REVENUES OF $150 MILLION AND DILUTED EPS OF $0.49
ANNOUNCES HIRING OF CHIEF BRAND OFFICER
NASHVILLE, Tenn., April 23, 2018 (GLOBE NEWSWIRE) -- Tivity Health, Inc. (NASDAQ:TVTY) today announced financial results for the first quarter ended March 31, 2018 and appointed marketing industry veteran Arra Yerganian to the newly created role of Chief Brand Officer.
First-Quarter 2018 Financial Highlights
TIVITY HEALTH, INC. | ||||||
Financial Highlights | ||||||
(Dollars in millions, except per-share data) | ||||||
See pages 9-10 for a reconciliation of non-GAAP financial measures | ||||||
Three Months Ended March 31, | ||||||
2018 | 2017 | |||||
Revenues | $ | 149.9 | $ | 141.0 | ||
Per diluted share: | ||||||
Income from continuing operations, GAAP basis | $ | 0.49 | $ | 0.38 | ||
Business separation expense | — | 0.02 | ||||
Restructuring charges | — | 0.01 | ||||
Adjusted income from continuing operations, non-GAAP basis (1) | $ | 0.49 | $ | 0.42 | ||
Weighted average diluted common shares outstanding (in thousands) | 43,589 | 40,541 |
(1) Figures may not add due to rounding.
“We are pleased with our first-quarter financial performance due in no small part to the relentless efforts of our nearly 500 colleagues,” said Donato Tramuto, Tivity Health’s Chief Executive Officer. “Our focus on the fundamentals of the A-B-C-D strategy and our digital marketing investments have further strengthened our brands, leading us to affirm our financial guidance for the year.
“We are also pleased to announce the hiring of Arra Yerganian for the newly created role of Chief Brand Officer. Arra, formerly Chief Marketing and Branding Officer for Sutter Health, joined Tivity Health last week and will focus on executing a unified brand voice and marketing strategy for Tivity Health and its products. Arra has a proven track record designing and implementing innovative marketing plans that drive revenue and increase brand loyalty. We have an opportunity to further leverage the power of the SilverSneakers® brand to the over 12 million base of members who have yet to enroll in the program even though they receive it for free. Our 2017 awareness campaign has been successful and we now have an opportunity to convert awareness into increased enrollment and increased engagement – converting our market share to more members.”
Adam Holland, Tivity Health’s Chief Financial Officer added, “Although our top line growth was pressured by the impact of flu and extreme winter weather, our first-quarter financial performance delivered a strong EBITDA margin and a meaningful increase in cash on our balance sheet. We are well-positioned to execute on our 2018 initiatives and make the investments in the business that we expect will contribute to sustainable profit growth for the long term.”
Affirms 2018 Financial Guidance
Tivity Health announced today that based on first quarter results and the Company’s outlook for the remainder of 2018 it has affirmed financial guidance for 2018, which includes:
This guidance for 2018 also includes:
Conference Call
Tivity Health will hold a conference call to discuss this release today at 5:00 p.m. Eastern Time. Investors will have the opportunity to listen to the conference call live over the Internet by going to www.tivityhealth.com and clicking Investors at least 15 minutes early to register, download and install any necessary audio software. For those who cannot listen to the live broadcast, a telephonic replay will be available for one week at 719-457-0820, code 2892276, and the replay will also be available on the Company’s web site for the next 12 months.
Safe Harbor Provisions
This press release contains forward-looking statements, including our guidance and financial expectations for future periods, 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. Those 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 and results of operations. Those forward-looking statements are subject to the finalization of the Company’s quarterly financial accounting procedures and may be affected by certain risks and uncertainties, including, but not limited to:
The Company undertakes no obligation to update or revise any such forward-looking statements.
About Tivity Health
Tivity Health, Inc. is a leading provider of fitness and health improvement programs, with strong capabilities in developing and managing network solutions. Through its existing three networks, SilverSneakers® - the nation’s leading community fitness program for older adults, Prime® Fitness, and WholeHealth Living™, Tivity Health is focused on targeted population health for those 50 and over. With more than 15 million Americans eligible for SilverSneakers, over 10,000 fitness centers in the Prime Fitness Network, and more than 25 years of clinical and operational expertise in managing specialty health benefits and networks, including chiropractic services, physical therapy, occupational therapy, speech therapy, acupuncture, massage and complementary and alternative medicine (CAM) services, the Company touches millions of consumers across the country and works directly with hundreds of healthcare practitioners and many of the nation’s largest payers and employers. Learn more at www.tivityhealth.com.
