8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of report (Date of earliest event reported):  August 7, 2019

TIVITY HEALTH, INC.

(Exact name of registrant as specified in its charter)

Delaware	000-19364	62-1117144
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

701 Cool Springs Boulevard Franklin, Tennessee	37067
(Address of principal executive offices)	(Zip Code)

(800) 869-5311

(Registrant's telephone number, including area code)

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock - $.001 par value	TVTY	The Nasdaq Stock Market LLC

Item 2.02. Results of Operations and Financial Condition.

On August 7, 2019, Tivity Health, Inc. issued a press release announcing earnings results for the second quarter ended June 30, 2019, the text of which is attached hereto as Exhibit 99.1. This information furnished pursuant to this Item 2.02 and Exhibit 99.1 shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and shall not be deemed to be incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act except as shall be expressly set forth by specific reference in such filing.

Item 9.01. Financial Statements and Exhibits.

Exhibit 99.1 Exhibit 99.2   Press Release dated August 7, 2019 Supplemental Material for Press Release dated August 7, 2019

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

TIVITY HEALTH, INC.
By:	/s/ Adam Holland
	Name: Adam Holland
	Title: Chief Financial Officer

Date:  August 7, 2019

EX-99.1

Exhibit 99.1

Investor Relations Contact:

Tommy Lewis, Chief Transformation Officer & Chief of Staff to the CEO

(615) 614-4576

investor.relations@tivityhealth.com

TIVITY HEALTH REPORTS SECOND-QUARTER 2019 RESULTS

———————————

REPORTS REVENUES OF $340.4 MILLION

———————————

REPAID $90 MILLION IN DEBT AS OF JULY 31, ONE YEAR AHEAD OF REQUIRED SCHEDULE

———————————

UPDATES FINANCIAL GUIDANCE FOR 2019

———————————

BOARD OF DIRECTORS APPOINTS NEW INDEPENDENT DIRECTOR

NASHVILLE, Tenn. (August 7, 2019) - Tivity Health, Inc. (NASDAQ:TVTY) today announced financial results for the second quarter ended June 30, 2019.

Second-Quarter 2019 Financial Highlights

• Revenues increased by 124.1% to $340.4 million, including nutrition segment revenues of $182.9 million.  This compares to revenues of $151.9 million for the second quarter of 2018. 

• Income from continuing operations was $18.1 million compared to $22.7 million for the second quarter of 2018.  Adjusted income from continuing operations was $31.2 million compared to $22.8 million for the second quarter of 2018.  Adjusted income from continuing operations for the second quarter of 2019 excludes a total of $11.4 million of pre-tax acquisition, integration, and restructuring costs incurred primarily in connection with the acquisition of Nutrisystem, $4.4 million of pre-tax amortization of intangible assets, and $1.2 million of tax adjustments related to the acquisition. See pages 12-14 for a reconciliation of non-GAAP financial measures.

• Income from continuing operations per diluted share was $0.37 compared to $0.52 for the second quarter of 2018.  Adjusted income from continuing operations per diluted share was $0.64 compared to $0.53 for the second quarter of 2018.  Adjusted income from continuing operations per diluted share for the second quarter of 2019 excludes $0.18 per diluted share related to acquisition, integration, and restructuring costs in connection with the Nutrisystem acquisition, $0.07 per diluted share related to amortization of intangible assets, and $0.02 per diluted share related to tax adjustments. See pages 12-14 for a reconciliation of non-GAAP financial measures.

• Adjusted EBITDA from continuing operations for the second quarter of 2019 was $70.3 million.  This includes $1.3 million of cost synergy benefits and $34.7 million from the nutrition segment and

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excludes $11.4 million of acquisition, integration, and restructuring costs associated with the Nutrisystem acquisition.  This compares toadjusted EBITDA from continuing operations of $35.1 million for the second quarter of 2018. See pages12-14for a reconciliation of non-GAAP financial measures.

TIVITY HEALTH, INC.

Financial Highlights

(Dollars in millions, except per-share data)

See pages 12-14 for a reconciliation of non-GAAP financial measures

	Three Months Ended June 30,
	2019		2018
Revenues	$	340.4	$	151.9
Per diluted share:
Income from continuing operations, GAAP basis	$	0.37	$	0.52
Acquisition and integration costs		0.14		—
Restructuring charges		0.04		0.00
Amortization of intangible assets		0.07		—
Tax adjustments		0.02		—
Adjusted income from continuing operations, non-GAAP basis (1)	$	0.64	$	0.53
Weighted average diluted common shares outstanding (in thousands)		48,461		43,284
Adjusted EBITDA	$	70.3	$	35.1

⁽¹⁾ Figures may not add due to rounding.

“We are pleased with the performance of our healthcare business and the early interest from health plans and large employers for our unique combination of health and nutrition solutions.  We now expect our 2019 SilverSneakers revenue to grow year over year due to continued strong member visits driven by our successful engagement activities,” said Donato Tramuto, Tivity Health’s Chief Executive Officer.  “Our preliminary projection for 2020 total revenue growth in the healthcare segment is between high single digit to low double digits.”

