EX-99.1 2 ex991_102617.htm EX-99.1, PRESS RELEASE
Exhibit 99.1


Investor Relations Contact:
Chip Wochomurka
(615) 614-4493
chip.wochomurka@tivityhealth.com

TIVITY HEALTH REPORTS THIRD-QUARTER 2017 RESULTS
¾¾¾¾¾¾¾¾¾¾¾
RAISES 2017 FINANCIAL GUIDANCE


NASHVILLE, Tenn. (October 26, 2017)Tivity Health, Inc. (NASDAQ: TVTY) today announced financial results for the third quarter and nine months ended September 30, 2017.

Third-Quarter 2017 Financial Highlights

·
Revenues increased by 10.1% to $137.7 million driven by growth in all three of the Company's product lines. This compares to revenues of $125.0 million for the third quarter of 2016.

·
Net income from continuing operations was $19.9 million, or $0.46 per diluted share, compared with $4.8 million, or $0.12 per diluted share, for the third quarter of 2016. Results for the third quarter of 2017 include an effective income tax rate of 34.3%. Adjusted net income from continuing operations for the third quarter of 2016 was $11.9 million, or $0.31 per diluted share, which excludes income tax expense related to the first half of 2016, restructuring charges, business separation costs and income attributable to the reversal of deferred tax asset valuation allowance. See pages 9-12 for a reconciliation of non-GAAP financial measures.

·
Weighted average diluted shares outstanding increased 13.3% to 43.5 million compared with the third quarter of 2016. The most significant factor driving the diluted share count increase was the 76% increase in the Company's weighted average stock price for the third quarter of 2017 compared with the third quarter of 2016.

·
EBITDA was $35.3 million or 25.7% of revenue. EBITDA for the third quarter of 2016 was $24.4 million, and adjusted EBITDA was $26.2 million, or 21.0% of revenue, which excluded restructuring costs and business separation costs.

·
Cash flow from operations was $33.6 million, and free cash flow totaled $31.8 million. Net funded debt was $151.3 million and the ratio of total debt to trailing 12 months EBITDA, as calculated under the Company's credit facility, improved to 1.2, compared with 1.9 at the end of 2016. At September 30, 2017, the Company had cash and cash equivalents of $4.9 million.
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TVTY Reports Third-Quarter Results
Page 2
October 26, 2017

TIVITY HEALTH, INC.
Financial Highlights
(Dollars in millions, except per-share data)
See pages 9-12 for a reconciliation of non-GAAP financial measures

 
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
 
2017
 
2016
 
2017
2016
 
Revenues
$
137.7
 
$
125.0
 
$
417.6
 
  $
376.1
 
Per diluted share:
                       
  Net income from continuing operations,
     GAAP basis
$
0.46
 
$
0.12
 
$
1.25
 
$
1.17
 
  Income tax expense related to six months
      ended June 30, 2016
   
-
     
0.41
     
-
     
0.42
 
  Reversal of deferred tax valuation allowance   -      (0.25 )    -      (0.26 )
  Business separation expense
 
-
   
0.01
   
0.02
   
0.01
 
  Restructuring charges
 
-
   
0.02
   
0.01
   
0.02
 
  Adjusted net income from continuing
     operations, non-GAAP basis
$
0.46
 
$
0.31
 
$
1.28
   $
1.36
 
Weighted average diluted common shares
  outstanding (in thousands)
 
43,527
   
38,421
   
42,253
   
37,505
 

"We are very pleased with the substantial growth in earnings and our overall operating and financial performance for the third quarter," said Donato Tramuto, Tivity Health's Chief Executive Officer. "This performance reflects consistent execution by our colleagues throughout the Company and the power of our brand and has enabled us to raise our financial guidance for 2017. Although multiple hurricanes in September and October disrupted our members and networks in the affected areas, we believe the value our members place on the SilverSneakers® brand and on the program, to some degree mutes the impact of that disruption. This value is tangibly evident in our annual member surveys, as well as in SilverSneakers' high Net Promoter Score.

"In addition to our strong financial performance for the quarter, we have seen continuing success in targeted initiatives designed to increase member awareness of our services through our social media presence, which is part of our broader marketing strategy. We will continue our work on these projects in the fourth quarter during the height of the Medicare Advantage open enrollment period. In 2018, we look forward to scaling the best of these projects that we believe will increase our growth rate beyond historical levels by increasing member enrollment and participation."

