NASHVILLE, Tenn., Aug. 2, 2018 /PRNewswire/ -- Tivity Health, Inc. (NASDAQ:TVTY) today announced financial results for the second quarter ended June 30, 2018.
Second-Quarter 2018 Financial Highlights
- Revenues increased by 9.3% to $151.9 million compared to revenues of $138.9 million for the second quarter of 2017.
- Income from continuing operations increased by 31.6% to $22.7 million, compared to $17.2 million for the second quarter of 2017. Adjusted income from continuing operations increased by 32.3% to $22.8 million, compared to $17.2 million for the second quarter of 2017. Adjusted income from continuing operations is a non-GAAP financial measure. See pages 9-11 for a reconciliation of non-GAAP financial measures.
- Income from continuing operations per diluted share increased by 26.8% to $0.52, compared to $0.41 for the second quarter of 2017. Adjusted income from continuing operations per diluted share increased by 29.3% to $0.53 compared to $0.41 for the second quarter of 2017. Adjusted income from continuing operations per diluted share is a non-GAAP financial measure. See pages 9-11 for a reconciliation of non-GAAP financial measures.
- EBITDA was $35.0 million, or 23.0% of revenues, compared to $31.7 million, or 22.8% of revenues, for the second quarter of 2017. Adjusted EBITDA was $35.1 million compared to $31.7 million for the second quarter of 2017, both of which exclude restructuring charges. See pages 9-11 for a reconciliation of non-GAAP financial measures.
- Cash flow from operations was $28.9 million and free cash flow totaled $27.2 million. See pages 9-11 for a reconciliation of non-GAAP financial measures.
TIVITY HEALTH, INC. |
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Financial Highlights |
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(Dollars in millions, except per-share data) |
|||||||||
See pages 9-11 for a reconciliation of non-GAAP financial measures |
|||||||||
Three Months Ended |
|||||||||
2018 |
2017 |
||||||||
Revenues |
$ |
151.9 |
138.9 |
||||||
Per diluted share: |
|||||||||
Income from continuing operations, GAAP basis |
$ |
0.52 |
0.41 |
||||||
Restructuring charges |
0.00 |
(0.00) |
|||||||
Adjusted income from continuing operations, non-GAAP basis (1) |
$ |
0.53 |
0.41 |
||||||
Weighted average diluted common shares outstanding (in thousands) |
43,284 |
42,369 |
(1) |
Figures may not add due to rounding. |
"We are pleased with our second-quarter financial results, which were driven by strong performance in our SilverSneakers® business," said Donato Tramuto, Tivity Health's Chief Executive Officer. "As expected, our SilverSneakers visits rebounded during the second quarter, reaffirming our belief that the reduction in visits during the first quarter was due in large part to the severe flu season and adverse weather.
"Our focus on increasing enrollment and participation of our SilverSneakers members is yielding early results and affirms our confidence in being able to reach our goal of 5 million enrolled SilverSneakers members by the end of 2020. Additionally, our new relationship announced today with AARP will continue to drive new growth in our Prime® Fitness business by focusing on an underserved segment of the age 50-plus population."
Reaffirms 2018 Financial Guidance
Based on the Company's performance through the first half of 2018 and its outlook for the remainder of 2018, Tivity Health reaffirmed financial guidance for 2018, which includes:
- Revenues in a range of $607 million to $625 million;
- EBITDA in a range of $139 million to $144 million; and
- Earnings per diluted share in a range of $2.12 to $2.20.
This financial guidance for 2018 assumes:
- Depreciation expense of approximately $4 million;
- Interest expense of approximately $8 million, of which approximately $6 million is non-cash expense;
- An effective tax rate of approximately 27%;
- Weighted average diluted shares outstanding in a range of 43.5 million to 44.0 million;
- Free cash flow in excess of $100 million (defined as cash flows from operations less capital expenditures); and
- Capital expenditures of approximately $10 million.