Tramuto continued, “While the nutrition business did not meet our expectations for the quarter, a comprehensive optimization plan has been developed and we believe the execution of this strategy will result in improved results for the 2020 diet season for the core nutrition business.  We are also executing a broader expansion that will take us beyond weight loss to offer nutrition-based solutions that will differentiate us in the marketplace and enable a platform to address aspects of the social determinants of health.”

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“Our strong cash flow is enabling rapid deleveraging as evidenced by $90 millionin scheduled payments and prepayments of our term loans, a full one year ahead of the required schedule.  We expect to meet our target leverage ratio of less than 3.5 times by the end of 2020.”

Segment Results

Healthcare Segment – Revenue was $157.5 million, which is 3.7% higher than revenue for the second quarter of 2018.  Adjusted EBITDA was $35.7 million, which is 1.7% higher than adjusted EBITDA for the second quarter of 2018.  

Nutrition Segment – Revenue was $182.9 million, and adjusted EBITDA was $34.7 million for the second quarter.

See pages 12-14 for a reconciliation of non-GAAP financial measures.

Updates 2019 Financial Guidance

In light of the aforementioned results for the second quarter and the Company’s expectations for the remainder of the year, Tivity Health is updating financial guidance provided on February 19, 2019. The consolidated financial guidance below includes the expected results for the Healthcare segment for the full year 2019 and the expected results for the Nutrition segment from March 8, 2019 through December 31, 2019:

	Updated 2019 Guidance	Previous 2019 Guidance
Consolidated Revenues	$1,127 million to $1,142 million	$1,146 million to $1,177 million
Healthcare Segment Revenues	$625 million to $630 million	$612 million to $627 million
Nutrition Segment Revenues 3/8-12/31	$502 million to $512 million	$534 million to $550 million*
Consolidated Adjusted EBITDA	$229 million to $239 million	$240 million to $258 million
Healthcare Segment Adjusted   EBITDA	$140 million to $143 million	$140 million to $145 million
Nutrition Segment Adjusted EBITDA 3/8-12/31	$80 million to $84 million	$91 million to $101 million*
Anticipated Cost Synergies	$9 to $12 million	$9 to $12 million
Consolidated Earnings Per Diluted Share	$1.11 to $1.32	$1.35 to $1.67
Consolidated Adjusted Earnings Per Diluted Share	$2.14 to $2.32	$2.24 to $2.52

*Nutrition segment revenues and adjusted EBITDA ranges are implied based on February 19, 2019 guidance.

The updated guidance for consolidated adjusted EBITDA and consolidated adjusted earnings per diluted share excludes:

• expected pre-tax acquisition, integration, and restructuring expenses in a range of $38 million to $40 million, which includes both cash and non-cash expenses;

• expected amortization expense of approximately $15 million related to intangible assets; and

• expected tax adjustments related to the acquisition of approximately $7 million.

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The Company’supdated guidance for consolidated adjusted EBITDA and consolidated adjusted earnings per diluted share includes:

• depreciation expense of approximately $17 million;

• interest expense in a range of $77 million to $79 million, of which approximately $8 million is non-cash expense;

• an effective tax rate of approximately 29% for each of the two remaining quarters of 2019;

• weighted average diluted shares outstanding of approximately 47 million;

• free cash flow, including cash paid for interest, in a range of $55 million to $60 million; and

• capital expenditures in a range of $22 million to $24 million.

See pages 12-14 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 to

the most directly comparable GAAP financial measure because it is unable to provide such reconciliation without unreasonable effort due to the uncertainty and inherent difficulty of predicting the financial impact of certain items.

Appointment of New Independent Director

The Company today announced that Daniel G. Tully, co-founder and managing director at Altaris Capital Partners, LLC (“Altaris”), has been appointed as a member of the Company’s board of directors.  The Company’s board will now be comprised of 12 directors, ten of whom are independent.  Altaris, together with its affiliates, beneficially owns approximately 8.5% of the Company’s outstanding common stock.  

“We are pleased to welcome Dan Tully as a new independent director to Tivity Health’s board,” said Kevin Wills, Tivity Health’s chairman.  “Dan is an accomplished professional with demonstrated competence in areas that firmly align with our strategic initiatives.  I am confident that he will add great value to our Board of Directors and that Tivity Health will benefit from Dan’s insights and counsel.”

Donato Tramuto added, “Dan joins Tivity Health at an exciting time as we continue to drive our strategic imperatives forward and build deeper relationships with our partners and customers to fulfill our mission of empowering and engaging adults to live their best healthy lives through nutrition, fitness and social connection.”

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 9579725 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 9579725, and the replay will also be available on the Company's website for the next 12 months.

