NASHVILLE, Tenn., Aug. 4, 2021 /PRNewswire/ -- Tivity Health,
Inc. (Nasdaq:TVTY) (the "Company"), a leading provider of healthy
life-changing solutions, including SilverSneakers®,
today announced financial results for the second quarter ended
June 30, 2021.
Richard Ashworth, President and
Chief Executive Officer, commented, "Our second quarter performance
was characterized by stronger than expected growth in both our
SilverSneakers and Prime Fitness businesses. SilverSneakers
in-person visits showed solid sequential growth as members
return to the gym and our virtual channel continues to attract new
members. We also successfully completed the implementation of
our new omnichannel marketing platform, which we believe will
help drive higher engagement from our members across an expanded
set of offerings." Ashworth continued, "During the current renewal
season, we have renewed two top-five health plan clients.
UnitedHealth Group has recently notified us that it will
reduce its group business beginning in 2022. Despite this, we
believe the momentum from our members returning to the gym, our
penetration of SilverSneakers into new markets with existing
clients, new client wins and our focus on a broader set of
engagement tools with our members will lead to revenue and Adjusted
EBITDA growth in 2022."
Second Quarter Highlights and Business Updates
- Revenue from continuing operations was $120.1 million during the second quarter of
2021;
- SilverSneakers revenue increased by $41.6 million compared to the prior year period
due to a 12.2 million increase in total visits, and Prime Fitness
revenue increased by $4.3 million
compared to the prior year period;
- Income from continuing operations was $8.8 million, reflecting a loss on extinguishment
and modification of debt of $19.0
million, $18.2 million of
which was non-cash, related to the Company's debt refinancing in
June 2021;
- Adjusted EBITDA from continuing operations was $41.5 million, consistent with the second quarter
of 2020;
- The Company ended the quarter with cash on hand of $24.2 million and a leverage ratio of 2.18, as
calculated under its new credit agreement, compared to 4.08 as of
June 30, 2020; and
- The Company owns approximately 11.1 million shares of common
stock of Sharecare, Inc. (Nasdaq: SHCR) following a business
combination between Sharecare's predecessor company and Falcon
Capital Acquisition Corp. in July 2021. The shares are
subject to restrictions on resale, including a customary lockup
period.
Second Quarter 2021 Financial Information
Dollars in
millions, except per-share data
|
|
|
|
Three Months
Ended
June 30,
|
|
|
2021
|
2020
|
|
|
|
|
|
Revenues from
Continuing Operations
|
$120.1
|
$81.9
|
|
Income from
Continuing Operations
|
$8.8
|
$17.2
|
|
Income from
Continuing Operations Margin
|
7.3%
|
21.0%
|
|
Adjusted EBITDA from
Continuing Operations (1)
|
$41.5
|
$41.5
|
|
Adjusted EBITDA from
Continuing Operations Margin (1)
|
34.6%
|
50.6%
|
|
Earnings Per Diluted
Share from Continuing Operations
|
$0.17
|
$0.35
|
|
Adjusted Earnings Per
Diluted Share from Continuing Operations (1)
|
$0.48
|
$0.41
|
|
Cash Flows from
Operating Activities – former Healthcare segment
(2)
|
$13.8
|
$47.7
|
|
Free Cash Flow –
former Healthcare segment (1) (2)
|
$9.7
|
$44.3
|
|
|
|
(1)
|
Adjusted EBITDA,
adjusted earnings per diluted share, and free cash flow are
non-GAAP financial measures. See pages 10-14 for a reconciliation
of non-GAAP financial measures.
|
(2)
|
For comparability,
figures for 2020 represent cash flows from the Company's former
Healthcare segment.
|
Revenues in the second quarter of 2021 of $120.1 million increased by $38.1 million, or approximately 47%, compared to
the second quarter of 2020, primarily due to continued recovery
from the COVID-19 pandemic. SilverSneakers revenue increased
by $41.6 million primarily due to an
increase in revenue-generating visits, and Prime Fitness revenue
increased by $4.3 million primarily
due to an increase in self-insured employer revenue. These
increases were partially offset by a decrease of $6.8 million due to revenue earned during the
second quarter of 2020 (that did not recur in 2021) from a program
with a large employer seeking to improve its employees' well-being
during the COVID-19 pandemic.
The mix of SilverSneakers revenue during the second quarter of
2021 was significantly different from the mix during the second
quarter of 2020 due to the reduction in fitness location visits in
the second quarter of 2020 resulting from the COVID-19 pandemic.
Revenue from per-member-per-month fees represented 47% of the
Company's SilverSneakers revenue in the second quarter of 2021,
compared to 88% in the same quarter of 2020.
Income from continuing operations for the second quarter of 2021
was $8.8 million, a decrease of
$8.4 million compared to the second
quarter of 2020, which reflects a loss on extinguishment and
modification of debt of $19.0
million, primarily related to a non-cash write-off of
unamortized original issuance discount and debt issuance costs
associated with the Company's prior credit facility.
Adjusted EBITDA was $41.5 million for the second quarter of
2021, or 34.6% of revenues, compared to $41.5 million for the second quarter of 2020, or
50.6% of revenues. The decrease in adjusted EBITDA as a
percentage of revenues is primarily due to a lower mix of revenues
from per-member-per-month fees for SilverSneakers coupled with an
increase in fitness location visit costs for SilverSneakers and
Prime Fitness due to an increase in participation levels.