Conference Call
Tivity Health will hold a conference call to discuss this release today at 5:00 p.m. Eastern Time. Investors will have the opportunity to listen to the conference call live by dialing 323-794-2588, code 2034426 or over the Internet by going to www.tivityhealth.com and clicking Investors at least 15 minutes early to register, download, and install any necessary audio software. For those who cannot listen to the live broadcast, a telephonic replay will be available for one week at 719-457-0820, code 2034426, 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's ability to sign and implement new contracts for its solutions;
- the Company's ability to accurately forecast the costs required to successfully implement new contracts;
- the Company's ability to anticipate change and respond to emerging trends for healthcare and the impact of the same on demand for the Company's services;
- the Company's ability to develop new products;
- the Company's ability to anticipate and respond to strategic changes, opportunities and emerging trends in the Company's industry and/or business and to accurately forecast the related impact on the Company's revenues and earnings;
- the Company's ability to renew and/or maintain contracts with its customers under existing terms or restructure these contracts on terms that would not have a material negative impact on the Company's results of operations;
- the Company's ability to accurately forecast the Company's revenues, margins, earnings and net income, as well as any potential charges that the Company may incur as a result of changes in its business and leadership;
- the Company's ability and/or the ability of its customers to enroll participants and to accurately forecast their level of enrollment and participation in the Company's programs in a manner and within the timeframe anticipated by the Company;
- the risks associated with deriving a significant concentration of revenues from a limited number of customers;
- the risks associated with changes in macroeconomic conditions;
- 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, which may result in unauthorized access by third parties to customer, employee or Company information or protected health information and lead to enforcement actions, fines and other litigation against the Company;
- the Company's ability to effectively compete against other entities, whose financial, research, staff, and marketing resources may exceed the Company's resources;
- the impact of severe or adverse weather conditions on member participation in the Company's programs;
- the ability of the Company's customers to maintain the number of covered lives enrolled in the plans during the terms of its agreements;
- the impact of any new or proposed legislation, regulations and interpretations relating to Medicare or Medicare Advantage;
- the impact of litigation involving the Company and/or its subsidiaries;
- the impact on the Company's operations and/or demand for its services of future state and federal legislation and regulations applicable to the Company's business, including the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010;
- current geopolitical turmoil, the continuing threat of domestic or international terrorism, and the potential emergence of a health pandemic or infectious disease outbreak; and
- other risks detailed in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2017 and other filings with the Securities and Exchange Commission
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 15.6 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. |
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CONSOLIDATED BALANCE SHEETS |
||||||||
(In thousands) |
||||||||
(Unaudited) |
||||||||
ASSETS |
||||||||
June 30, 2018 |
December 31, |
|||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ |
66,995 |
$ |
