Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2019 | Jul. 31, 2019 | |
Document And Entity Information [Abstract] | ||
Entity Registrant Name | TIVITY HEALTH, INC. | |
Entity Central Index Key | 0000704415 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Current Reporting Status | Yes | |
Entity Shell Company | false | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q2 | |
Trading Symbol | TVTY | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2019 | |
Entity Common Stock, Shares Outstanding | 47,833,104 | |
Entity File Number | 000-19364 | |
Entity Tax Identification Number | 621117144 | |
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 |
CONSOLIDATED BALANCE SHEETS (Un
CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 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 |
CONSOLIDATED BALANCE SHEETS (_2
CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Statement Of Financial Position [Abstract] | ||
Accumulated depreciation | $ 37,039 | $ 30,711 |
Stockholders' equity: | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized (in shares) | 5,000,000 | 5,000,000 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 120,000,000 | 120,000,000 |
Common stock, shares outstanding (in shares) | 47,801,630 | 41,049,418 |
Treasury stock (in shares) | 2,254,953 | 2,254,953 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Income Statement [Abstract] | ||||
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 |
CONSOLIDATED STATEMENTS OF OP_2
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Income Statement [Abstract] | ||||
Cost of services, depreciation and amortization | $ 7,364 | $ 995 | $ 10,347 | $ 1,970 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Statement Of Income And Comprehensive Income [Abstract] | ||||
Net income | $ 18,137 | $ 23,584 | $ 22,351 | $ 44,920 |
Net change in fair value of interest rate swaps, net of income tax benefit of $4,068 | (12,236) | (12,236) | ||
Comprehensive income | $ 5,901 | $ 23,584 | $ 10,115 | $ 44,920 |
CONSOLIDATED STATEMENTS OF CO_2
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended |
Jun. 30, 2019 | Jun. 30, 2019 | |
Statement Of Income And Comprehensive Income [Abstract] | ||
Net change in fair value of interest rate swaps, income tax benefit | $ 4,068 | $ 4,068 |
CONSOLIDATED STATEMENT OF CHANG
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (Unaudited) - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Retained Earnings (Accumulated Deficit) | Treasury Stock | Accumulated Other Comprehensive Loss |
Balance at Dec. 31, 2017 | $ 271,953 | $ 40 | $ 349,243 | $ (49,148) | $ (28,182) | |
Comprehensive income (loss) | 44,920 | 44,920 | ||||
Exercise of stock options | 1,135 | 1,135 | ||||
Tax withholding for share-based compensation | (1,398) | (1,398) | ||||
Share-based employee compensation expense | 3,250 | 3,250 | ||||
Balance at Jun. 30, 2018 | 319,860 | 40 | 352,230 | (4,228) | (28,182) | |
Balance at Mar. 31, 2018 | 294,575 | 40 | 350,529 | (27,812) | (28,182) | |
Comprehensive income (loss) | 23,584 | 23,584 | ||||
Exercise of stock options | 365 | 365 | ||||
Tax withholding for share-based compensation | (504) | (504) | ||||
Share-based employee compensation expense | 1,840 | 1,840 | ||||
Balance at Jun. 30, 2018 | 319,860 | 40 | 352,230 | (4,228) | (28,182) | |
Balance at Dec. 31, 2018 | 369,001 | 41 | 347,487 | 49,655 | (28,182) | |
Comprehensive income (loss) | 10,115 | 22,351 | $ (12,236) | |||
Issuance of Common Stock in connection with Merger | 132,838 | 6 | 132,832 | |||
Share-based compensation replacement awards related to Merger and attributable to pre-combination services | 9,107 | 9,107 | ||||
Exercise of stock options | 370 | 370 | ||||
Tax withholding for share-based compensation | (1,135) | (1,135) | ||||
Share-based employee compensation expense | 9,257 | 9,257 | ||||
Other | (247) | (129) | (118) | |||
Balance at Jun. 30, 2019 | 529,306 | 47 | 497,789 | 71,888 | (28,182) | (12,236) |
Balance at Mar. 31, 2019 | 517,164 | 47 | 491,548 | 53,751 | (28,182) | |
Comprehensive income (loss) | 5,901 | 18,137 | (12,236) | |||
Exercise of stock options | 137 | 137 | ||||
Tax withholding for share-based compensation | (794) | (794) | ||||
Share-based employee compensation expense | 6,898 | 6,898 | ||||
Balance at Jun. 30, 2019 | $ 529,306 | $ 47 | $ 497,789 | $ 71,888 | $ (28,182) | $ (12,236) |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Cash flows from operating activities: | ||