In June 2021, the Company entered
into a new credit agreement that provides increased flexibility,
lower annual principal payments, and an extended maturity date and
is expected to result in cash interest savings of over $3 million during the first 12 months. As
of June 30, 2021, net debt (total
debt less cash and cash equivalents) was $361.4 million, resulting in a net leverage ratio
of 2.18. The Company's required principal payments are
$1 million per quarter, with the next
quarterly installment being due on September
30, 2021.
Forward-Looking Expectations
2021 Financial Guidance
Tivity Health announced today that it has affirmed its
revenue and adjusted EBITDA guidance for 2021 and has updated other
components of its guidance based on the refinancing of its credit
facility and the Company's outlook for the remainder of 2021, as
follows:
Dollars in
millions, except per-share data
|
|
|
|
May 5,
2021
(Prior
Guidance)
|
August 4,
2021
(Updated
Guidance)
|
|
|
|
Revenues
|
$465 -
$485
|
Unchanged
|
Income from
Continuing Operations
|
$71.3 -
$74.3
|
$60.7 - $63.7
(1)
|
Adjusted EBITDA
(2)
|
$151 -
$155
|
Unchanged
|
Depreciation
Expense
|
Approximately
$14
|
Approximately
$12
|
Interest
Expense
|
Approximately
$37,
including $6
non-cash
|
Approximately
$35,
including
$6 non-cash
|
Effective Tax
Rate
|
Approximately
25%
|
Unchanged
|
Weighted Average
Diluted Shares Outstanding
|
50.0 million –
50.5 million
|
Unchanged
|
Earnings per Diluted
Share
|
$1.41 -
$1.49
|
$1.20 - $1.27
(1)
|
Adjusted Earnings per
Diluted Share (2)
|
$1.49 -
$1.56
|
$1.54 -
$1.62
|
Cash Flows from
Operating Activities
|
$81 - $85
|
$86 - $90
|
Free Cash Flow
(2)
|
$50 - $60
|
$60 - $70
|
Capital
Expenditures
|
$20 - $25
|
$15 - $20
|
Tivity Health's detailed guidance considerations for 2021 are
available in the supplemental information posted on the Company's
website at http://investors.tivityhealth.com.
(1)
|
Includes pre-tax
charges of $19.0 million and interest savings of $2.0 million
related to the Company's entering into a new credit facility in
June 2021.
|
(2)
|
Adjusted EBITDA,
adjusted earnings per diluted share, and free cash flow are
non-GAAP financial measures. See pages 10-14 for a reconciliation
of non-GAAP financial measures.
|
2022 Update
UnitedHealth Group recently notified the Company that it will
reduce approximately half of its eligible group lives for 2022,
which the Company currently expects will reduce 2022 revenue by
approximately $20 million.
Despite this, the Company expects revenue and Adjusted EBITDA
growth in 2022 driven by geographic expansion with current
partners, new client wins, organic growth in Medicare Advantage, a
continuing increase in SilverSneakers utilization, and continuing
growth in Prime Fitness.
Conference Call
Tivity Health will hold a conference call to discuss this
release today at 5:00 p.m. Eastern
Time. Investors will have the opportunity to listen to
the conference call live by dialing 877-683-2218, or 647-689-5447
for international callers, and referencing code 6861359 or over the
Internet by going to www.tivityhealth.com and clicking "Investors"
at least 15 minutes early to register, download, and install any
necessary audio software. For those who cannot listen to the live
broadcast, a telephonic replay will be available for one week at
800-585-8367 or 416-621-4642 for international callers, code
6861359, and the replay will also be available on the Company's web
site for the next 7 months.
About Tivity Health
Tivity Health® Inc. (Nasdaq: TVTY) is a leading
provider of healthy life-changing solutions, including
SilverSneakers®, Prime® Fitness, WholeHealth
Living® and Wisely Well™. We plan to become
the modern destination for healthy living through our
industry-leading fitness offerings and enhanced digital engagement
platform. We are continuously developing the SilverSneakers suite
of digital offerings and services to provide seniors with
everything they need to maintain and improve their health,
including physical activity, social connection, community
involvement, volunteer opportunities and mental enrichment. Our
goal is to partner with payers and service providers to enable a
personalized, interactive, and intuitive experience to offer the
right solutions to each member. We deliver solutions that help
adults feel better, work better and live better, and improve health
outcomes while reducing healthcare costs. Learn more
at www.tivityhealth.com.
Non-GAAP Financial Measures
This press release contains certain non-GAAP financial measures.
Reconciliations of certain of these non-GAAP measures to the
comparable GAAP measures are included on pages
10-14.
Cautionary Statement Regarding Forward-Looking
Statements
This press release contains certain statements that are
"forward-looking" statements within the meaning of the federal
securities laws, including Section 27A of the Securities Act of
1933, as amended, and Section 21E of the Securities Exchange Act of
1934, as amended. These forward-looking statements are based
upon current expectations and include all statements that are not
historical statements of fact and those regarding the intent,
belief or expectations, including, without limitation, statements
that are accompanied by words such as "will," "expect," "outlook,"
"anticipate," "intend," "plan," "believe," "seek," "see," "would,"
"target," or other similar words, phrases or expressions and
variations or negatives of these words. These forward-looking
statements include, but are not limited to, the Company's
statements regarding its future financial performance. Readers
of this press release should understand that these statements are
not guarantees of performance or results. Many risks and
uncertainties could affect actual results and cause them to vary
materially from the forward-looking statements.