28,440 |
||||
Accounts receivable, net |
68,762 |
55,113 |
||||||
Prepaid expenses |
4,249 |
3,444 |
||||||
Other current assets |
4,746 |
2,180 |
||||||
Cash convertible notes hedges |
141,246 |
134,079 |
||||||
Income taxes receivable |
636 |
39 |
||||||
Total current assets |
286,634 |
223,295 |
||||||
Property and equipment: |
||||||||
Leasehold improvements |
10,396 |
10,384 |
||||||
Computer equipment and related software |
22,330 |
19,508 |
||||||
Furniture and office equipment |
8,193 |
8,194 |
||||||
Capital projects in process |
2,649 |
1,105 |
||||||
43,568 |
39,191 |
|||||||
Less accumulated depreciation |
(30,791) |
(28,533) |
||||||
12,777 |
10,658 |
|||||||
Other assets |
26,069 |
13,315 |
||||||
Long-term deferred tax asset |
9,912 |
25,166 |
||||||
Intangible assets, net |
29,049 |
29,049 |
||||||
Goodwill, net |
334,680 |
334,680 |
||||||
Total assets |
$ |
699,121 |
$ |
636,163 |
TIVITY HEALTH, INC. |
||||||||
CONSOLIDATED BALANCE SHEETS |
||||||||
(In thousands, except share and per share data) |
||||||||
(Unaudited) |
||||||||
LIABILITIES AND STOCKHOLDERS' EQUITY |
||||||||
June 30, 2018 |
December 31, |
|||||||
Current liabilities: |
||||||||
Accounts payable |
$ |
26,622 |
$ |
26,804 |
||||
Accrued salaries and benefits |
5,993 |
15,018 |
||||||
Accrued liabilities |
41,762 |
33,527 |
||||||
Other current liabilities |
3,792 |
984 |
||||||
Cash conversion derivative |
141,246 |
134,079 |
||||||
Current portion of debt |
150,007 |
145,959 |
||||||
Current portion of long-term liabilities |
2,244 |
2,262 |
||||||
Total current liabilities |
371,666 |
358,633 |
||||||
Other long-term liabilities |
7,595 |
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, 39,963,683 and 39,729,580 shares outstanding, respectively |
40 |
40 |
||||||
Additional paid-in capital |
352,230 |
349,243 |
||||||
Accumulated deficit |
(4,228) |
(49,148) |
||||||
Treasury stock, at cost, 2,254,953 shares in treasury |
(28,182) |
(28,182) |
||||||
Total stockholders' equity |
319,860 |
271,953 |
||||||
Total liabilities and stockholders' equity |
$ |
699,121 |
$ |
636,163 |
TIVITY HEALTH, INC. |
||||||||||||||||
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) |
||||||||||||||||
(In thousands, except earnings (loss) per share data) |
||||||||||||||||
(Unaudited) |
||||||||||||||||
Three Months Ended |
Six Months Ended |
|||||||||||||||
June 30, |
June 30, |
|||||||||||||||
2018 |
2017 |
2018 |
2017 |
|||||||||||||
Revenues |
$ |
151,865 |
$ |
138,914 |
$ |
301,795 |
$ |
279,884 |
||||||||
Cost of services (exclusive of depreciation and amortization of $995, $648, $1,970 and $1,305, respectively, included below) |
109,022 |
99,071 |
217,299 |
201,470 |
||||||||||||
Selling, general & administrative expenses |
7,756 |
8,176 |
16,334 |
16,538 |
||||||||||||
Depreciation and amortization |
1,135 |
789 |
2,257 |
1,576 |
||||||||||||
Restructuring and related charges |
118 |
(52) |
124 |
685 |
||||||||||||
Operating income |
33,834 |
30,930 |
65,781 |
59,615 |
||||||||||||
Interest expense |
3,482 |
4,130 |
6,936 |
7,964 |
||||||||||||
Income before income taxes |
30,352 |
26,800 |
58,845 |
51,651 |
||||||||||||
Income tax expense |
7,669 |
9,560 |
14,826 |
18,931 |
||||||||||||
Income from continuing operations |
22,683 |
17,240 |
44,019 |
32,720 |
||||||||||||
Income (loss) from discontinued operations, net of income tax |
901 |
(3,673) |
901 |
(3,893) |
||||||||||||
Net income |
$ |
23,584 |
$ |
13,567 |
$ |
44,920 |
$ |
28,827 |
||||||||
Earnings (loss) per share - basic: |
||||||||||||||||
Continuing operations |
$ |
0.57 |
$ |
0.44 |
$ |
1.10 |
$ |
0.84 |
||||||||
Discontinued operations |
$ |
0.02 |
$ |
(0.09) |
$ |
0.02 |
$ |
(0.10) |
||||||||
Net income (loss) |
$ |
0.59 |
$ |
0.35 |
$ |
1.13 |
$ |
0.74 |
||||||||
Earnings (loss) per share - diluted: |
||||||||||||||||
Continuing operations |
$ |
0.52 |
