Tivity Health, Inc. (TVTY) Tops Q4 EPS by 9c, Slight Beat on Revenues; Offers FY18 EPS Outlook Above Consensus

Tivity Health, Inc. (NASDAQ: TVTY) reported Q4 EPS of $0.41, $0.09 better than the analyst estimate of $0.32. Revenue for the quarter came in at $139.4 million versus the consensus estimate of $138.29 million.

Fourth-Quarter 2017 Financial Highlights

• Revenues increased by 11.5% to $139.4 million driven by growth in all three of the Company’s lines of business. This compares to revenues of $124.9 million for the fourth quarter of 2016.
• Income from continuing operations was $8.6 million, a decrease of 28.9% from $12.1 million for the fourth quarter of 2016. Adjusted income from continuing operations increased 26.0% to $17.6 million compared to $14.0 million for the fourth quarter of 2016. The fourth quarter of 2017 excludes $2.6 million in pre-tax restructuring charges and $7.4 million of income tax expense related to tax reform legislation. Adjusted income from continuing operations for the fourth quarter of 2016 excludes $5.2 million of pre-tax business separation costs and restructuring charges and a $2.2 million favorable adjustment to pre-tax depreciation expense. See pages 11-14 for a reconciliation of non-GAAP financial measures.
• Income from continuing operations per diluted share was $0.20 compared to $0.30 for the fourth quarter of 2016, and adjusted income from continuing operations per diluted share grew 17.1%, to $0.41 from $0.35 for the fourth quarter of 2016. The adjusted income per diluted share of $0.41 excludes a restructuring charge of $0.04 per diluted share and a charge of $0.17 per diluted share resulting from the 2017 tax reform legislation. See pages 11-14 for a reconciliation of non-GAAP financial measures.
• Weighted average diluted shares outstanding increased to 43.4 million compared with 39.8 million for the fourth quarter of 2016. The most significant factor driving the diluted share count increase was the 56% increase in the Company’s weighted average stock price compared with the fourth quarter of 2016.
• Adjusted EBITDA was $29.8 million, or 21.4% of revenues, which excludes $2.6 million of restructuring expenses, compared to adjusted EBITDA for the fourth quarter of 2016 of $29.1 million, or 23.3% of revenues, which excluded $5.2 million of business separation costs and restructuring charges. See pages 11-14 for a reconciliation of non-GAAP financial measures.
• Cash flow from operations was $31.6 million, and free cash flow totaled $29.7 million. Total debt was $146.0 million, and the ratio of total debt to trailing 12 months EBITDA, as calculated under the Company’s credit facility, improved to 1.0, compared with 1.9 at the end of 2016. At December 31, 2017, the Company had cash and cash equivalents of $28.4 million. See pages 11-14 for a reconciliation of non-GAAP financial measures.

2018 Financial Guidance

Tivity Health announced today its 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 guidance for 2018 also includes:

• 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 to 44.0 million;
• Free cash flow in excess of $100 million; and
• Capital expenditures of approximately $10 million.

GUIDANCE:

Tivity Health, Inc. sees FY2018 EPS of $2.12-$2.20, versus the consensus of $1.76. Tivity Health, Inc. sees FY2018 revenue of $607-625 million, versus the consensus of $616.41 million.

For earnings history and earnings-related data on Tivity Health, Inc. (TVTY) click here.

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