Adam Holland, Tivity Health's Chief Financial Officer, added, "Our third quarter margin profile improved from the first half of 2017 due to lower than anticipated operating costs, primarily due to the average cost of member visits, and from reduced investment expenses due to timing. Our revised financial guidance incorporates previously discussed higher spending in the fourth quarter to support the Medicare Advantage open enrollment period, other planned marketing initiatives and a modest increase in spending on information technology. During the fourth quarter, we expect to continue reducing funded debt and building our cash position, concurrent with ongoing investments to drive increased member awareness and engagement."

2017 Financial Guidance

Tivity Health announced today that, based on results for the first nine months of the year and the Company's outlook for the remainder of 2017, it has raised its financial guidance for 2017, as follows:
 
·
 revenues in a range of $555 million to $557 million, compared with the previous range of $550 million to $558 million;
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TVTY Reports Third-Quarter Results
Page 3
October 26, 2017

·
adjusted EBITDA in a range of $126 million to $128 million, compared with the previous range of $119 million to $123 million; and
·
adjusted earnings per diluted share in a range of $1.58 to $1.61, compared with the previous range of $1.50 to $1.58.

The guidance for adjusted EBITDA and adjusted earnings per diluted share reflects the exclusion of pre-tax restructuring and business separation expenses totaling $2.4 million that were incurred in the first quarter of 2017.  See page 12 for a reconciliation of adjusted earnings per diluted share guidance to earnings per diluted share guidance.  The Company does not provide a reconciliation of adjusted EBITDA guidance because certain information required for such reconciliation is not determinable with reasonable certainty.

This guidance for 2017 now includes the following assumptions:
 
·
depreciation and amortization expense of approximately $3 million;
·
total interest expense of approximately $16 million;
·
a federal income tax rate for the remainder of the year of approximately 39%;
·
weighted average diluted shares outstanding of approximately 42.7 million for the full year, with an expected fourth quarter diluted share count of approximately 43.9 million;
·
free cash flow of approximately $95 million; and
·
capital expenditures of approximately $6 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 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. Presentation materials related to the conference call may also be accessed by going to www.tivityhealth.com and clicking Investors. For those who cannot listen to the live broadcast, a telephonic replay will be available for one week at 719-457-0820, code 6062340, 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, revenues 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 risks associated with recent changes in the Company's senior management team;
·
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 products and 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;
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TVTY Reports Third-Quarter Results
Page 4
October 26, 2017

 
·
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 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 ability of the Company's customers to maintain the number of covered lives enrolled in the plans during the terms of its agreements;
·
counterparty risk associated with the Company's cash convertible notes hedges;
·
the risks associated with valuation of the cash convertible notes hedges and the cash conversion derivative, which may result in volatility to the Company's consolidated statements of comprehensive income (loss) if these transactions do not completely offset one another;
·
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, 2016 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 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 14.5 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.
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TVTY Reports Third-Quarter Results
Page 5
October 26, 2017

TIVITY HEALTH, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)

ASSETS

 
 
 
September 30,
2017
 
 
December 31,
2016
   
Current assets:
 
 
 
 
     
Cash and cash equivalents
 
$
4,908
 
 
$
1,602
   
Accounts receivable, net
 
 
53,833
 
 
 
50,424
   
Prepaid expenses
 
 
3,571
 
 
 
3,409
   
Other current assets
 
 
2,124
 
 
 
2,250
   
Cash convertible notes hedges, current
   
166,473
     
   
Income taxes receivable
 
 
 
 
 
426
   
Total current assets
 
 
230,909
 
 
 
58,111
   
 
 
 
 
 
 
 
 
   
Property and equipment:
 
 
 
 
 
 
 
   
Leasehold improvements
 
 
10,374
 
 
 
10,144
   
Computer equipment and related software
 
 
22,490
 
 
 
23,024
   
Furniture and office equipment
 
 
8,184
 
 
 
8,670
   
Capital projects in process
 
 
3,311
 
 
 
2,079
   
 
 
 
44,359
 
 
 
43,917
   
Less accumulated depreciation
 
 
(34,173
)
 
 
(35,586
)
 
 
 
 
10,186
 
 
 
8,331
   
 
 