These risks and uncertainties include, among other things:
impacts from the COVID-19 pandemic (including the response of
governmental authorities to combat and contain the pandemic, the
closure of fitness centers in the Company's 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 the Company's 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, including variant strains of COVID-19) or other outbreaks
of disease, geopolitical turmoil, and the continuing threat of
domestic or international terrorism; the Company's ability to
collect accounts receivable from its customers and amounts due
under its sublease agreements; the market's acceptance of the
Company's new products and services; the Company's ability to
develop and implement effective strategies and to anticipate and
respond to strategic changes, opportunities, and emerging trends in
the Company's industry and/or business, as well as to accurately
forecast the related impact on the Company's revenues and earnings;
the impact of any impairment of the Company's goodwill, intangible
assets, or other long-term assets; the Company's ability to
attract, hire, or retain key personnel or other qualified employees
and to control labor costs; the effectiveness of the reorganization
of the Company's business and the Company's ability to realize the
anticipated benefits; the Company's ability to effectively compete
against other entities, whose financial, research, staff, and
marketing resources may exceed its resources; the impact of legal
proceedings involving the Company and/or its subsidiaries,
products, or services, including any claims related to intellectual
property rights, as well as the Company's ability to maintain
insurance coverage with respect to such legal proceedings and
claims on terms that would be favorable to it; the impact of severe
or adverse weather conditions, the current COVID-19 pandemic
(including variant strains of COVID-19), and the potential
emergence of additional health pandemics or infectious disease
outbreaks on member participation in the Company's programs; the
risks associated with deriving a significant concentration of
revenues from a limited number of the Company's customers, many of
whom are health plans; 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 Company's ability to sign, renew and/or maintain
contracts with its customers and/or the Company's fitness partner
locations under existing terms or to restructure these contracts on
terms that would not have a material negative impact on the
Company's results of operations; the ability of the Company's
health plan customers to maintain the number of covered lives
enrolled in those health plans during the terms of the Company's
agreements; the Company's ability to add and/or retain active
subscribers in its 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 the
Company's business; the risks associated with potential failures of
the Company's information systems or those of its 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 the Company's 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
the Company's information, or other data subject to privacy laws
and may lead to a disruption in the Company's business, costs to
modify, enhance, or remediate its cybersecurity measures,
enforcement actions, fines or litigation against the Company, or
damage to its 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 the Company or its 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 the Company's business;
the Company's ability to enforce its intellectual property rights;
the risk that the Company's indebtedness may limit the Company's
ability to adapt to changes in the economy or market conditions,
expose the Company to interest rate risk for the variable rate
indebtedness and require a substantial portion of cash flows from
operations to be dedicated to the payment of indebtedness; the
Company's ability to service its debt, make principal and interest
payments as those payments become due, and remain in compliance
with its debt covenants; the Company's ability to obtain adequate
financing to provide the capital that may be necessary to support
its current or future operations; counterparty risk associated with
the Company's interest rate swap agreements; and other risks
detailed in the Company's filings with the Securities and Exchange
Commission.
For additional information about factors that could cause actual
results to differ materially from those described in the
forward-looking statements, please refer to the Company's filings
with the SEC. Except as required by law, the Company undertakes no
obligation to update any such forward-looking statements to reflect
new information, subsequent events or circumstances.
Investor Relations Contact:
Matt Milanovich, VP of Investor Relations; (602)
562-2595; matt.milanovich@tivityhealth.com
TIVITY HEALTH,
INC.
CONSOLIDATED
BALANCE SHEETS
(In thousands,
except share and per share data)
(Unaudited)
|
|
|
|
|
|
June 30, 2021
|
|
|
December 31,
2020
|
|
Current
assets:
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
24,226
|
|
|
$
|
100,385
|
|
Accounts receivable,
net
|
|
|
53,140
|
|
|
|
25,981
|
|
Prepaid
expenses
|
|
|
7,652
|
|
|
|
5,556
|
|
Income taxes
receivable
|
|
|
7,460
|
|
|
|
10,996
|
|
Other current
assets
|
|
|
16,423
|
|
|
|
11,336
|
|
Total current
assets
|
|
|
108,901
|
|
|
|
154,254
|
|
|
|
|
|
|
|
|
|
|
Property and
equipment, net of accumulated depreciation of
$43,297
and $38,188 respectively
|
|
|
20,010
|
|
|
|
20,959
|
|
Right-of-use
assets
|
|
|
14,436
|
|
|
|
18,139
|
|
Long-term deferred
tax asset
|
|
|
917
|
|
|
|
3,601
|
|
Intangible assets,
net
|
|
|
29,049
|
|
|
|
29,049
|
|
Goodwill,
net
|
|
|
334,680
|
|
|
|
334,680
|
|
Other
assets
|
|
|
15,755
|
|
|
|
18,301
|
|
Total
assets
|
|
$
|
523,748
|
|
|
$
|
578,983
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
18,982
|
|
|
$
|
19,741
|
|
Accrued salaries and
benefits
|
|
|
5,657
|
|
|
|
8,949
|
|
Accrued
liabilities
|
|
|
31,051
|
|
|
|
18,424
|
|
Deferred
revenue
|
|
|
3,937
|
|
|
|
4,460
|
|
Current portion of
long-term debt
|
|
|
4,000
|
|
|
|
7,456
|
|
Current portion of
lease liabilities
|
|
|
8,121
|
|
|
|
8,052
|
|
Current portion of
other long-term liabilities
|
|
|
13,724
|
|
|
|
14,753
|
|
Total current
liabilities
|
|
|
85,472
|
|
|
|
81,835
|
|
|
|
|
|
|
|
|
|
|
Long-term
debt
|
|
|
381,598
|
|
|
|
459,250
|
|
Long-term lease
liabilities
|
|
|
7,401
|
|
|
|
11,494
|
|
Other long-term
liabilities
|
|
|
14,490
|
|
|
|
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,
49,641,314 and 48,983,735 shares outstanding,
respectively
|
|
|
49
|
|
|
|
49
|
|
Additional paid-in
capital
|
|
|
512,674
|
|
|
|
513,263
|
|
Accumulated
deficit
|
|
|
(436,592)
|
|
|
|
(464,085)
|
|
Treasury stock, at
cost, 2,254,953 shares in treasury
|
|
|
(28,182)
|
|
|
|
(28,182)
|
|
Accumulated other
comprehensive loss
|
|
|
(13,162)
|
|
|
|
(17,389)
|
|
Total stockholders'
equity
|
|
|
34,787
|
|
|
|
3,656
|
|
Total liabilities and
stockholders' equity
|
|
$
|
523,748
|
|
|
$
|
578,983
|
|
TIVITY HEALTH,
INC.