Income from continuing operations | $ 22,351 | $ 44,019 |
Income from discontinued operations, net of tax | 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 |
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 |
Basis of Presentation
Basis of Presentation | 6 Months Ended |
Jun. 30, 2019 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Basis of Presentation | 1. Basis of Presentation Our financial statements and accompanying notes are prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”). In our opinion, the accompanying consolidated financial statements of Tivity Health ® ® We have reclassified certain items in prior periods to conform to current classifications. Following the acquisition of Nutrisystem, we organize and manage our operations within two reportable segments, based on the types of products and services they offer: Healthcare and Nutrition. The Healthcare segment is comprised of our legacy business and includes SilverSneakers senior fitness, Prime Fitness and WholeHealth Living TM ® and the South Beach Diet ® products. Effective July 31, 2016, we sold our total population health services (“TPHS”) business to Sharecare, Inc. Results of operations for the TPHS business have been classified as discontinued operations for all periods presented in the consolidated financial statements. We have omitted certain financial information that is normally included in financial statements prepared in accordance with U.S. GAAP but that is not required for interim reporting purposes. You should read the accompanying consolidated financial statements in conjunction with the financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2018. |
Business Combinations
Business Combinations | 6 Months Ended |
Jun. 30, 2019 | |
Business Combinations [Abstract] | |
Business Combinations | 2. Business Combinations On December 9, 2018, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Nutrisystem, a provider of weight management products and services, and Sweet Acquisition, Inc., a wholly-owned subsidiary of Tivity Health (“Merger Sub”). The Merger Agreement provided that Merger Sub would merge with and into Nutrisystem, with Nutrisystem surviving as a wholly-owned subsidiary of Tivity Health (the “Merger”). The Merger was completed o except for certain excluded shares, each share of Nutrisystem common stock outstanding immediately prior to Closing was converted into the right to receive $38.75 in cash, without interest, and 0.2141 of a share of Tivity Health Common Stock (“Exchange Ratio”) (with cash payable in lieu of any fractional shares). Nutrisystem shares excluded from the conversion were those shares held by Nutrisystem as treasury stock and shares with respect to which appraisal rights have been properly exercised in accordance with the General Corporation Law of the State of Delaware. The acquisition of Nutrisystem enables us to offer, at scale, an integrated portfolio of fitness, nutrition and social engagement solutions to support a healthy lifestyle and to address weight management, chronic conditions, and social determinants of health. The fair value of consideration transferred at Closing was $1.3 billion (“Merger Consideration”), which includes cash consideration, the fair value of the stock consideration, and the fair value of the consideration for Nutrisystem equity awards assumed by Tivity Health that related to pre-combination services (see Note 8). (In thousands) Cash paid for outstanding Nutrisystem shares (1) $ 1,138,143 Value of Tivity Health Common Stock issued in the merger (2) 132,838 Value of Nutrisystem stock options (3) 6,020 Value of Tivity Health replacement awards attributable to pre-combination service (4) 9,107 Total Merger Consideration $ 1,286,108 (1) Represents the total cash paid to former Nutrisystem stockholders as cash consideration. This amount is based on the shares of Nutrisystem common stock issued and outstanding as of Closing and cash consideration of $ 38.75 per share , plus cash payable in lieu of fractional shares . (2) Represents the fair value of 6.3 million shares of Tivity Health Common Stock issued for outstanding Nutrisystem shares as stock consideration. This amount is based on (a) 29,370,594 Nutrisystem common shares issued and outstanding as of Closing, times (b) the Exchange Ratio of 0.2141, times (c) $21.12, which is equal