 
 
 
 
 
 
   
Other assets
 
 
13,436
 
 
 
6,688
   
Cash convertible notes hedges, long-term
   
     
48,361
   
Long-term deferred tax asset
 
 
38,556
 
 
 
59,562
   
Intangible assets, net
   
29,049
     
29,049
   
Goodwill, net
   
334,680
 
 
 
334,680
   
Total assets
 
$
656,816
 
 
$
544,782
   
 
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TVTY Reports Third-Quarter Results
Page 6
October 26, 2017

TIVITY HEALTH, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
(Unaudited)

LIABILITIES AND STOCKHOLDERS' EQUITY

 
 
September 30,
2017
 
 
December 31,
2016
 
Current liabilities:
 
 
 
 
 
 
Accounts payable
 
$
27,121
 
 
$
26,029
 
Accrued salaries and benefits
 
 
10,543
 
 
 
18,686
 
Accrued liabilities
 
 
31,926
 
 
 
33,623
 
Other current liabilities
 
 
731
 
 
 
397
 
Cash conversion derivative, current
   
166,473
     
 
Current portion of long-term debt
 
 
144,064
 
 
 
46,046
 
Current portion of long-term liabilities
 
 
2,709
 
 
 
7,582
 
Total current liabilities
 
 
383,567
 
 
 
132,363
 
 
 
 
 
 
 
 
 
 
Long-term debt
 
 
4,955
 
 
 
164,297
 
Cash conversion derivative, long-term
   
     
48,361
 
Other long-term liabilities
 
 
5,606
 
 
 
10,463
 
 
 
 
 
 
 
 
 
 
Stockholders' equity:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Preferred stock $.001 par value, 5,000,000 shares authorized, none outstanding
 
 
 
 
 
 
Common stock $.001 par value, 120,000,000 shares authorized, 39,551,278 and 38,933,580 shares outstanding, respectively
 
 
39
 
 
 
39
 
Additional paid-in capital
 
 
348,462
 
 
 
341,270
 
Accumulated deficit
 
 
(57,631
 
 
(119,327
)
Treasury stock, at cost, 2,254,953 shares in treasury
 
 
(28,182
)
 
 
(28,182
)
Accumulated other comprehensive loss
 
 
 
 
 
(4,502
)
Total stockholders' equity
 
 
262,688
 
 
 
189,298
 
Total liabilities and stockholders' equity
 
$
656,816
 
 
$
544,782
 


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TVTY Reports Third-Quarter Results
Page 7
October 26, 2017

TIVITY HEALTH, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In thousands, except earnings (loss) per share data)
(Unaudited)

 
Three Months Ended
 
Nine Months Ended
 
 
September 30,
 
September 30,
 
 
2017
   
2016
 
2017
 
2016
 
 
 
 
 
 
   
 
 
 
 
 
Revenues
$
137,703
 
 
$
125,049
 
$
417,588
 
$
376,065
 
Cost of services (exclusive of depreciation and amortization of $699, $1,334, $2,003 and $4,548, respectively, included below)
 
94,539
 
 
 
89,153
 
 
296,009
 
 
269,411
 
Selling, general & administrative expenses
 
7,838
 
 
 
10,406
 
 
24,376
 
 
29,924
 
Depreciation and amortization
 
850
 
 
 
1,603
 
 
2,426
 
 
5,352
 
Restructuring and related charges
 
(16
 
 
1,129
 
 
669
 
 
1,170
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating income
 
34,492
 
 
 
22,758
 
 
94,108
 
 
70,208
 
Interest expense
 
4,203
 
 
 
4,833
 
 
12,167
 
 
13,115
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income before income taxes
 
30,289
 
 
 
17,925
 
 
81,941
 
 
57,093
 
Income tax expense
 
10,403
 
 
 
13,126
 
 
29,334
 
 
13,126
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income from continuing operations
 
19,886
 
 
 
4,799
 
 
52,607
 
 
43,967
 
Income (loss) from discontinued operations, net of income tax
 
6,519
 
 
 
49,075
 
 
2,625
 
 
(179,482
)
Net income (loss) 
 
26,405
 
 
 
53,874
 
 
55,232
 
 
(135,515
)
Less: net income attributable to non-controlling interest
 
 
 
 
 
80
 
 
 
 
 
