Tivity Health, Inc. (TVTY) Tops Q3 EPS by 35c, Revenues Beat

Tivity Health, Inc. (NASDAQ: TVTY) reported Q3 EPS of $0.72, $0.35 better than the analyst estimate of $0.37. Revenue for the quarter came in at $254.9 million versus the consensus estimate of $247.14 million.

"The Healthcare and Nutrition divisions both delivered strong performance this quarter. SilverSneakers continues to show strong brand affinity through the acceleration and continued adoption of our digital portfolio. Our healthcare business had another robust renewal and selling season. We will retain virtually all of our current health plan customers and gain net new eligible members in SilverSneakers from new clients and expanded markets," said Richard Ashworth, President & Chief Executive Officer. "Divesting the Nutrition division will significantly strengthen our balance sheet and will provide a great foundation to drive growth and to accelerate the execution of our strategic plan."

Third Quarter Highlights and Business Update:

• Healthcare division adjusted EBITDA increased by 5% compared to the prior year;
• Healthcare division virtual visits grew by nearly 30% quarter over quarter;
• Healthcare division year to date virtual visits through October surpassed one million;
• Added over 350,000 new SilverSneakers eligibles for 2021 through new client wins and market expansions;
• Nutrisystem brand direct to consumer (DTC) revenue grew by 20% versus the prior year, driven by a 31% increase in revenue from new customers;
• Executing on a Company-wide operational realignment that results in an organization that is lean, efficient and optimized for growth with capital available for necessary investments to enable us to deliver on strategic priorities;
• Ended the quarter with cash on hand of $56.4 million after prepaying $39.7 million of principal amortization on term loan debt, resulting in the Company's next quarterly installment being due in March 2022.

Mr. Ashworth continued, "In pursuit of a member-centric organization, we are focused on our healthcare business that will leverage SilverSneakers, Prime and WholeHealth Living, combining them with innovative digital engagement tools and data. We are delivering new fitness offerings and social connectivity to engage more members in an omnichannel way: in the gym, through our virtual channels, and in the community to become a modern destination for healthy living. We will partner with best-in-class healthcare and consumer data partners to provide insights and power a digital engagement platform."

Outlook

Based on the Healthcare segment's revenue and adjusted EBITDA(1) performance through the third quarter of 2020 and the outlook for the remainder of 2020, Tivity Health is providing guidance for annual 2020 Healthcare segment revenue in a range of $425 million to $432 million and adjusted EBITDA in a range of $143 million to $145 million.

"We believe the financial and operational performance of our Healthcare segment in the second and third quarters reflect the ability of our business to address the challenges of the pandemic. Based on early fourth quarter activity, we anticipate utilization costs in our Prime and WholeHealth Living businesses to increase as compared to the third quarter. We remain focused on managing the business with financial discipline and completing the Nutrition segment divestiture, and we look forward to investing in our healthcare business for 2021 and beyond," said Adam Holland, Chief Financial Officer.

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

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