TIVITY HEALTH, INC. | ||||||||
CONSOLIDATED BALANCE SHEETS | ||||||||
(In thousands) | ||||||||
(Unaudited) | ||||||||
ASSETS | ||||||||
| March 31, 2018 | December 31, 2017 | ||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 38,792 | $ | 28,440 | ||||
Accounts receivable, net | 67,582 | 55,113 | ||||||
Prepaid expenses | 3,485 | 3,444 | ||||||
Other current assets | 4,779 | 2,180 | ||||||
Cash convertible notes hedges | 157,143 | 134,079 | ||||||
Income taxes receivable | — | 39 | ||||||
Total current assets | 271,781 | 223,295 | ||||||
Property and equipment: | ||||||||
Leasehold improvements | 10,396 | 10,384 | ||||||
Computer equipment and related software | 21,022 | 19,508 | ||||||
Furniture and office equipment | 8,188 | 8,194 | ||||||
Capital projects in process | 1,461 | 1,105 | ||||||
41,067 | 39,191 | |||||||
Less accumulated depreciation | (29,650 | ) | (28,533 | ) | ||||
11,417 | 10,658 | |||||||
Other assets | 27,524 | 13,315 | ||||||
Long-term deferred tax asset | 18,076 | 25,166 | ||||||
Intangible assets, net | 29,049 | 29,049 | ||||||
Goodwill, net | 334,680 | 334,680 | ||||||
Total assets | $ | 692,527 | $ | 636,163 | ||||
TIVITY HEALTH, INC. | ||||||||
CONSOLIDATED BALANCE SHEETS | ||||||||
(In thousands, except share and per share data) | ||||||||
(Unaudited) | ||||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
March 31, 2018 | December 31, 2017 | |||||||
Current liabilities: | ||||||||
Accounts payable | $ | 26,941 | $ | 26,804 | ||||
Accrued salaries and benefits | 6,661 | 15,018 | ||||||
Accrued liabilities | 44,971 | 33,527 | ||||||
Other current liabilities | 750 | 984 | ||||||
Cash conversion derivative | 157,143 | 134,079 | ||||||
Current portion of long-term debt | 147,831 | 145,959 | ||||||
Current portion of long-term liabilities | 1,709 | 2,262 | ||||||
Total current liabilities | 386,006 | 358,633 | ||||||
Other long-term liabilities | 11,946 | 5,577 | ||||||
Stockholders' equity: | ||||||||
Preferred stock $.001 par value, 5,000,000 shares authorized, none outstanding | — | — | ||||||
Common stock $.001 par value, 120,000,000 shares authorized, 39,847,047 and 39,729,580 shares outstanding, respectively | 40 | 40 | ||||||
Additional paid-in capital | 350,529 | 349,243 | ||||||
Accumulated deficit | (27,812 | ) | (49,148 | ) | ||||
Treasury stock, at cost, 2,254,953 shares in treasury | (28,182 | ) | (28,182 | ) | ||||
Total stockholders' equity | 294,575 | 271,953 | ||||||
Total liabilities and stockholders' equity | $ | 692,527 | $ | 636,163 | ||||
TIVITY HEALTH, INC. | |||||||
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | |||||||
(In thousands, except earnings (loss) per share data) | |||||||
(Unaudited) | |||||||
Three Months Ended | |||||||
March 31, | |||||||
2018 | 2017 | ||||||
Revenues | $ | 149,930 | $ | 140,970 | |||
Cost of services (exclusive of depreciation and amortization of $975 and $657, respectively, included below) | 108,277 | 102,399 | |||||
Selling, general & administrative expenses | 8,583 | 8,361 | |||||
Depreciation and amortization | 1,123 | 787 | |||||
Restructuring and related charges | — | 737 | |||||
Operating income | 31,947 | 28,686 | |||||
Interest expense | 3,454 | 3,834 | |||||
Income before income taxes | 28,493 | 24,852 | |||||
Income tax expense | 7,157 | 9,371 | |||||
Net income from continuing operations | 21,336 | 15,481 | |||||
Loss from discontinued operations, net of income tax benefit | — | (220 | ) | ||||
Net income | $ | 21,336 | $ | 15,261 | |||
Earnings (loss) per share - basic: | |||||||
Continuing operations | $ | 0.54 | $ | 0.40 | |||
Discontinued operations | $ | — | $ | (0.01 | ) | ||
Net income | $ | 0.54 | $ | 0.39 | |||
Earnings (loss) per share - diluted: | |||||||
Continuing operations | $ | 0.49 | $ | 0.38 | |||
Discontinued operations | $ | — | $ | (0.01 | ) | ||
Net income (1) | $ | 0.49 | $ | 0.38 | |||
Comprehensive income | $ | 21,336 | $ | 15,372 | |||
Weighted average common shares | |||||||