About Tivity Health

Tivity Health^®, Inc. (Nasdaq: TVTY) is a leading provider of health improvement, nutrition, fitness and social engagement solutions at scale to improve clinical outcomes, reduce healthcare costs and create opportunities to feel better, work better and live better. With decades of clinical and operational expertise, Tivity Health

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touches millions of consumers through its integrated portfolio of brands and works directly with hundreds of healthcare practitioners and many of the nation's largest payers and employers. Tens of millions of Americans are currently eligible for Tivity Health's SilverSneakers^®, Prime^® Fitness, WholeHealth Living^™ and flip50^™ programs and millions of people have lost weight with Nutrisystem^®, South Beach Diet^® and DNA BodyBlueprint^™. As part of its commitment to tackling social isolation and loneliness, in 2017, Tivity Health launched a rural aging initiative to address challenges unique to older adults in rural communities. Learn more at 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 12-14. Certain of the non-GAAP measures included in this press release are forward-looking, and reconciliations of these forward-looking non-GAAP financial measures (including adjusted EBITDA guidance) to the most directly comparable GAAP financial measures are not provided because the Company is unable to provide such reconciliations without unreasonable effort due to the uncertainty and inherent difficulty of predicting the financial impact of certain items.

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,” “will,” “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, statements regarding the Company’s future financial performance and the Company’s acquisition of Nutrisystem, Inc. (“Nutrisystem”), as well as the expected benefits, synergies or opportunities of such acquisition. 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: 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 risk that expected benefits, synergies and growth opportunities of the Company’s acquisition of Nutrisystem may not be achieved in a timely manner or at all, including that the acquisition may not be accretive within the expected timeframe or to the extent anticipated; the Company’s ability to successfully integrate Nutrisystem's business or any other new or acquired businesses, services, technologies, solutions, or products into the Company’s business and to accurately forecast the related costs; the risk that the significant indebtedness incurred in connection with the Company’s acquisition of Nutrisystem 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

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obtain adequate financing to provide the capital that may be necessary to support its current or future operations; the risks associated with changes in macroeconomic conditions, geopolitical turmoil and the continuing threat of domestic or international terrorism; the impact of any impairment of the Company’s goodwill, intangible assets, or other long-term assets; the risks associated with the potential failures of the Company’s information systems; 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, which may result in unauthorized access by third parties, loss, misappropriation, disclosure or corruption of customer, employee or Company 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 the Company’s cybersecurity measures, enforcement actions, fines or litigation against the Company, or damage to its business reputation; the impact of any new or proposed legislation, regulations and interpretations relating to Medicare, Medicare Advantage, Medicare Supplement, as well as privacy and security laws; 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 its ability to realize the anticipated benefits thereof; 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, including any potential claims related to intellectual property rights; the Company’s ability to enforce its intellectual property rights; the risks associated with deriving a significant concentration of the Company’s revenues from a limited number of its Healthcare segment customers, many of whom are health plans; the Company’s ability and/or the ability of its Healthcare segment 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 the Company’s Healthcare segment customers and/or its partner locations 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 ability of the Company’s Healthcare segment customers to maintain the number of covered lives enrolled in the plans during the terms of the Company’s agreements; the impact of severe or adverse weather conditions and the potential emergence of a health pandemic or an infectious disease outbreak on member participation in the Company’s Healthcare segment programs; the impact of healthcare reform on the Company’s business; the effectiveness of the Company’s marketing and advertising programs; loss, or disruption in the business, of any of the Company’s food suppliers or its fulfillment provider, or disruptions in the shipping of the Company’s food products for its Nutrition segment; the impact of any claims that the Company’s Nutrition segment personnel are unqualified to provide proper weight loss advice; the impact of health or advertising related claims by the Company’s Nutrition segment customers; competition from other weight management industry participants or the development of more effective or more favorably perceived weight management methods; loss of any of the Company’s Nutrition segment third-party retailer agreements and any obligations associated with such loss; the Company’s ability to continue to develop innovative weight loss programs and enhance its existing programs, or the failure of the Company’s programs to continue to appeal to the market; the impact of claims from the Company’s Nutrition segment competitors regarding advertising or other marketing practices; the Company’s ability to develop and commercially introduce new products and services; the Company’s ability to receive referrals from existing Nutrition segment customers, a decline in which could adversely impact customer acquisition costs; failure to attract or negative publicity with respect to any of the Company’s spokespersons; the Company’s ability to anticipate change and respond to emerging trends for customer preferences and the impact of the same on demand for the Company’s services and products; negative publicity with respect to the weight loss industry; the impact of increased governmental regulation on the

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Company’s Nutrition segment; claims arising from the sale of ingested products; 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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TIVITY HEALTH, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

(Unaudited)