$ |
0.41 |
$ |
1.01 |
$ |
0.79 |
||||||||
Discontinued operations |
$ |
0.02 |
$ |
(0.09) |
$ |
0.02 |
$ |
(0.09) |
||||||||
Net income (loss) |
$ |
0.54 |
$ |
0.32 |
$ |
1.03 |
$ |
0.70 |
||||||||
Comprehensive income |
$ |
23,584 |
$ |
17,957 |
$ |
44,920 |
$ |
33,329 |
||||||||
Weighted average common shares and equivalents: |
||||||||||||||||
Basic |
39,899 |
39,246 |
39,841 |
39,158 |
||||||||||||
Diluted |
43,284 |
42,369 |
43,437 |
41,456 |
TIVITY HEALTH, INC. |
||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS |
||||||||
(In thousands) |
||||||||
(Unaudited) |
||||||||
Six Months Ended June 30, |
||||||||
2018 |
2017 |
|||||||
Cash flows from operating activities: |
||||||||
Income from continuing operations |
$ |
44,019 |
$ |
32,720 |
||||
Income (loss) from discontinued operations |
901 |
(3,893) |
||||||
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
Depreciation and amortization |
2,257 |
1,589 |
||||||
Amortization of deferred loan costs |
1,050 |
1,246 |
||||||
Amortization of debt discount |
4,140 |
3,911 |
||||||
Share-based employee compensation expense |
3,250 |
3,362 |
||||||
(Gain) Loss on sale of TPHS business |
(1,304) |
444 |
||||||
Loss on release of cumulative translation adjustment |
— |
3,044 |
||||||
Deferred income taxes |
15,254 |
18,755 |
||||||
Increase in accounts receivable, net |
(13,890) |
(4,398) |
||||||
Decrease in other current assets |
756 |
869 |
||||||
Decrease in accounts payable |
(1,869) |
(1,480) |
||||||
Decrease in accrued salaries and benefits |
(9,928) |
(11,953) |
||||||
Decrease in other current liabilities |
(4,563) |
(2,268) |
||||||
Other |
1,227 |
(1,888) |
||||||
Net cash flows provided by operating activities |
$ |
41,300 |
$ |
40,060 |
||||
Cash flows from investing activities: |
||||||||
Acquisition of property and equipment |
$ |
(3,673) |
$ |
(2,244) |
||||
Proceeds from sale of MeYou Health |
1,416 |
— |
||||||
Net cash flows used in investing activities |
$ |
(2,257) |
$ |
(2,244) |
||||
Cash flows from financing activities: |
||||||||
Proceeds from issuance of long-term debt |
$ |
13,675 |
$ |
274,425 |
||||
Payments of long-term debt |
(14,216) |
(308,496) |
||||||
Payments related to tax withholding for share-based compensation |
(1,398) |
(1,066) |
||||||
Exercise of stock options |
1,135 |
2,757 |
||||||
Deferred loan costs |
— |
(2,452) |
||||||
Change in cash overdraft and other |
343 |
1,558 |
||||||
Net cash flows (used in) provided by financing activities |
$ |
(461) |
$ |
(33,274) |
||||
Effect of exchange rate changes on cash |
$ |
(27) |
$ |
1,652 |
||||
Net increase in cash and cash equivalents |
$ |
38,555 |
$ |
6,194 |
||||
Cash and cash equivalents, beginning of period |
$ |
28,440 |
$ |
1,602 |
||||
Cash and cash equivalents, end of period |
$ |
66,995 |
$ |
7,796 |
TIVITY HEALTH, INC. |
|||||||||||
RECONCILIATION OF NON-GAAP MEASURES TO GAAP MEASURES |
|||||||||||
(Unaudited) |
|||||||||||
Reconciliation of Adjusted EBITDA from Continuing Operations, Non-GAAP Basis |
|||||||||||
to Income from Continuing Operations, GAAP Basis |
|||||||||||
(In thousands) |
|||||||||||
Three Months June 30, 2018 |
Three Months June 30, 2017 |
||||||||||
Adjusted EBITDA from continuing operations, non-GAAP basis (1) |
$ |
35,087 |
$ |
31,667 |
|||||||
Restructuring charges (2) |
(118) |
52 |
|||||||||
EBITDA from continuing operations, non-GAAP basis (3) |
$ |
34,969 |
$ |
31,719 |
|||||||
Depreciation and amortization |
(1,135) |
(789) |
|||||||||
Interest expense |
(3,482) |
(4,130) |
|||||||||
Income tax expense |
(7,669) |
(9,560) |
|||||||||
Income from continuing operations, GAAP basis |
$ |
22,683 |
$ |
17,240 |
(1) |
Adjusted EBITDA from continuing operations is a non-GAAP financial measure. The Company excludes 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. |
(2) |