CONSOLIDATED
STATEMENTS OF OPERATIONS
(In thousands,
except earnings per share data)
(Unaudited)
|
|
|
|
Three Months
Ended
June 30,
|
|
|
Six Months
Ended
June 30,
|
|
|
|
|
2021
|
|
|
2020
|
|
|
2021
|
|
|
2020
|
|
|
Revenues
|
|
$
|
120,071
|
|
|
$
|
81,923
|
|
|
$
|
228,156
|
|
|
$
|
241,615
|
|
|
Cost of revenue
(exclusive of depreciation of $2,595, $2,240, $5,126 and
$4,071, respectively included below)
|
|
|
68,639
|
|
|
|
33,804
|
|
|
|
125,924
|
|
|
|
148,952
|
|
|
Marketing
expense
|
|
|
1,396
|
|
|
|
765
|
|
|
|
2,627
|
|
|
|
8,064
|
|
|
Selling, general and
administrative expenses
|
|
|
9,652
|
|
|
|
8,905
|
|
|
|
19,349
|
|
|
|
20,957
|
|
|
Depreciation
expense
|
|
|
2,740
|
|
|
|
2,410
|
|
|
|
5,423
|
|
|
|
4,440
|
|
|
Restructuring and
related charges
|
|
|
—
|
|
|
|
827
|
|
|
|
—
|
|
|
|
1,309
|
|
|
Operating
income
|
|
|
37,644
|
|
|
|
35,212
|
|
|
|
74,833
|
|
|
|
57,893
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
9,400
|
|
|
|
11,253
|
|
|
|
20,156
|
|
|
|
22,523
|
|
|
Loss on
extinguishment and modification of debt
|
|
|
19,027
|
|
|
|
—
|
|
|
|
19,027
|
|
|
|
—
|
|
|
Other expense
(income), net
|
|
|
259
|
|
|
|
—
|
|
|
|
(872)
|
|
|
|
—
|
|
|
Total non-operating
expense, net
|
|
|
28,686
|
|
|
|
11,253
|
|
|
|
38,311
|
|
|
|
22,523
|
|
|
Income before income
taxes
|
|
|
8,958
|
|
|
|
23,959
|
|
|
|
36,522
|
|
|
|
35,370
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
expense
|
|
|
187
|
|
|
|
6,757
|
|
|
|
7,806
|
|
|
|
9,893
|
|
|
Income from continuing
operations
|
|
$
|
8,771
|
|
|
$
|
17,202
|
|
|
$
|
28,716
|
|
|
$
|
25,477
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from
discontinued operations, net of
income
tax benefit of $142, $650, $419 and
$18,931,
respectively
|
|
|
(414)
|
|
|
|
11,309
|
|
|
|
(1,223)
|
|
|
|
(195,072)
|
|
|
Net income
(loss)
|
|
$
|
8,357
|
|
|
$
|
28,511
|
|
|
$
|
27,493
|
|
|
$
|
(169,595)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per
share - basic:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
$
|
0.18
|
|
|
$
|
0.35
|
|
|
$
|
0.58
|
|
|
$
|
0.52
|
|
|
Discontinued
operations
|
|
$
|
(0.01)
|
|
|
$
|
0.23
|
|
|
$
|
(0.02)
|
|
|
$
|
(4.01)
|
|
|
Net income (loss)
(1)
|
|
$
|
0.17
|
|
|
$
|
0.59
|
|
|
$
|
0.56
|
|
|
$
|
(3.49)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per
share - diluted:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
$
|
0.17
|
|
|
$
|
0.35
|
|
|
$
|
0.57
|
|
|
$
|
0.52
|
|
|
Discontinued
operations
|
|
$
|
(0.01)
|
|
|
$
|
0.23
|
|
|
$
|
(0.02)
|
|
|
$
|
(4.00)
|
|
|
Net income (loss)
(1)
|
|
$
|
0.17
|
|
|
$
|
0.58
|
|
|
$
|
0.55
|
|
|
$
|
(3.47)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income
(loss)
|
|
$
|
9,782
|
|
|
$
|
27,366
|
|
|
$
|
31,720
|
|
|
$
|
(190,569)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares and equivalents:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
49,470
|
|
|
|
48,711
|
|
|
|
49,361
|
|
|
|
48,662
|
|
|
Diluted
|
|
|
50,457
|
|
|
|
48,794
|
|
|
|
50,413
|
|
|
|
48,825
|
|
|
|
|
(1)
|
Figures may not add
due to rounding.
|
TIVITY HEALTH,
INC.
