Tivity Health Delivers Strong Results For First Quarter 2021 With 141% Year Over Year Increase In Income From Continuing Operations

NASHVILLE, Tenn., May 5, 2021 /PRNewswire/ -- Tivity Health, Inc. TVTY, today announced financial results for the first quarter ended March 31, 2021.

Richard Ashworth, President and Chief Executive Officer, commented, "We delivered strong results for the first quarter of 2021, allowing us to tighten the ranges on revenue and Adjusted EBITDA guidance for the full year. We successfully expanded our SilverSneakers virtual offerings by launching a new Roku application for viewing on-demand content and are on track to deploy our omni-channel capabilities by the start of the third quarter.  These strategic initiatives combined with the continued momentum in the number of in-person visits give us optimism for the remainder of the year.  The recent additions of our new Chief Information Officer (CIO) and Chief Experience and Innovation Officer (CXIO) underline our commitment to quickly expand our member-centric engagement through a robust platform which includes digital and in-person experiences."

First Quarter Highlights

• Revenue from continuing operations was $108.1 million during the first quarter of 2021; 
• Income from continuing operations was $19.9 million, an increase of $11.7 million, or 141%, over the prior year; 
• Adjusted EBITDA from continuing operations was $41.2 million, representing an increase of $11.0 million, or 36%, compared to the prior year;
• In-person SilverSneakers gym visits totaled 11.2 million for Q1 2021, growing by 19% over the fourth quarter of 2020; 
• Virtual SilverSneakers visits accelerated, totaling 1.2 million during the quarter, a 50% increase over the fourth quarter of 2020, with 36% of virtual visit participants being new to SilverSneakers;
• The Company ended the quarter with cash on hand of $52.4 million and a leverage ratio of 2.11, as calculated under its credit agreement.  During the first quarter of 2021, the Company prepaid $63.6 million of principal and amortization of term loan debt.  The Company's next quarterly installment is not due until December 2022;
• A new comprehensive scientific study conducted by Avalere Health showed that total average healthcare expenses for SilverSneakers participants were 16% lower compared to non-participating Medicare Advantage members.

First Quarter 2021 Financial Information

Dollars in millions, except per-share data

See pages 9-13 for a reconciliation of non-GAAP financial measures.

Revenues in the first quarter of 2021 of $108.1 million decreased $51.6 million, or approximately 32%, compared to the first quarter of 2020, primarily as a result of a significant decrease in SilverSneakers revenue of $41.8 million resulting from fewer revenue-generating visits due to the COVID-19 pandemic.  Additionally, Prime Fitness revenue decreased by $10.2 million primarily due to terminations and suspensions.

The mix of SilverSneakers revenue during the first quarter of 2021 remained different from the mix during the first quarter of 2020 due to the reduction in fitness location visits resulting from the COVID-19 pandemic. Revenue from per-member-per-month fees represented 53% of the Company's SilverSneakers revenue in the first quarter of 2021, compared to 36% in the same quarter of 2020.   

Income from continuing operations for the first quarter of 2021 was $19.9 million, an increase of $11.7 million compared to the first quarter of 2020.  Adjusted EBITDA was $41.2 million for the first quarter, or 38.1% of revenues, compared to $30.2 million for the first quarter of 2020, or 18.9% of revenues.  This improvement is primarily due to the mix of per-member-per-month fees for SilverSneakers driven by a reduction in fitness location visits and related costs for SilverSneakers and Prime, and also reflects a reduction in advertising expense and employee-related expenses.

During the first quarter, the Company prepaid $63.6 million of principal amortization on its term loan debt, and net debt (total debt less cash and cash equivalents) improved to $353 million, resulting in a net leverage ratio of 2.11. The Company's next quarterly installment is not due until December 2022. 

Updated 2021 Financial Guidance

Tivity Health announced today that, based on first-quarter results and the Company's outlook for the remainder of 2021, it has updated its financial guidance as follows:

 Dollars in millions, except per-share data

Tivity Health's detailed guidance considerations for 2021 may be found in the supplemental information posted on the Company's website at http://investors.tivityhealth.com.  

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 4896873 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 4896873, and the replay will also be available on the Company's web site for the next 7 months.

About Tivity Health

Tivity Health^® Inc. TVTY is a leading provider of healthy life-changing solutions, including SilverSneakers^®, Prime^® Fitness, WholeHealth Living^® and Wisely Well™.  We are focused on becoming 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 seniors under the SilverSneakers umbrella.  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.  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 9-13.   

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) 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 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 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 our third-party vendors, including as a result of telecommuting issues associated with the Company's employees 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 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 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.

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SOURCE Tivity Health, Inc.