Restructuring charges consists of pre-tax charges of $118,000 for the three months ended June 30, 2018 primarily due to additional costs incurred related to a prior restructuring. Restructuring charges for the three months ended June 30, 2017 consists of adjustments of ($52,000) primarily due to actual employee tax and benefit amounts differing from previous estimates related to a restructuring of our corporate support infrastructure. |
(3) |
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 adjusted EBITDA from continuing operations in isolation or as a substitute for net income from continuing operations determined in accordance with accounting principles generally accepted in the United States. |
Reconciliation of Adjusted Income from Continuing Operations, Non-GAAP Basis |
|||||||||||
to Income from Continuing Operations, GAAP Basis |
|||||||||||
(In thousands) |
|||||||||||
Three Months Ended June 30, |
|||||||||||
2018 |
2017 |
||||||||||
Adjusted income from continuing operations, non-GAAP basis (4) |
$ |
22,770 |
$ |
17,209 |
|||||||
Net income (loss) attributable to restructuring charges (5) |
(87) |
31 |
|||||||||
Income from continuing operations, GAAP basis |
$ |
22,683 |
$ |
17,240 |
(4) |
Adjusted income from continuing operations is a non-GAAP financial measure. The Company excludes net income (loss) attributable to 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 income from continuing operations as a substitute for income from continuing operations determined in accordance with accounting principles generally accepted in the United States. |
(5) |
Net income (loss) attributable to restructuring charges consists of pre-tax charges of $118,000 for the three months ended June 30, 2018 and adjustments of ($52,000) for the three months ended June 30, 2017. See footnote 3 for further explanation. The tax rates applied to these restructuring charges for the three months ended June 30, 2018 and 2017 were 26.53% and 39.55%, respectively, which represented the combined estimated U.S. federal and state statutory tax rate. |
Reconciliation of Adjusted Income from Continuing Operations |
|||||||
Per Share ("EPS"), Non-GAAP Basis to EPS, GAAP Basis |
|||||||
Three Months Ended June 30, |
|||||||
2018 |
2017 |
||||||
Adjusted EPS, non-GAAP basis (6) |
$ |
0.53 |
$ |
0.41 |
|||
EPS (loss) attributable to restructuring charges (7) |
(0.00) |
0.00 |
|||||
EPS, GAAP basis (8) |
$ |
0.52 |
$ |
0.41 |
(6) |
Adjusted EPS is a non-GAAP financial measure. The Company excludes EPS (loss) attributable to 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 on the same basis as that used by management. You should not consider adjusted EPS in isolation or as a substitute for EPS determined in accordance with accounting principles generally accepted in the United States. |
(7) |
EPS (loss) attributable to restructuring charges consists of pre-tax charges of $118,000 for the three months ended June 30, 2018 and adjustments of ($52,000) for the three months ended June 30, 2017. See footnote 3 for further explanation. The tax rates applied to these restructuring charges for the three months ended June 30, 2018 and 2017 were 26.53% and 39.55%, respectively, which represented the combined estimated U.S. federal and state statutory tax rate. |
(8) |
Figures may not add due to rounding. |
Reconciliation of Free Cash Flow, Non-GAAP Basis to |
||||||||
Net Cash Flows Provided By Operating Activities, GAAP Basis (in thousands) |
||||||||
Three Months Ended June 30, 2018 |
Three Months Ended June 30, 2017 |
|||||||
Free cash flow, non-GAAP basis (9) |
$ |
27,207 |
$ |
36,026 |
||||
Acquisition of property and equipment |
1,727 |
1,010 |
||||||
Net cash flows provided by operating activities, GAAP basis |
$ |
28,934 |
$ |
37,036 |
||||
(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. |
SOURCE Tivity Health, Inc.
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