and equivalents: | |||||||
Basic | 39,783 | 39,069 | |||||
Diluted | 43,589 | 40,541 | |||||
(1) Figures may not add due to rounding. | |||||||
TIVITY HEALTH, INC. | ||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
(In thousands) | ||||||||
(Unaudited) | ||||||||
Three Months Ended March 31, | ||||||||
2018 | 2017 | |||||||
Cash flows from operating activities: | ||||||||
Net income from continuing operations | $ | 21,336 | $ | 15,481 | ||||
Net loss from discontinued operations | — | (220 | ) | |||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 1,123 | 793 | ||||||
Amortization of deferred loan costs | 522 | 516 | ||||||
Amortization of debt discount | 2,044 | 1,931 | ||||||
Share-based employee compensation expense | 1,410 | 1,446 | ||||||
Loss on sale of TPHS business | — | 310 | ||||||
Deferred income taxes | 7,090 | 8,972 | ||||||
Increase in accounts receivable, net | (12,712 | ) | (16,459 | ) | ||||
Decrease (increase) in other current assets | 2,037 | (441 | ) | |||||
(Decrease) increase in accounts payable | (916 | ) | 1,337 | |||||
Decrease in accrued salaries and benefits | (9,007 | ) | (12,099 | ) | ||||
(Decrease) increase in other current liabilities | (1,185 | ) | 2,642 | |||||
Other | 625 | (1,185 | ) | |||||
Net cash flows provided by operating activities | $ | 12,367 | $ | 3,024 | ||||
Cash flows from investing activities: | ||||||||
Acquisition of property and equipment | $ | (1,946 | ) | $ | (1,234 | ) | ||
Net cash flows used in investing activities | $ | (1,946 | ) | $ | (1,234 | ) | ||
Cash flows from financing activities: | ||||||||
Proceeds from issuance of long-term debt | 8,400 | 109,975 | ||||||
Payments of long-term debt | (8,793 | ) | (115,465 | ) | ||||
Payments related to tax withholding for share-based compensation | (894 | ) | (885 | ) | ||||
Exercise of stock options | 771 | 2,250 | ||||||
Change in cash overdraft and other | 378 | 1,155 | ||||||
Net cash flows used in financing activities | $ | (138 | ) | $ | (2,970 | ) | ||
Effect of exchange rate changes on cash | $ | 69 | $ | 242 | ||||
Net increase (decrease) in cash and cash equivalents | $ | 10,352 | $ | (938 | ) | |||
Cash and cash equivalents, beginning of period | 28,440 | 1,602 | ||||||
Cash and cash equivalents, end of period | $ | 38,792 | $ | 664 | ||||
TIVITY HEALTH, INC. | |||||||
RECONCILIATION OF NON-GAAP MEASURES TO GAAP MEASURES | |||||||
(Unaudited) | |||||||
Reconciliation of Adjusted Income from Continuing Operations, Non-GAAP Basis and | |||||||
Adjusted Income from Continuing Operations Per Share, Non-GAAP Basis to | |||||||
Income from Continuing Operations, GAAP Basis and | |||||||
Income from Continuing Operations Per Share, GAAP Basis | |||||||
Three Months Ended March 31, 2017 | |||||||
$ in thousands | Per Share | ||||||
Adjusted income from continuing operations, non-GAAP basis (1) | $ | 16,917 | $ | 0.42 | |||
Net loss attributable to business separation expenses (2) | (991 | ) | (0.02 | ) | |||
Net loss attributable to restructuring charges (3) | (445 | ) | (0.01 | ) | |||
Income from continuing operations, GAAP basis (4) | $ | 15,481 | $ | 0.38 |
(1) Adjusted income from continuing operations and adjusted income from continuing operations per share are non-GAAP financial measures. The Company excludes net loss attributable to business separation expenses and restructuring charges from these measures because of their comparability to the Company's historical operating results. The Company believes it is useful to investors to provide disclosures of its operating results and guidance on the same basis as that used by management. You should not consider adjusted income from continuing operations and adjusted income from continuing operations per share in isolation or as a substitute for income from continuing operations or income from continuing operations per share determined in accordance with accounting principles generally accepted in the United States.
