REPORTS EPS OF $0.52 AND ADJUSTED EPS OF $0.53 ON REVENUES OF $152 MILLION
REPORTS EPS OF $0.52 AND ADJUSTED EPS OF $0.53 ON REVENUES OF $152 MILLION
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.
Financial Highlights
(Dollars in millions, except per-share data)
See pages 9-11 for a reconciliation of non-GAAP financial measures
Three Months Ended
June 30,
--------
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.
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
ASSETS
June 30, December 31,
2017
2018
----
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, December 31,
2017
2018
----
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
Ended
Three Months
June 30, 2018 Ended
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 Three Months Ended
June 30, 2018 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.
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SOURCE Tivity Health, Inc.
Company Codes: NASDAQ-NMS:TVTY