496
 
Net income (loss) attributable to Tivity Health, Inc.
$
 
26,405
 
 
$
53,794
 
$
 
55,232
 
$
(136,011
 
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings (loss) per share attributable to
      Tivity Health, Inc. - basic:
 
 
 
 
 
 
 
 
 
 
 
 
 
   Continuing operations
$
0.50
 
 
$
0.13
 
$
1.34
 
$
1.21
 
   Discontinued operations
$
0.17
 
 
$
1.32
 
$
0.07
 
$
(4.94
)
   Net income (loss)
$
0.67
 
 
$
1.45
 
$
1.41
 
$
(3.73
)
  
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings (loss) per share attributable to
      Tivity Health, Inc. - diluted:
 
 
 
 
 
 
 
 
 
 
 
 
 
   Continuing operations
$
0.46
 
 
$
0.12
 
$
1.25
 
$
1.17
 
   Discontinued operations
$
0.15
 
 
1.28
 
$
0.06
 
(4.80
)
   Net income (loss)
$
0.61
 
 
1.40
 
$
1.31
 
(3.63
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Comprehensive income (loss)
$
26,405
 
 
$
54,096
 
$
59,734
 
$
(134,411
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average common shares
 
 
 
 
 
 
 
 
 
 
 
 
 
 and equivalents:
 
 
 
 
 
 
 
 
 
 
 
 
 
  Basic
 
39,443
 
 
 
37,037
 
 
39,254
 
 
36,441
 
  Diluted
 
43,527
 
 
 
38,421
 
 
42,253
 
 
37,505
 
                           
 
 
 
                       
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TVTY Reports Third-Quarter Results
Page 8
October 26, 2017


TIVITY HEALTH, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 
 
 
Nine Months Ended
September 30,
 
 
2017
 
 
2016
 
Cash flows from operating activities:
 
 
 
 
 
 
Net income from continuing operations
 
$
52,607
 
 
$
43,967
 
Net income (loss) from discontinued operations
   
2,625
     
(179,482
)
Adjustments to reconcile net income (loss) to net cash provided by operating activities, net of business acquisitions:
 
 
 
 
 
 
 
 
Depreciation and amortization
 
 
2,446
 
 
 
30,319
 
Amortization of deferred loan costs
 
 
2,318
 
 
 
1,645
 
Amortization of debt discount
 
 
5,941
 
 
 
5,618
 
Share-based employee compensation expense
 
 
5,019
 
 
 
15,367
 
(Gain) loss on sale of TPHS business
   
(4,782
)
   
195,772
 
Loss on release of cumulative translation adjustment
   
3,044
     
 
Equity in income from joint ventures
 
 
 
 
 
(271
Deferred income taxes
 
 
27,545
 
 
 
(89,013
)
(Increase) decrease in accounts receivable, net
 
 
(2,986
 
 
1,837
 
Decrease in other current assets
 
 
2,035
 
 
 
5,548
 
Decrease in accounts payable
 
 
(1,247
 
 
(3,698
Decrease in accrued salaries and benefits
 
 
(10,925
 
 
(5,457
(Decrease) increase in other current liabilities
 
 
(7,487
 
 
1,568
 
Other
 
 
(2,525
 
 
(5,642
Net cash flows provided by operating activities
 
$
73,628
 
 
$
18,078
 
 
 
 
 
 
 
 
 
 
Cash flows from investing activities:
 
 
 
 
 
 
 
 
Acquisition of property and equipment
 
$
(3,974
)
 
$
(12,860
)
Investment in joint ventures
 
 
 
 
 
(1,298
)
Proceeds from sale of MeYou Health
   
     
5,156
 
Payments related to sale of TPHS business
   
     
(27,469
)
Other
 
 
 
 
 
(787
)
Net cash flows used in investing activities
 
$
(3,974
)
 
$
(37,258
)
 
 
 
 
 
 
 
 
 
Cash flows from financing activities:
 
 
 
 
 
 
 
 
Proceeds from issuance of long-term debt
 
 
330,700
 
 
 
396,491
 
Payments of long-term debt
 
 
(400,945
)
 
 
(385,188
)
Payments related to tax withholding for share-based compensation
 
 
(1,798
 
 
(4,962
Exercise of stock options
 
 
4,314
 
 
 
8,747
 
Deferred loan costs
   
(2,452
)
   