to the volume-weighted averages of the trading price per share of our Common Stock for the five consecutive trading days up to and including March 6, 2019. (3) Represents the fair value of the cash consideration paid for the net settlement of approximately 204,000 Nutrisystem stock options vested and outstanding as of the closing date. In accordance with the Merger Agreement, each vested and outstanding Nutrisystem stock option was cancelled, and the holder received a cash payment per option equal to approximately $43.27 minus the applicable exercise price of the stock option. (4) U We performed a valuation analysis of the fair market value of Nutrisystem’s assets and liabilities as of Closing. The following table sets forth an allocation of the Merger Consideration to the identifiable tangible and intangible assets acquired and liabilities assumed, with the excess recorded to goodwill. During the three months ended June 30, 2019, we adjusted the preliminary purchase price allocation based on additional information obtained regarding facts and circumstances which existed as of the acquisition date. These adjustments resulted in a decrease of $15 million to the estimated fair value of intangible assets, an increase of $11.4 million to goodwill, and a decrease of $3.6 million to deferred tax liabilities. This allocation of the Merger Consideration may be subject to further revision if new facts and circumstances arise over the measurement period, which may extend up to one year from Closing. (In thousands) Cash, cash equivalents, and short-term investments $ 81,217 Accounts receivable 22,639 Inventory 38,494 Prepaid expenses and other current assets 12,345 Property and equipment 31,233 Right-of-use assets 22,145 Intangible assets 933,000 Other assets/liabilities 7,161 Accounts payable (25,152 ) Accrued salaries and benefits and other liabilities (41,796 ) Deferred revenue (13,339 ) Lease liabilities (22,145 ) Deferred tax liabilities, net (216,750 ) Total identifiable assets and liabilities acquired $ 829,052 Goodwill (1) 457,056 Total Merger Consideration $ 1,286,108 (1) Goodwill represents the excess of Merger Consideration over the preliminary fair value of the underlying assets acquired and liabilities assumed. Goodwill is attributable to the assembled workforce of experienced personnel at Nutrisystem and synergies expected to be achieved from the combined operations of Tivity Health and Nutrisystem. We consolidated Nutrisystem’s operating results into our financial statements beginning on March 8, 2019. Refer to Note 18 for revenue and profit recognized from the Nutrition segment during the three and six months ended June 30, 2019. The following financial information presents the pro forma combined company results as if the acquisition of Nutrisystem had occurred on January 1, 2018: (In thousands) Three Months Ended June 30, Six Months Ended June 30, 2019 2018 2019 2018 Revenue $ 340,377 $ 343,176 $ 687,919 $ 704,036 Net income $ 19,042 $ 30,574 $ 14,808 $ 1,134 The above pro forma results are based on assumptions and estimates, which we believe to be reasonable. They are not the operating results that would have been realized had the acquisition actually closed on January 1, 2018 and are not necessarily indicative of our ongoing combined operating results. The pro forma results include adjustments related to purchase accounting, acquisition and integration costs, financing, and amortization of intangible assets. There are no material non-recurring pro forma adjustments reflected in the pro forma results for the three months ended June 30, 2019 or June 30, 2018. Material non-recurring pro forma adjustments reflected in the pro forma results for the six months ended June 30, 2019 include: (1) the operating results of Nutrisystem from January 1, 2019 to March 7, 2019, (2) acquisition, integration, and restructuring cost decrease of $33.4 million, and (3) income tax expense decrease of $2.7 million (see Note 9). For the six months ended June 30, 2018, material non-recurring pro forma adjustments reflected in the pro forma results include: cost of revenue increase of $2.8 million due to the purchase accounting mark-up of inventory, (2) acquisition, integration, and restructuring cost increase of $38.7 million, and (3) i see Note 9). |
Recent Relevant Accounting Stan
Recent Relevant Accounting Standards | 6 Months Ended |
Jun. 30, 2019 | |