	June 30, 2019			December 31, 2018
Current assets:
Cash and cash equivalents	$	4,404		$	1,933
Accounts receivable, net		93,067			67,139
Inventories		29,775			—
Prepaid expenses		12,776			3,655
Income taxes receivable		3,900			720
Other current assets		6,130			4,658
Total current assets		150,052			78,105
Property and equipment, net of accumulated depreciation of    $37,039 and $30,711 respectively		48,575			16,341
Right-of-use assets		43,413			—
Intangible assets, net		956,289			29,049
Goodwill, net		791,736			334,680
Other long-term assets		25,442			23,904
Total assets	$	2,015,507		$	482,079
Current liabilities:
Accounts payable	$	51,571		$	29,103
Accrued salaries and benefits		10,047			6,512
Accrued liabilities		69,496			42,563
Deferred revenue		10,614			582
Current portion of debt		—			57
Current portion of lease liabilities		14,423			—
Current portion of long-term liabilities		2,772			2,255
Total current liabilities		158,923			81,072
Long-term debt		1,058,099			30,589
Long-term lease liabilities		31,826			—
Long-term deferred tax liability		223,790			319
Other long-term liabilities		13,563			1,098
Stockholders' equity:
Preferred stock $.001 par value, 5,000,000 shares authorized,    none outstanding		—			—
Common Stock $.001 par value, 120,000,000 shares authorized,    47,801,630 and 41,049,418 shares outstanding, respectively		47			41
Additional paid-in capital		497,789			347,487
Retained earnings		71,888			49,655
Treasury stock, at cost, 2,254,953 shares in treasury		(28,182	)		(28,182	)
Accumulated other comprehensive loss		(12,236	)		—
Total stockholders' equity		529,306			369,001
Total liabilities and stockholders' equity	$	2,015,507		$	482,079

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TIVITY HEALTH, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except earnings per share data)

(Unaudited)

	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Revenues	$	340,377	$	151,865	$	554,471	$	301,795
Cost of revenue (exclusive of depreciation and    amortization of $7,364, $995, $10,347, and $1,970,    respectively, included below)		194,758		104,416		335,097		209,812
Marketing expenses		54,603		4,611		78,751		7,498
Selling, general and administrative expenses		29,667		7,751		56,852		16,323
Depreciation and amortization		9,084		1,135		12,666		2,257
Restructuring and related charges		2,352		118		3,943		124
Operating income		49,913		33,834		67,162		65,781
Interest expense		23,661		3,482		31,328		6,936
Income before income taxes		26,252		30,352		35,834		58,845
Income tax expense		8,115		7,669		13,483		14,826
Income from continuing operations		18,137		22,683		22,351		44,019
Income from discontinued operations, net of tax		—		901		—		901
Net income		18,137		23,584		22,351		44,920
Earnings per share - basic:
Continuing operations	$	0.38	$	0.57	$	0.49	$	1.10
Discontinued operations	$	—	$	0.02	$	—	$	0.02
Net income	$	0.38	$	0.59	$	0.49	$	1.13
Earnings per share - diluted:
Continuing operations	$	0.37	$	0.52	$	0.49	$	1.01
Discontinued operations	$	-	$	0.02	$	-	$	0.02
Net income	$	0.37	$	0.54	$	0.49	$	1.03
Comprehensive income	$	5,901	$	23,584	$	10,115	$	44,920
Weighted average common shares and equivalents:
Basic		47,790		39,899		45,165		39,841
Diluted		48,461		43,284		45,719		43,437

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TIVITY HEALTH, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Six Months Ended June 30,
	2019			2018
Cash flows from operating activities:
Income from continuing operations	$	22,351		$	44,019
Income from discontinued operations		—			901
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		12,666			2,257
Amortization and write-off of deferred loan costs		3,073			1,050
Amortization of debt discount		389			4,140
Share-based employee compensation expense		9,257			3,250
Gain on sale of TPHS business		—			(1,304	)
Deferred income taxes		10,789			15,254
Increase in accounts receivable, net		(3,754	)		(13,890	)
Decrease in inventory		8,719			—
Decrease in other current assets		1,057			756
Increase (decrease) in accounts payable		(5,872	)		(1,869	)
Increase (decrease) in accrued salaries and benefits		570			(9,928	)
Decrease in other current liabilities		(8,266	)		(4,563	)
Decrease in deferred revenue		(2,725	)		—
Other		1,345			1,227
Net cash flows provided by operating activities	$	49,599		$	41,300
Cash flows from investing activities:
Acquisition of property and equipment	$	(8,918	)	$	(3,673	)
Business acquisitions, net of cash acquired		(1,062,818	)		1,416
Net cash flows used in investing activities	$	(1,071,736	)	$	(2,257	)
Cash flows from financing activities:
Proceeds from issuance of long-term debt	$	1,399,945		$	13,675
Payments of long-term debt		(347,879	)		(14,216	)
Payments related to tax withholding for share-based compensation		(1,135	)		(1,398	)
Exercise of stock options		370			1,135
Deferred loan costs		(30,189	)		—
Change in cash overdraft and other		3,508			343
Net cash flows provided by (used in) financing activities	$	1,024,620		$	(461	)
Effect of exchange rate changes on cash	$	(12	)	$	(27	)
Net increase in cash and cash equivalents	$	2,471		$	38,555
Cash and cash equivalents, beginning of period	$	1,933		$	28,440
Cash and cash equivalents, end of period	$	4,404		$	66,995

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TIVITY HEALTH, INC.