(424
)
Change in cash overdraft and other
 
 
2,083
 
 
 
2,556
 
Net cash flows (used in) provided by financing activities
 
$
(68,098
)
 
$
17,220
 
 
 
 
 
 
 
 
 
 
Effect of exchange rate changes on cash
 
$
1,750
 
 
$
817
 
 
 
 
 
 
 
 
 
 
Less: net increase in discontinued operations cash and cash equivalents
 
$
   
$
(1,637
)
                 
Net increase in cash and cash equivalents
 
$
3,306
 
 
$
494
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents, beginning of period
 
$
1,602
 
 
$
233
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents, end of period
 
$
4,908
 
 
$
727
 
 
 
 
 
 
 
 
 
 
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TVTY Reports Third-Quarter Results
Page 9
October 26, 2017

TIVITY HEALTH, INC.
RECONCILIATION OF NON-GAAP MEASURES TO GAAP MEASURES
(Unaudited)

Reconciliation of Adjusted EBITDA from Continuing Operations, Non-GAAP Basis
to Net Income from Continuing Operations, GAAP Basis
(In thousands)

     
Three Months Ended
September 30, 2017
     
Three Months Ended
September 30, 2016
   
 
Adjusted EBITDA from continuing operations, non-GAAP basis (1)
 
$
35,326
   
$
26,204
   
 
Business separation costs (2)
   
     
(714
)
 
 
Restructuring charges (3)
   
16
     
(1,129
)
 
 
EBITDA from continuing operations, non-GAAP basis (4)
 
$
35,342
   
$
24,361
   
 
Depreciation and amortization
   
(850
)
   
(1,603
)
 
 
Interest expense
   
(4,203
)
   
(4,833
)
 
 
Income tax expense
   
(10,403
)
   
(13,126
)
 
 
Net income from continuing operations, GAAP basis
 
$
19,886
   
$
4,799
   

(1)
Adjusted EBITDA from continuing operations is a non-GAAP financial measure.  The Company excludes business separation costs and 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 net income from continuing operations determined in accordance with accounting principles generally accepted in the United States.

(2)
Business separation costs consists of pre-tax charges of $714,000 for the three months ended September 30, 2016 related to the separation of the Network Solutions business from the disposed total population health business.

(3)
Restructuring charges consists of pre-tax charges of ($16,000) and $1,129,000 for the three months ended September 30, 2017 and 2016, respectively, associated with the 2016 restructuring of corporate support infrastructure.

(4)
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.















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TVTY Reports Third-Quarter Results
Page 10
October 26, 2017



Reconciliation of Adjusted Net Income from Continuing Operations
Per Share ("EPS"), Non-GAAP Basis to EPS, GAAP Basis

 
Three Months Ended
September 30,
 
 
Nine Months Ended
September 30,
 
 
2017 
 
2016
 
 
2017
 
 
2016
 
Adjusted EPS, non-GAAP basis (5)
$
0.46
 
 
$
0.31
 
 
$
1.28
 
 
$
1.36
 
EPS (loss) attributable to income tax expense related to six months ended June 30, 2016 (6)
 
 
 
 
(0.41
)
 
 
 
 
 
(0.42
)
EPS attributable to reversal of deferred tax asset valuation allowance (7)
 
     
0.25
     
     
0.26
 
EPS (loss) attributable to business separation costs (8)
 
     
(0.01
)
   
(0.02
)
   
(0.01
)
EPS (loss) attributable to restructuring charges (9)
 
     
(0.02
)
   
(0.01
)
   
(0.02
)
EPS, GAAP basis
$
0.46
   
$
0.12
   
$
1.25
   
$
1.17
 

(5)
Adjusted EPS is a non-GAAP financial measure.  The Company excludes EPS (loss) attributable to income tax expense related to the six months ended June 30, 2016, the reversal of deferred tax asset valuation allowance, business separation costs, and 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.

(6)
EPS (loss) attributable to income tax expense related to six months ended June 30, 2016 totals $15,602,000 and is related to the incremental tax provision for the first half of 2016, a period in which no income tax provision was recorded as a result of off-setting tax benefits on losses from discontinued operations.

(7)
EPS attributable to the reversal of a deferred tax asset valuation allowance during the three months ended September 30, 2016 totals $9,615,000 and is due to a reversal of a deferred tax asset valuation allowance recorded in the fourth quarter of 2015.