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In
thousands)
(Unaudited)
|
|
|
|
Six Months Ended
June 30,
|
|
|
|
2021
|
|
|
2020
|
|
Cash flows from
operating activities:
|
|
|
|
|
|
|
|
|
Income from continuing
operations
|
|
$
|
28,716
|
|
|
$
|
25,477
|
|
Loss from discontinued
operations
|
|
|
(1,223)
|
|
|
|
(195,072)
|
|
Adjustments to
reconcile net income (loss) to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
Loss on extinguishment
of debt
|
|
|
18,237
|
|
|
|
—
|
|
Depreciation and
amortization
|
|
|
5,423
|
|
|
|
27,682
|
|
Amortization and
write-off of deferred loan costs
|
|
|
1,993
|
|
|
|
2,315
|
|
Amortization and
write-off of debt discount
|
|
|
1,735
|
|
|
|
2,049
|
|
Share-based employee
compensation expense
|
|
|
5,866
|
|
|
|
3,689
|
|
Unrealized gain on
derivatives
|
|
|
(872)
|
|
|
|
—
|
|
Impairment of goodwill
and intangible assets of discontinued operation
|
|
|
—
|
|
|
|
199,500
|
|
Deferred income
taxes
|
|
|
1,234
|
|
|
|
(16,447)
|
|
(Increase) decrease in
accounts receivable, net
|
|
|
(27,159)
|
|
|
|
61,257
|
|
Decrease in income
taxes receivable
|
|
|
3,536
|
|
|
|
—
|
|
Decrease in
inventory
|
|
|
—
|
|
|
|
14,319
|
|
(Increase) decrease in
other current assets
|
|
|
(10,309)
|
|
|
|
1,363
|
|
(Decrease) increase in
accounts payable
|
|
|
(1,882)
|
|
|
|
9,411
|
|
Decrease in accrued
salaries and benefits
|
|
|
(3,292)
|
|
|
|
(2,532)
|
|
Increase (decrease) in
other current liabilities
|
|
|
13,005
|
|
|
|
(5,925)
|
|
Other
|
|
|
1,422
|
|
|
|
3,857
|
|
Net cash flows
provided by operating activities
|
|
$
|
36,430
|
|
|
$
|
130,943
|
|
|
|
|
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
|
|
|
Acquisition of
property and equipment
|
|
$
|
(4,039)
|
|
|
$
|
(10,362)
|
|
Proceeds from sale of
business, net of cash transferred
|
|
|
2,747
|
|
|
|
—
|
|
Settlement on
derivatives not designated as hedges
|
|
|
(3,301)
|
|
|
|
—
|
|
Net cash flows used in
investing activities
|
|
$
|
(4,593)
|
|
|
$
|
(10,362)
|
|
|
|
|
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
|
|
|
Proceeds from issuance
of long-term debt
|
|
$
|
398,000
|
|
|
$
|
196,525
|
|
Payments of long-term
debt
|
|
|
(496,275)
|
|
|
|
(236,375)
|
|
Deferred loan
costs
|
|
|
(3,953)
|
|
|
|
—
|
|
Payments related to
tax withholding for share-based compensation
|
|
|
(6,813)
|
|
|
|
(2,949)
|
|
Exercise of stock
options
|
|
|
358
|
|
|
|
601
|
|
Change in cash
overdraft and other
|
|
|
687
|
|
|
|
(20,595)
|
|
Net cash flows used in
financing activities
|
|
$
|
(107,996)
|
|
|
$
|
(62,793)
|
|
|
|
|
|
|
|
|
|
|
Net (decrease)
increase in cash and cash equivalents
|
|
$
|
(76,159)
|
|
|
$
|
57,788
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents, beginning of period
|
|
$
|
100,385
|
|
|
$
|
2,486
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents, end of period
|
|
$
|
24,226
|
|
|
$
|
60,274
|
|
TIVITY HEALTH,
INC.
RECONCILIATION OF NON-GAAP MEASURES TO GAAP MEASURES
(Unaudited)
|
|
Reconciliation of
Income from Continuing Operations, GAAP Basis to
Adjusted EBITDA
from Continuing Operations, Non-GAAP Basis (in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
Months
Ended
June 30,
2021
|
|
|
% of
Revenue
|
|
Three
Months
Ended
June 30,
2020
|
|
|
% of
Revenue
|
|
Income from
continuing operations, GAAP basis
|
|
$
|
8,771
|
|
|
7.3%
|
|
$
|
17,202
|
|
|
21.0%
|
|
Income tax
expense
|
|
|
187
|
|
|
|
|
|
6,757
|
|
|
|
|
Interest
expense
|
|
|
9,400
|
|
|
|
|
|
11,253
|
|
|
|
|
Depreciation
expense
|
|
|
2,740
|
|
|
|
|
|
2,410
|
|
|
|
|
EBITDA from continuing
operations, non-GAAP basis (1)
|
|
$
|
21,098
|
|
|
|
|
$
|
37,622
|
|
|
|
|
Acquisition,
integration, and CEO transition costs (2)
|
|
|
1,118
|
|
|
|
|
|
3,023
|
|
|
|
|
Restructuring charges
(3)
|
|
|
—
|
|
|
|
|
|
827
|
|
|
|
|
Loss on
extinguishment and modification of debt (4)
|
|
|
19,027
|
|
|
|
|
|
—
|
|
|
|
|
Other expense
(5)
|
|
|
259
|
|
|
|
|
|
—
|
|
|
|
|
Adjusted EBITDA from
continuing operations, non-GAAP basis (6)
|
|
$
|
41,502
|
|
|
34.6%
|
|
$
|
41,472
|
|
|
50.6%
|
|
|
|
(1)
|
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.