Segment Information

(In thousands)

(Unaudited)

	Three Months Ended June 30, 2019
	Healthcare		Nutrition		Consolidated
Revenues	$	157,481	$	182,896	$	340,377
Adjusted EBITDA	$	35,681	$	34,667	$	70,348
Acquisition and integration costs					$	8,999
Restructuring and related charges						2,352
Interest expense						23,661
Depreciation and amortization						9,084
Income before income taxes					$	26,252

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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 June 30, 2019		% of Revenue		Three Months Ended June 30, 2018		% of Revenue
Adjusted EBITDA from continuing operations, non-GAAP basis (1)	$	70,348		20.7%	$	35,087		23.1%
Acquisition and integration costs (2)		(8,999	)			—
Restructuring charges (3)		(2,352	)			(118	)
EBITDA from continuing operations, non-GAAP basis (4)	$	58,997			$	34,969
Depreciation and amortization		(9,084	)			(1,135	)
Interest expense		(23,661	)			(3,482	)
Income tax expense		(8,115	)			(7,669	)
Income from continuing operations, GAAP basis	$	18,137			$	22,683

(1) Adjusted EBITDA from continuing operations is a non-GAAP financial measure.  The Company excludes acquisition and integration 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 EBITDA from continuing operations in isolation or as a substitute for income from continuing operations determined in accordance with U.S. GAAP.  Additionally, because Adjusted EBITDA from continuing operations may be defined differently by other companies in the Company’s industry, the non-GAAP financial measure presented here may not be comparable to similarly titled measures of other companies.

(2) Acquisition and integration costs consists of pre-tax charges of $8,999 for the three months ended June 30, 2019 incurred in connection with the acquisition and integration of Nutrisystem.

(3) Restructuring charges consists of pre-tax charges of $2,352 for the three months ended June 30, 2019 primarily related to the 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 EBITDA from continuing operations in isolation or as a substitute for income from continuing operations determined in accordance with U.S. GAAP.

TVTY Reports Second-Quarter Results

Page 13

August 7, 2019

Reconciliation of Adjusted Income from Continuing Operations, Non-GAAP Basis and

Adjusted Income from Continuing Operations Per Diluted Share ("EPS”), Non-GAAP Basis

to Income from Continuing Operations, GAAP Basis (in thousands) and EPS, GAAP Basis

		Three Months Ended June 30, 2019						Three Months Ended June 30, 2018
		$ in thousands			Per Share			$ in thousands			Per Share
Adjusted income from continuing operations, non-GAAP basis (5)	$	31,187		$	0.64		$	22,770		$	0.53
Net loss attributable to acquisition, integration, and restructuring costs (6)		(8,513	)		(0.18	)		(87	)		(0.00	)
Net loss attributable to amortization of intangible assets (7)		(3,330	)		(0.07	)		—			—
Loss attributable to tax adjustments (8)		(1,207	)		(0.02	)		—			—
Income from continuing operations, GAAP basis(9)	$	18,137		$	0.37		$	22,683		$	0.52

(5) Adjusted income from continuing operations and adjusted income from continuing operations per diluted share are non-GAAP financial measures.  The Company excludes net loss attributable to acquisition, integration, and restructuring costs, amortization of intangible assets, and tax adjustments from these measures because of their 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 income from continuing operations or adjusted income from continuing operations per diluted share in isolation or as a substitute for income from continuing operations or EPS determined in accordance with U.S. GAAP.  Additionally, because adjusted income from continuing operations and adjusted income from continuing operations per diluted share may be defined differently by other companies in the Company’s industry, the non-GAAP financial measures presented here may not be comparable to similarly titled measures of other companies.

(6) Net loss attributable to acquisition, integration, and restructuring costs consists of pre-tax charges of $11,350 for the three months ended June 30, 2019 incurred in connection with the acquisition and integration of Nutrisystem. The tax rate applied to this expense was 25%, which represented the combined estimated U.S. federal and state statutory tax rate.

(7) Net loss attributable to amortization of intangible assets consists of pre-tax charges of $4,440 for the three months ended June 30, 2019 related to the amortization of certain definite lived intangible assets recorded as part of the acquisition of Nutrisystem. The tax rate applied to this expense was 25%, which represented the combined estimated U.S. federal and state statutory tax rate.

(8) Loss attributable to tax adjustments represents the estimated impact on the Company’s effective tax rate for the three months ended June 30, 2019 arising from certain nondeductible expenses related to the acquisition of Nutrisystem.

(9) Figures may not add due to rounding.