(8)
EPS (loss) attributable to business separation costs consists of pre-tax charges of $1,639,000 for the nine months ended September 30, 2017 and $714,000 for each of the three and nine months ended September 30, 2016 related to the separation of the Network Solutions business from the disposed total population health business.  The tax rate applied to these costs was 39.55%, which represented the combined estimated U.S. federal and state statutory tax rate.

(9)
EPS (loss) attributable to restructuring charges consists of pre-tax charges of $669,000 for the nine months ended September 30, 2017 and $1,129,000 for each of the three and nine months ended September 30, 2016, respectively, associated with the 2016 restructuring of corporate support infrastructure.  The tax rate applied to these restructuring charges was 39.55%, which represented the combined estimated U.S. federal and state statutory tax rate

















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TVTY Reports Third-Quarter Results
Page 11
October 26, 2017


Reconciliation of Adjusted Net Income from Continuing Operations, Non-GAAP Basis to
Net Income from Continuing Operations, GAAP Basis (in thousands)

 
 
 
Three Months Ended September 30,
2016
 
Adjusted net income from continuing operations, non-GAAP basis (10)
 
 $
11,900
 
Net loss attributable to income tax expense related to six months ended June 30, 2016 (11)
   
(15,602
)
Net income attributable to reversal of deferred tax asset valuation allowance (12)
   
9,615
 
Net loss attributable to business separation costs (13)
   
(432
)
Net loss attributable to restructuring charges (14)
   
(682
)
Net income from continuing operations, GAAP basis
 
$
4,799
 
         
 
(10)
Adjusted net income from continuing operations is a non-GAAP financial measure.  The Company excludes net loss attributable to income tax expense related to the six months ended June 30, 2016, the reversal of deferred tax asset valuation allowance, business separation costs, and 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 net income 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

(11)
Net loss attributable to income tax expense related to six months ended June 30, 2016 is related to the incremental tax provision for the first half of 2016, a period in which no income tax provision was recorded as a result of off-setting tax benefits on losses from discontinued operations.

(12)
Net income attributable to the reversal of a deferred tax asset valuation allowance is due to a reversal during the three months ended September 30, 2016 of a deferred tax asset valuation allowance recorded in the fourth quarter of 2015.

(13)
Net loss attributable to business separation costs consists of pre-tax charges of $714,000 related to the separation of the Network Solutions business from the disposed total population health business.  The tax rate applied to these costs was 39.55%, which represented the combined estimated U.S. federal and state statutory tax rate.

(14)
Net loss attributable to restructuring charges consists of pre-tax charges of $1,129,000 associated with the 2016 restructuring of corporate support infrastructure.  The tax rate applied to these restructuring charges was 39.55%, which represented the combined estimated U.S. federal and state statutory tax rate.


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TVTY Reports Third-Quarter Results
Page 12
October 26, 2017

Reconciliation of Adjusted EPS Guidance, Non-GAAP Basis
to EPS Guidance, GAAP Basis

     
Fiscal Year Ending December 31, 2017
 
 
Adjusted EPS guidance, non-GAAP basis (15)
 
$
1.58 - 1.61
 
 
EPS (loss) guidance attributable to business separation costs (16)
   
(0.02
)
 
EPS (loss) guidance attributable to restructuring charges (17)
   
(0.01
)
 
EPS guidance, GAAP basis
 
$
1.55 – 1.58
 

(15) Adjusted EPS guidance is a non-GAAP financial measure.  The Company excludes EPS (loss) guidance attributable to business separation expenses and 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 EPS guidance in isolation or as a substitute for EPS guidance determined in accordance with accounting principles generally accepted in the United States.

(16) EPS (loss) guidance attributable to business separation costs consists of pre-tax charges of $1,639,000 related to the separation of the Network Solutions business from the disposed total population health business.  The tax rate applied to these costs was 39.55%, which represented the combined estimated U.S. federal and state statutory tax rate.

(17) EPS (loss) guidance attributable to restructuring charges consists of pre-tax charges of $737,000 associated with the 2016 restructuring of corporate support infrastructure.  The tax rate applied to these restructuring charges was 39.55%, which represented the combined estimated U.S. federal and state statutory tax rate.




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