|
(2)
|
Acquisition,
integration, and CEO transition costs consist of pre-tax charges of
$1,118 and $3,023 for the three months ended June 30, 2021 and
2020, respectively, primarily incurred in connection with the
acquisition and integration of Nutrisystem and with the termination
of the Company's former CEO in February 2020 and the hiring of a
new CEO in June 2020.
|
(3)
|
Restructuring charges
consist of pre-tax charges of $827 for the three months ended June
30, 2020 related to eliminating certain compensation costs in
response to the COVID-19 pandemic.
|
(4)
|
Loss on
extinguishment and modification of debt consists of pre-tax charges
of $19,027 for the three months ended June 30, 2021 related to the
Company's entering into a new credit facility on June 30,
2021.
|
(5)
|
Other expense
consists of pre-tax expense of $259 for the three months ended June
30, 2021 related to certain interest rate swap agreements that do
not qualify for hedge accounting treatment ("de-designated swaps")
and require changes in fair value to be recognized each period in
current earnings.
|
(6)
|
Adjusted EBITDA from
continuing operations is a non-GAAP financial measure. The
Company excludes acquisition, integration, and CEO transition
costs, restructuring charges, loss on extinguishment and
modification of debt, and other expense from this measure
because of its comparability to the Company's historical operating
results. The Company updated its definition of adjusted
EBITDA during the second quarter of 2021 to exclude loss on
extinguishment and modification of debt. The Company considers this
item to be outside the performance of its ongoing core business
operations and believes that presenting Adjusted EBITDA excluding
this item provides increased transparency as to the operating costs
of its current business performance. The Company did not revise the
prior period's Adjusted EBITDA amounts because there were no costs
similar in nature to this item. The Company believes it is
useful to investors to provide disclosures of its operating results
on the same basis as that used by management. You should not
consider Adjusted EBITDA 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.
|
Reconciliation of
Income from Continuing Operations Guidance, GAAP Basis
to
Adjusted EBITDA
from Continuing Operations Guidance, Non-GAAP Basis (in
millions)
|
|
|
|
|
|
Year
Ending
December 31,
2021
|
|
|
Income from
continuing operations guidance, GAAP basis
|
|
|
|
$60.7 -
$63.7
|
|
|
Depreciation expense
|
|
|
|
12
|
|
|
Interest
expense
|
|
|
|
35
|
|
|
Income
tax expense
|
|
|
|
20.2 –
21.2
|
|
|
EBITDA from
continuing operations guidance, non-GAAP basis
(7)
|
|
|
|
$127.9 -
$131.9
|
|
|
Integration, project, and CEO transition costs
(8)
|
|
|
|
5
|
|
|
Loss on
extinguishment and modification of debt (9)
|
|
|
|
19
|
|
|
Other
income (10)
|
|
|
|
(0.9)
|
|
|
Adjusted EBITDA from
continuing operations guidance, non-GAAP basis
(11)
|
|
|
|
$151 -
$155
|
|
|
|
|
|
|
|
|
|
(7)
|
EBITDA from
continuing operations 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 from continuing operations guidance in
isolation or as a substitute for income from continuing operations
guidance determined in accordance with U.S. GAAP. Figures may
not add due to rounding.
|
(8)
|
Integration, project,
and CEO transition costs primarily relate to strategic projects and
the Company's transition to a new CEO during 2020.
|
(9)
|
Loss on
extinguishment and modification of debt relates to the Company's
entering into a new credit facility on June 30, 2021.
|
(10)
|
Other income consists
of pre-tax income of $872 related to de-designated swaps that
require changes in fair value to be recognized each period in
current earnings. This amount represents other income
recognized for the six months ended June 30, 2021 and does not
include any impact from the de-designated swaps for the remainder
of 2021 as the Company is not able to predict future changes in
fair value of the de-designated swaps.
|
(11)
|
Adjusted EBITDA from
continuing operations guidance is a non-GAAP financial
measure. The Company excludes integration, project, and CEO
transition costs and loss on extinguishment and modification of
debt 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 guidance in isolation or as a substitute for
income from continuing operations guidance determined in accordance
with U.S. GAAP. Additionally, because Adjusted EBITDA from
continuing operations guidance may be defined differently by other
companies in the Company's industry, the non-GAAP financial measure
presented here may not be comparable to similarly titled measures
of other companies.
|
Reconciliation of
Net Cash Flows Provided by Operations, GAAP Basis to
Free Cash Flow,
Non-GAAP Basis (in thousands)
|
|
|
|
|
|
Three
Months
Ended
June
30,
2021
|
|
|
|
Three
Months
Ended
June
30,
2020
|
|
Net cash flows
provided by operations, GAAP basis
|
|
|
$
|
13,807
|
|
|
$
|
83,919
|
|
Acquisition of property and
equipment
|
|
|
|
(2,478)
|
|
|
|
(5,487)
|
|
Settlement on
derivatives not designated as hedges
|
|
|
|
(1,668)
|
|
|
|
—
|
|
Free cash flow,
non-GAAP basis (12)
|
|
|
$
|
9,661
|
|
|
$
|
78,432
|
|
|
|
|
|
|
|
|
|
|
|
(12)
|
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 and settlement on derivatives not designated
as hedges. The Company updated its definition of free cash
flow during the fourth quarter of 2020 to exclude settlement on
derivatives not designated as hedges. The Company considers these
costs to be a reduction of cash available for other uses and
believes that presenting free cash flow excluding settlement on
derivatives provides increased transparency. The Company did not
revise prior periods' free cash flow because there were no costs
similar in nature to this item. The Company believes free cash flow
is a useful measure of performance and an indication of the
strength of the Company and its ability to generate
cash. The Company believes it is useful to investors to
provide disclosures of its results on the same basis as that used
by management. You should not consider free cash flow in
isolation or as a substitute for net cash flows provided by
operating activities determined in accordance with U.S.