TVTY Reports Second-Quarter Results

Page 14

August 7, 2019

Reconciliation of Adjusted EPS Guidance, Non-GAAP Basis

to EPS Guidance, GAAP Basis

For the Year Ending December 31, 2019

Adjusted EPS guidance, non-GAAP basis (10)	$	2.14 – 2.32
EPS (loss) guidance attributable to acquisition, integration, and restructuring costs (11)		(0.64 – 0.61	)
EPS (loss) guidance attributable to amortization of intangible assets (12)		(0.24	)
EPS (loss) guidance attributable to tax adjustments (13)		(0.15	)
EPS guidance, GAAP basis (14)	$	1.11 – 1.32

(10) Adjusted EPS guidance is a non-GAAP financial measure.  The Company excludes EPS (loss) guidance attributable to acquisition, integration, and restructuring costs, amortization of intangible assets, and tax adjustments 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 guidance in isolation or as a substitute for EPS guidance determined in accordance with U.S. GAAP.  Additionally, because adjusted EPS guidance may be defined differently by other companies in the Company’s industry, the non-GAAP financial measure presented here may not be comparable to similarly titled measures of other companies.

(11) EPS (loss) guidance attributable to acquisition, integration, and restructuring costs consists of pre-tax charges in a range of $38,000 to $40,000 incurred in connection with the acquisition and integration of Nutrisystem. The tax rate applied to this expense was 25%, which represented the combined estimated U.S. federal and state statutory tax rate.

(12) EPS (loss) guidance attributable to amortization of intangible assets consists of pre-tax charges of approximately $15,000 related to the amortization of certain definite-lived intangible assets recorded as part of the acquisition of Nutrisystem. The tax rate applied to this expense was 25%, which represented the combined estimated U.S. federal and state statutory tax rate.

(13) EPS (loss) guidance attributable to tax adjustments represents an estimated impact of approximately $7,000 on the Company’s effective tax rate arising from certain nondeductible expenses related to the acquisition of Nutrisystem.

(14) Figures may not add due to rounding.

EX-99.2

Tivity Health Q2 2019 Earnings Release Supplemental Material August 7, 2019 Exhibit 99.2

Note on Forward-Looking Statements This communication 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,” “will,” “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, statements regarding Tivity Health, Inc.’s (the “Company”) future financial performance and the Company’s acquisition of Nutrisystem, Inc. (“Nutrisystem”), as well as the expected benefits, synergies or opportunities of such acquisition. Readers of this communication 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 expectations contained in the forward-looking statements. These risks and uncertainties include, among other things: 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 risk that expected benefits, synergies and growth opportunities of the Company’s acquisition of Nutrisystem may not be achieved in a timely manner or at all, including that the acquisition may not be accretive within the expected timeframe or to the extent anticipated; the Company’s ability to successfully integrate Nutrisystem's business or any other new or acquired businesses, services, technologies, solutions, or products into the Company’s business and to accurately forecast the related costs; the risk that the significant indebtedness incurred in connection with the Company’s acquisition of Nutrisystem 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; the risks associated with changes in macroeconomic conditions, geopolitical turmoil and the continuing threat of domestic or international terrorism; the impact of any impairment of the Company’s goodwill, intangible assets, or other long-term assets; the risks associated with the potential failures of the Company’s information systems; 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, which may result in unauthorized access by third parties, loss, misappropriation, disclosure or corruption of customer, employee or Company 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 the Company’s cybersecurity measures, enforcement actions, fines or litigation against the Company, or damage to its business reputation; the impact of any new or proposed legislation, regulations and interpretations relating to Medicare, Medicare Advantage, Medicare Supplement, as well as privacy and security laws; 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 its ability to realize the anticipated benefits thereof; 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, including any potential claims related to intellectual property rights; the Company’s ability to enforce its intellectual property rights; the risks associated with deriving a significant concentration of the Company’s revenues from a limited number of its Healthcare segment customers, many of whom are Cautionary Note on Forward-Looking Statements

Cautionary Note on Forward-Looking Statements health plans; the Company’s ability and/or the ability of its Healthcare segment 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 the Company’s Healthcare segment customers and/or its partner locations 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 ability of the Company’s Healthcare segment customers to maintain the number of covered lives enrolled in the plans during the terms of the Company’s agreements; the impact of severe or adverse weather conditions and the potential emergence of a health pandemic or an infectious disease outbreak on member participation in the Company’s Healthcare segment programs; the impact of healthcare reform on the Company’s business; the effectiveness of the Company’s marketing and advertising programs; loss, or disruption in the business, of any of the Company’s food suppliers or its fulfillment provider, or disruptions in the shipping of the Company’s food products for its Nutrition segment; the impact of any claims that the Company’s Nutrition segment personnel are unqualified to provide proper weight loss advice; the impact of health or advertising related claims by the Company’s Nutrition segment customers; competition from other weight management industry participants or the development of more effective or more favorably perceived weight management methods; loss of any of the Company’s Nutrition segment third-party retailer agreements and any obligations associated with such loss; the Company’s ability to continue to develop innovative weight loss programs and enhance its existing programs, or the failure of the Company’s programs to continue to appeal to the market; the impact of claims from the Company’s Nutrition segment competitors regarding advertising or other marketing practices; the Company’s ability to develop and commercially introduce new products and services; the Company’s ability to receive referrals from existing Nutrition segment customers, a decline in which could adversely impact customer acquisition costs; failure to attract or negative publicity with respect to any of the Company’s spokespersons; the Company’s ability to anticipate change and respond to emerging trends for customer preferences and the impact of the same on demand for the Company’s services and products; negative publicity with respect to the weight loss industry; the impact of increased governmental regulation on the Company’s Nutrition segment; claims arising from the sale of ingested products; 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.