(2) Net loss attributable to business separation costs consists of pre-tax charges of $1,639,000 for the three months ended March 31, 2017 related to the separation of the Network Solutions business from the disposed total population health business. The tax rate applied to these costs was 39.55%, which represented the combined estimated U.S. federal and state statutory tax rate.
(3) Net loss attributable to restructuring charges consists of pre-tax charges of $737,000 for the three months ended March 31, 2017 associated with the 2016 restructuring of corporate support infrastructure. The tax rate applied to these restructuring charges was 39.55%, which represented the combined estimated U.S. federal and state statutory tax rate.
(4) Figures may not add due to rounding.
Reconciliation of Adjusted EBITDA from Continuing Operations, Non-GAAP Basis | |||||||||
to Income from Continuing Operations, GAAP Basis | |||||||||
(In thousands) | |||||||||
Three Months Ended March 31, 2018 | Three Months Ended March 31, 2017 | ||||||||
Adjusted EBITDA from continuing operations, non-GAAP basis (5) | $ | 33,070 | $ | 31,849 | |||||
Business separation costs (6) | — | (1,639 | ) | ||||||
Restructuring charges (7) | — | (737 | ) | ||||||
EBITDA from continuing operations, non-GAAP basis (8) | $ | 33,070 | $ | 29,473 | |||||
Depreciation and amortization | (1,123 | ) | (787 | ) | |||||
Interest expense | (3,454 | ) | (3,834 | ) | |||||
Income tax expense | (7,157 | ) | (9,371 | ) | |||||
Income from continuing operations, GAAP basis | $ | 21,336 | $ | 15,481 |
(5) Adjusted EBITDA from continuing operations is a non-GAAP financial measure. The Company excludes business separation costs and restructuring charges from this measure because of its comparability to the Company's historical operating results. The Company believes it is useful to investors to provide disclosures of its operating results and guidance 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 accounting principles generally accepted in the United States (“U.S. GAAP”).
(6) Business separation costs consists of pre-tax charges of $1,639,000 for the three months ended March 31, 2017 related to the separation of the Network Solutions business from the disposed total population health business.
(7) Restructuring charges consists of pre-tax charges of $737,000 for the three months ended March 31, 2017 associated with the 2016 restructuring of corporate support infrastructure.
(8) EBITDA from continuing operations is a non-GAAP financial measure. The Company believes it is useful to investors to provide disclosures of its 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.
Reconciliation of Free Cash Flow, Non-GAAP Basis to | |||
Net Cash Flows Provided By Operating Activities, GAAP Basis (in thousands) | |||
Three Months Ended March 31, 2018 | |||
Free cash flow, non-GAAP basis (9) | $ | 10,421 | |
Acquisition of property and equipment | 1,946 | ||
Net cash flows provided by operating activities, GAAP basis | $ | 12,367 |
(9) Free cash flow is a non-GAAP financial measure and is defined by the Company as net cash flows provided by operating activities less acquisition of property and equipment. The Company believes free cash flow is a useful measure of performance and an indication of the strength of the Company and its ability to generate cash. The Company believes it is useful to investors to provide disclosures of its results on the same basis as that used by management. You should not consider free cash flow in isolation or as a substitute for net cash flows provided by operating activities determined in accordance with U.S. GAAP.
Reconciliation of EBITDA Guidance, Non-GAAP Basis | |||
to Net Income Guidance, GAAP Basis | |||
(In millions) | |||
Year Ending December 31, 2018 | |||
EBITDA guidance, non-GAAP basis (10) | $ | 139 - 144 | |
Depreciation and amortization | (4 | ) | |
Interest expense | (8 | ) | |
Income tax expense | (34 - 36 | ) | |
Net income guidance, GAAP basis | $ | 93 - 96 |
(10) EBITDA guidance is a non-GAAP financial measure. The Company believes it is useful to investors to provide disclosures of its operating results and guidance on the same basis as that used by management. You should not consider EBITDA guidance in isolation or as a substitute for net income guidance determined in accordance with U.S. GAAP.
Investor Relations Contact:
Bob East, Westwicke Partners
(443) 213-0500
Tivity@Westwicke.com