GAAP. Additionally, because free cash flow may be defined
differently by other companies in the Company's industry, the
non-GAAP financial measure presented here may not be comparable to
similarly titled measures of other companies.
|
Reconciliation of
Net Cash Flows Provided by Operations from Former Healthcare
Segment, GAAP Basis
to Free Cash Flow from Former Healthcare Segment, Non-GAAP Basis
(in thousands)
|
|
|
|
|
|
Three
Months
Ended
June
30,
2021
|
|
|
|
Three
Months
Ended
June
30,
2020
|
|
Net cash flows
provided by operations from former Healthcare segment, GAAP
basis
|
|
|
$
|
13,807
|
|
|
$
|
47,658
|
|
Acquisition of property and equipment
|
|
|
|
(2,478)
|
|
|
|
(3,355)
|
|
Settlement on derivatives not designated as hedges
|
|
|
|
(1,668)
|
|
|
|
—
|
|
Free cash flow from
former Healthcare segment, non-GAAP basis
(13)
|
|
|
$
|
9,661
|
|
|
$
|
44,303
|
|
|
|
|
|
|
|
|
|
|
|
(13)
|
Free cash flow from
former Healthcare segment 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 and
settlement on derivatives not designated as hedges. The
Company updated its definition of free cash flow during the fourth
quarter of 2020 to exclude settlement on derivatives not designated
as hedges. The Company considers these costs to be a reduction of
cash available for other uses and believes that presenting free
cash flow excluding settlement on derivatives provides increased
transparency. The Company did not revise prior periods' free cash
flow because there were no costs similar in nature to this item.
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 from former Healthcare segment in isolation
or as a substitute for net cash flows provided by operating
activities determined in accordance with U.S.
GAAP. Additionally, because free cash flow may be defined
differently by other companies in the Company's industry, the
non-GAAP financial measure presented here may not be comparable to
similarly titled measures of other companies.
|
Reconciliation of
Net Cash Flows Provided by Operations Guidance, GAAP Basis
to
Free Cash Flow
Guidance, Non-GAAP Basis (in millions)
|
|
|
|
|
|
Year
Ending
December
31,
2021
|
|
|
Net cash flows
provided by operations guidance, GAAP basis
|
|
|
$
|
86 - 90
|
|
|
Acquisition of property and
equipment
|
|
|
|
(20 - 15)
|
|
|
Settlement on derivatives not
designated as hedges
|
|
|
|
(6 - 5)
|
|
|
Free cash flow
guidance, non-GAAP basis (14)
|
|
|
$
|
60 - 70
|
|
|
|
|
|
|
|
|
|
(14)
|
Free cash flow
guidance is a non-GAAP financial measure and is defined by the
Company as net cash flows provided by operating activities less
acquisition of property and equipment and settlement on derivatives
not designated as hedges. The Company believes free cash flow
is a useful measure of performance and an indication of the
strength of the Company and its ability to generate
cash. The Company believes it is useful to investors to
provide disclosures of its results and guidance on the same basis
as that used by management. You should not consider free cash
flow guidance in isolation or as a substitute for net
cash flows provided by operating activities guidance determined in
accordance with U.S. GAAP. Additionally, because free cash
flow may be defined differently by other companies in the Company's
industry, the non-GAAP financial measure presented here may not be
comparable to similarly titled measures of other
companies.
|
Reconciliation of
Diluted Earnings Per Share ("EPS") from Continuing Operations, GAAP
Basis to
Adjusted EPS from
Continuing Operations, Non-GAAP Basis (footnote amounts in
thousands)
|
|
|
|
|
Three
Months
Ended
June
30,
2021
|
|
|
Three
Months
Ended
June
30,
2020
|
|
|
EPS from continuing
operations, GAAP basis
|
|
$
|
0.17
|
|
$
|
0.35
|
|
|
Net loss
per share attributable to acquisition, integration, CEO transition,
and restructuring costs (15)
|
|
|
0.02
|
|
|
0.06
|
|
|
Net loss
per share attributable to loss on extinguishment and modification
of debt (16)
|
|
|
0.28
|
|
|
—
|
|
|
Net loss
per share attributable to other expense (17)
|
|
|
0.00
|
|
|
—
|
|
|
Adjusted EPS from
continuing operations, non-GAAP basis (18)
|
|
$
|
0.48
|
|
$
|
0.41
|
|
|
|
|
|
|
|
|
|
|
|
(15)
|
Net loss attributable
to acquisition, integration, CEO transition, and restructuring
costs consists of pre-tax charges of $1,118 and $3,851 for the
three months ended June 30, 2021 and 2020, respectively.