Measure Q2 2019 Results Q2 2018 Comparison Revenue $340.4 million $151.9 million Income from continuing operations $18.1 million $22.7 million Adjusted Income from continuing operations 1 $31.2 million $22.8 million Adjusted EBITDA 1 $70.3 million $35.1 million Adjusted EBITDA margin 1 20.7% 23.1% Income from continuing operations per diluted share $0.37 $0.52 Adjusted income from continuing operations per diluted share 1 $0.64 $0.53 2019 term loan reduction $90 million paid as of July 31, 2019 N/A Cost Synergies $1.3 million N/A Q2 2019 Financial Results Adjusted income from continuing operations, Adjusted EBITDA, Adjusted EBITDA margin and Adjusted income from continuing operations per diluted share are non-GAAP financial measures. Reconciliation of these non-GAAP financial measures is included in Tivity Health’s earnings release included as an exhibit to Tivity Health’s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 7, 2019.

Enterprise Level Investment Highlights & Updates Strong Free Cash Flow Business Paid Down Debt Ahead of Schedule On Track to Achieve Target Debt Ratios for 2020 and 2021 On Plan to Achieve Cost Synergies Revenue Synergies Beginning to Take Shape as Evidenced by: Strong Early Demand for Payor Integrated Service Offering (physical activity, loneliness, nutrition) - Benefits both Business Units 2 Post-Discharge Meal Delivery Contract Wins Combining Fitness and Nutrition Solutions 2 Chronic Condition Pilots Initiated Focused on Diabetes (employer and health plan) Nutrisystem Contact Center and Media Expertise now Supporting Enrollment & Engagement in SilverSneakers/Prime. Additionally, the Healthcare Fitness Center Network and Health Plan Partnerships Now Supporting New Channels for Nutrisystem

Healthcare Business Unit Investment Highlights & Updates Digital / Media Strategies Driving Higher Revenues Customer Renewals at 99 Percent for 2020 Strong Selling Season with New Client Wins and Return of Past Clients has Yielded Approximately 600,000 New Eligible Lives SilverSneakers Eligible Lives Expected to be 16.0 – 16.5 million in 2020 Medicare Supplement Expansion – Won One of the Largest Non-Health Plan Insurers United Health Retention – 20-25% of Current Individual Lives Now Expected to be Retained –All of the Group Lives Expected to Continue in 2020 Won Two Post-Discharge Meal Delivery Contracts - Combining Fitness and Nutrition Solutions Chronic Condition Pilots – 2 Initiated - Focused on Diabetes (Employer and Health Plan)

Nutrition Business Unit Investment Highlights & Updates Two-Pronged Strategy (O-E) Optimization of the Core Nutrition Business Underway to Ensure a Successful 2020 Diet Season and Beyond Expansion into New Channels by (a) expanding beyond direct-to-consumer including opportunities with our health plan partners and fitness partner locations and (b) leveraging our food science capabilities beyond weight loss so that we can address the broader opportunity of nutrition-based solutions and continue to differentiate ourselves in the market. Nutrition Business Unit Continues to Generate Meaningful EBITDA and Free Cash Flow

Healthcare Segment Q2 2019 Segment Highlights Revenue $157.5M SilverSneakers 78% Prime19% WholeHealth Living3% Adjusted EBITDA $35.7M1 Investment in media in first half triggered better than expected visits despite a decrease in eligible members Higher mix of revenue generating visits than prior year Digital marketing programs in first half for Prime Fitness continue to yield results Quarterly Visits (millions) Quarterly Prime Subscriptions (000’s) Adjusted EBITDA is a non-GAAP financial measure. Reconciliation of this non-GAAP financial measure is included in Tivity Health’s earnings release included as an exhibit to Tivity Health’s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 7, 2019.

Q2 2019 Segment Highlights Nutrition Segment Adjusted EBITDA is a non-GAAP financial measure. Reconciliation of this non-GAAP financial measure is included in Tivity Health’s earnings release included as an exhibit to Tivity Health’s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 7, 2019. $182.9 million of Revenue $170.4 million from Direct to Consumer (“DTC”), down 5% compared to Q2 2018 New customer revenue declined 11% compared to the prior year, but was partially offset by gains in customer paid length of stay and revenue per customer Reactivation revenue increased 8% as compared to Q2 2018, as we continue to leverage our customer database QVC and Retail revenues are relatively consistent with the prior year $34.7 Million of Adjusted EBITDA1 Gross margin percentage was favorable both year-over-year and sequential quarter-over-quarter

