfer; Change in Control.

Section 11.Confidentiality, Non-Solicitation and Non-Compete.

(a)

(b)

(i)

(ii)

hire or solicit to leave the employ of the Company any person employed by or under contract as an independent contractor to the Company; or

(iii)

Section 12.Miscellaneous.

To the Company:Tivity Health, Inc.

701 Cool Springs Blvd

Franklin, Tennessee 37067


To the Grantee:	PARTICIPANT NAME
(Grantee name and address)	Address on File
	at Tivity Health

12.9.Interpretation; Resolution of Disputes; Section 409A.

conclusive on the Grantee and the Company for all purposes.

[remainder of page intentionally left blank; signature page follows]

IN WITNESS WHEREOF, the parties have caused the Restricted Stock Unit Award Agreement to be duly executed as of the day and year first written above.

TIVITY HEALTH, INC.

/s/ Mary S. Flipse

Name:Mary S. Flipse

Title:Chief Legal Officer

GRANTEE: PARTICIPANT NAME

Online Grant Acceptance Satisfies

Signature Requirement

Exhibit 10.10

TIVITY HEALTH, INC.

SECOND AMENDED AND RESTATED 2014 STOCK INCENTIVE PLAN

2020 RESTRICTED STOCK UNIT AWARD AGREEMENT

(DIRECTORS)

Section 3.Termination or Expiration of Director’s Position on the Board

3.1 Termination or Resignation from Board. If the Director shall cease to serve as a director of the Company on or after December 31, 2020 but prior to the Vesting Date as set forth in Section 2 for any reason other than involuntary removal by the stockholders for cause, then the Vesting Date shall be the effective date of such cessation of service as a director of the Company, and all of the Restricted Stock Units shall vest on such date of cessation of service. If such cessation of service as a director occurs prior to December 31, 2020, then on the date of such cessation of service, the Director shall become vested in a pro rata portion of the Restricted Stock Units. The pro rata portion shall be the product of (i) the number of Restricted Stock Units as set forth in Section 1, multiplied by (ii) a fraction, (A) the numerator of which is the number of days of continuous service as a director of the Company between September 1, 2020 and the date of cessation of service as a director, and (B) the denominator of which is 122. All Restricted Stock Units that have not vested following such acceleration will be forfeited and the Director shall have no further rights with respect to such Restricted Stock Units. Any Restricted Stock Units that vest pursuant to this Section 3.1 shall be settled promptly following the Vesting Date (as modified) as provided in Section 2.

3.2 Termination by Reason of Death or Disability. If the Director shall cease to serve as a director of the Corporation by reason of death or Disability (as defined in the Plan),

the Restricted Stock Units granted hereunder shall immediately vest.

Section 5.Restrictions on Transfer; Change in Control.

Section 8.[Intentionally Omitted]

Section 9.Plan. This Agreement is made under and subject to the provisions of the Plan, and all of the provisions of the Plan are also provisions of this Agreement. If there is a

Section 10.Miscellaneous.

To the Company:Tivity Health, Inc.

701 Cool Springs Blvd

Franklin, Tennessee 37067


To the Director:	PARTICIPANT NAME
(Director name and address)	Address on File
	at the Company

10.7Validity; Severability. If, for any reason, any provision hereof shall be determined to be invalid or unenforceable, the validity and effect of the other provisions hereof

[remainder of page intentionally left blank; signature page follows]

IN WITNESS WHEREOF, the parties have caused the Restricted Stock Unit Agreement to be duly executed as of the day and year first written above.


		TIVITY HEALTH, INC.
		/s/ Mary S. Flipse Name:Mary S. Flipse Title:Chief Legal Officer

DIRECTOR: PARTICIPANT NAME

Online Grant Acceptance Satisfies

Signature Requirement

Exhibit 31.1

CERTIFICATION

I, Richard M. Ashworth, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Tivity Health, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: May 7, 2021

	/s/ Richard M. Ashworth
	Richard M. Ashworth
	Chief Executive Officer

Exhibit 31.2

CERTIFICATION

I, Adam C. Holland, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Tivity Health, Inc.;

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: May 7, 2021

	/s/ Adam C. Holland
	Adam C. Holland
	Chief Financial Officer

Exhibit 32

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Tivity Health, Inc. (the "Company") on Form 10-Q for the quarter ended March 31, 2021, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), we, Richard M. Ashworth, Chief Executive Officer of the Company, and Adam C. Holland, Chief Financial Officer of the Company, each certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to our knowledge:

(1)

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Richard M. Ashworth

Richard M. Ashworth

Chief Executive Officer

May 7, 2021

/s/ Adam C. Holland

Adam C. Holland

Chief Financial Officer

May 7, 2021