These costs primarily related to the acquisition and integration of
Nutrisystem, the termination of the Company's former CEO in
February 2020 and hiring of a new CEO in June 2020, and
restructuring activities as described in Note 3 above. The
tax rate applied to these charges was 25%, which represented the
combined estimated U.S. federal and state statutory tax
rate.
|
(16)
|
Net loss attributable
to loss on extinguishment and modification of debt consists of
pre-tax charges of $19,027 for the three months ended June 30, 2021
related to the Company's entering into a new credit facility on
June 30, 2021. The tax rate applied to this loss was 25%,
which represented the combined estimated U.S. federal and state
statutory tax rate.
|
(17)
|
Net loss attributable
to other expense consists of pre-tax expense of $259 for the three
months ended June 30, 2021 related to de-designated swaps, as
described in Note 5 above. The tax rate applied to this
expense was 25%, which represented the combined estimated U.S.
federal and state statutory tax rate.
|
(18)
|
Adjusted EPS from
continuing operations is a non-GAAP financial measure.
The Company excludes net (income) loss per share attributable to
acquisition, integration, CEO transition, and restructuring costs,
loss on extinguishment and modification of debt, and other expense
from this measure because of its comparability to the Company's
historical operating results. The Company updated its
definition of adjusted EPS from continuing operations during
the second quarter of 2021 to exclude loss on extinguishment and
modification of debt. The Company considers this item to be outside
the performance of its ongoing core business operations and
believes that presenting Adjusted EPS from continuing
operations excluding this item provides increased transparency
as to the operating costs of its current business performance. The
Company did not revise the prior period's Adjusted EPS from
continuing operations amounts because there were no costs
similar in nature to this item. 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 from continuing operations in isolation
or as a substitute for EPS from continuing
operations determined in accordance with U.S. GAAP.
Additionally, because adjusted EPS from continuing operations
may be defined differently by other companies in the Company's
industry, the non-GAAP financial measures presented here may not be
comparable to similarly titled measures of other companies. Figures
may not add due to rounding.
|
Reconciliation of
EPS from Continuing Operations Guidance, GAAP Basis to Adjusted EPS
from
Continuing Operations Guidance, Non-GAAP Basis (footnote amounts in
thousands)
|
|
|
|
|
Year
Ending
December 31,
2021
|
|
|
EPS from continuing
operations guidance, GAAP basis
|
|
|
$1.20 -
$1.27
|
|
|
Net loss
per share attributable to integration, project, and CEO transition
costs (19)
|
|
|
0.07
|
|
|
Net loss
per share attributable to loss on extinguishment and modification
of debt (20)
|
|
|
0.28
|
|
|
Net
income per share attributable to other income
(21)
|
|
|
(0.01)
|
|
|
Adjusted EPS from
continuing operations guidance, non-GAAP basis
(22)
|
|
$
|
$1.54 –
1.62
|
|
|
|
|
|
|
|
|
(19)
|
Net loss per share
attributable to integration, project, and CEO transition costs
consists of pre-tax charges of $5,000 for the year ending December
31, 2021. These costs primarily relate to strategic projects
and the Company's transition to a new CEO during 2020. The
tax rate applied to these charges was 25%, which represents the
combined estimated U.S. federal and state statutory tax
rate.
|
(20)
|
Net loss per share
attributable to loss on extinguishment and modification of debt
consists of pre-tax charges of $19,027 for the year ending December
31, 2021 related to the Company's entering into a new credit
facility on June 30, 2021. The tax rate applied to this loss
was 25%, which represented the combined estimated U.S. federal and
state statutory tax rate.
|
(21)
|
Net income per share
attributable to other income consists of pre-tax income of $872 for
the year ending December 31, 2021 related to the Company's
de-designated swaps. This amount represents other income
recognized for the six months ended June 30, 2021 and does not
include any impact from the de-designated swaps for the remainder
of 2021 as the Company is not able to predict future changes in
fair value of the de-designated swaps. The tax rate applied
to this income was 25%, which represented the combined estimated
U.S. federal and state statutory tax rate.
|
(22)
|
Adjusted EPS from
continuing operations guidance is a non-GAAP financial
measure. The Company excludes net loss attributable to
restructuring, project, and CEO transition costs 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 EPS from continuing operations guidance in
isolation or as a substitute for EPS from continuing
operations guidance determined in accordance with U.S. GAAP.
Additionally, because adjusted EPS from continuing operations
guidance may be defined differently by other companies in the
Company's industry, the non-GAAP financial measures presented here
may not be comparable to similarly titled measures of other
companies. Figures may not add due to rounding.
|
Reconciliation of
Total Debt, GAAP Basis
to Net Debt,
Non-GAAP Basis (in thousands)
|
|
|
|
|
|
June 30,
2021
|
|
|
|
June
30,
2020
|
|
Total debt, GAAP
basis
|
|
|
$
|
385,598
|
|
|
$
|
1,012,322
|
|
Cash and cash
equivalents
|
|
|
|
(24,226)
|
|
|
|
(60,274)
|
|
Net debt, non-GAAP
basis (23)
|
|
|
$
|
361,372
|
|
|
$
|
952,048
|
|
|
|
|
|
|
|
|
|
|
|
(23)
|
Net debt is a
non-GAAP financial measure. The Company excludes cash and
cash equivalents from this measure and believes that net debt is an
important measure to monitor its leverage and evaluate the balance
sheet. The Company believes it is useful to investors to
provide disclosures of its financial position on the same basis as
that used by management. You should not consider net
debt in isolation or as a substitute for total
debt determined in accordance with U.S. GAAP.
Additionally, because net debt may be defined differently by
other companies in the Company's industry, the non-GAAP financial
measures presented here may not be comparable to similarly titled
measures of other companies.
|
View original
content:https://www.prnewswire.com/news-releases/tivity-health-delivers-strong-second-quarter-2021-results-with-year-over-year-revenue-growth-of-47-301348644.html
SOURCE Tivity Health, Inc.