Consolidated Basis – Updated 2019 Financial Guidance Metric 2019 Guidance Updated 2019 Guidance Original Consolidated Revenues $1,127 - $1,142 $1,146 - $1,177 Healthcare Segment Revenues $625 - $630 $612 - $627 Nutrition Segment Revenues Stub Period (3/8 – 12/31) $502 - $512 $534 - $550 ** Consolidated Adjusted EBITDA 1, 2 $229 - $239 * $240 - $258 Healthcare Segment Adjusted EBITDA 1, 2 $140 - $143 $140 - $145 Nutrition Segment Adjusted EBITDA Stub Period (3/8 – 12/31) 1, 2 $80 - $84 * $91 - $101 ** Anticipated Cost Synergies $9 - $12 $9 - $12 Consolidated Earnings Per Diluted Share $1.11 – $1.32 $1.35 - $1.67 Consolidated Adjusted Earnings Per Diluted Share 1, 2 $2.14 - $2.32 $2.24 - $2.52 Footnotes shown on following page * Includes approximately $3 million in investments associated with the two pronged “O-E” strategy that were not contemplated in the 2019 original guidance. ** Nutrition revenues and adjusted EBITDA ranges are implied based on February 19, 2019 guidance $ in millions except per share amounts

Consolidated Basis – Updated 2019 Financial Guidance Footnotes Adjusted EBITDA and Adjusted Earnings per Diluted Share are forward-looking non-GAAP financial measures.  A reconciliation of Adjusted Earnings per Diluted Share guidance for the year ending December 31, 2019 to the comparable GAAP financial measure is included as an exhibit to Tivity Health’s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 7, 2019.  The Company does not provide a reconciliation of Adjusted EBITDA guidance to the most directly comparable GAAP financial measure because it is unable to provide such reconciliations without unreasonable effort due to the uncertainty and inherent difficulty of predicting the financial impact of certain items. We believe Adjusted EBITDA and Adjusted Earnings per Diluted Share are useful measures of performance. You should not consider Adjusted EBITDA and Adjusted Earnings per Diluted Share in isolation or as a substitute for net income or Earnings per Diluted Share, respectively, in each case, determined in accordance with GAAP. Additionally, because Adjusted EBITDA and Adjusted Earnings per Diluted Share may be defined differently by other companies in the Company’s industry, the non-GAAP financial measures presented here may not be comparable to similarly titled measures of other companies. 

Appendix

Nutrisystem Stand-Alone 2019 Full Year Review on a Stand-Alone Basis

Nutrisystem Stand-Alone Full Year Basis – Updated 2019 Financial Guidance Metric 2019 Guidance Updated 2019 Guidance Original Nutrition Segment Revenues (1/1 - 12/31) 4 $635 - $645 $682 - $702 Nutrition Segment Adjusted EBITDA (1/1 – 12/31) 1, 2, 3, 4 $71 - $75 * $90 - $100 *Includes approximately $3 million in investments associated with the two pronged “O-E” strategy that were not contemplated in the 2019 original guidance. Adjusted EBITDA and Adjusted Earnings per Diluted Share are forward-looking non-GAAP financial measures.  A reconciliation of Adjusted Earnings per Diluted Share guidance for the year ending December 31, 2019 to the comparable GAAP financial measure is included as an exhibit to Tivity Health’s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 7, 2019.  The Company does not provide a reconciliation of Adjusted EBITDA guidance to the most directly comparable GAAP financial measure because it is unable to provide such reconciliations without unreasonable effort due to the uncertainty and inherent difficulty of predicting the financial impact of certain items. We believe Adjusted EBITDA and Adjusted Earnings per Diluted Share are useful measures of performance. You should not consider Adjusted EBITDA and Adjusted Earnings per Diluted Share in isolation or as a substitute for net income or Earnings per Diluted Share, respectively, in each case, determined in accordance with GAAP. Additionally, because Adjusted EBITDA and Adjusted Earnings per Diluted Share may be defined differently by other companies in the Company’s industry, the non-GAAP financial measures presented here may not be comparable to similarly titled measures of other companies.  In order to conform to Tivity Health’s historical reporting methodology, Adjusted EBITDA guidance for the Nutrition segment as presented includes non-cash share-based compensation expense. Nutrisystem removed this expense from Adjusted EBITDA as reported in its Current Report on Form 8-K filed with the Securities and Exchange Commission on February 19, 2019. Nutrition segment Revenues and Adjusted EBITDA on a stand-alone full year basis include Nutrisystem actual results from 1/1/19 to 3/7/19. These figures are being provided for comparison purposes to the original 2019 stand-alone guidance and to prior year results. $ in millions

XML

Document and Entity Information	Aug. 07, 2019
Document Document And Entity Information [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Aug. 07, 2019
Entity Registrant Name	TIVITY HEALTH, INC.
Entity Central Index Key	0000704415
Entity Emerging Growth Company	false
Entity File Number	000-19364
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	62-1117144
Entity Address, Address Line One	701 Cool Springs Boulevard
Entity Address, City or Town	Franklin
Entity Address, State or Province	TN
Entity Address, Postal Zip Code	37067
City Area Code	800
Local Phone Number	869-5311
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of each class	Common Stock - $.001 par value
Trading Symbol	TVTY
Name of each exchange on which registered	NASDAQ