New Accounting Pronouncements And Changes In Accounting Principles [Abstract] | |
Recent Relevant Accounting Standards | 3. Re c o a d In August 2017, the FASB issued Accounting Standards Update (“ASU”) No. 2017-12, “Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities” (ASU 2017-12”), which amends the hedge accounting recognition and presentation requirements. ASU 2017-12 eliminates the concept of recognizing periodic hedge ineffectiveness for cash flow and net investment hedges and allows the entity to apply the shortcut method to partial-term fair value hedges of interest rate risk. We adopted ASU 2017-12 in May 2019 upon entering into interest rate swap agreements, as described in Note 14. We do not anticipate that adopting this standard will have an impact on our financial position, results of operations, and cash flows. In March 2016, the FASB issued ASU 2016-04, “Liabilities – Extinguishment of Liabilities (Subtopic 405-20): Recognition of Breakage for Certain Prepaid Stored-Value Products” (“ASU 2016-04”). ASU 2016-04 aligns recognition of the financial liabilities related to prepaid stored-value products (for example, gift cards) with ASU 2014-09, Revenue from Contracts with Customers (Topic 606), for non-financial liabilities. In general, these liabilities may be extinguished proportionately in earnings as redemptions occur, or when redemption is remote if issuers are not entitled to the unredeemed stored value. We adopted ASU 2016-04 in March 2019 upon acquiring Nutrisystem. We do not anticipate that adopting this standard will have a material impact on our consolidated financial statements. On January 1, 2019, we adopted ASU We elected to recognize the cumulative effect of initially applying the standard as an adjustment to beginning retained earnings as of January 1, 2019. The significant majority of our leases are classified as operating leases. As of January 1, 2019, we recognized a right-of-use asset of $27.0 million and lease liabilities of $29.7 million. On March 8, 2019, we assumed existing leases from Nutrisystem and recognized additional right-of-use assets and lease liabilities of $22.1 million each. In addition, we elected the following practical expedients available under ASC 842: (1) the package of practical expedients whereby we are not required to reassess upon adoption of ASC 842 (a) whether a contract is or contains a lease, (b) lease classification, and (c) initial direct costs (ASC 842-10-65-1(f)); and (2) the short-term lease measurement and recognition exemption (ASC 842-20-25-2). ASC 842 also requires significant new disclosures about leasing activity In January 2017, the FASB issued ASU No. 2017-04, “Intangibles - Goodwill and Other” (“ASU 2017-04”), which simplifies the subsequent measurement of goodwill by eliminating step two from the goodwill impairment test. ASU 2017-04 is effective for annual and interim impairment tests in fiscal years beginning after December 15, 2019 and is required to be applied prospectively. Early adoption is allowed for annual goodwill impairment tests performed on testing dates after January 1, 2017. We do not anticipate that adopting this standard will have an impact on our consolidated financial statements and related disclosures. In August 2018, the FASB issued ASU No. 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement” (“ASU 2018-13”), which changes the fair value measurement disclosure requirements of ASC 820. ASU 2018-13 is effective for fiscal years beginning on or after December 15, 2019, including interim periods therein, and is generally required to be applied retrospectively, except for certain components that are to be applied prospectively. Early adoption is permitted for any eliminated or modified disclosures. We do not anticipate that adopting this standard will have a material impact on our disclosures. In August 2018, the FASB issued ASU No. 2018-15, “Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract,” which requires implementation costs incurred by customers in cloud computing arrangements to be deferred and recognized over the term of the arrangement, if those costs would be capitalized by the customer in a software licensing arrangement. This standard is effective for annual periods beginning after December 15, 2019, and interim periods within those fiscal years. We do not anticipate that adopting this standard will have a material impact on our consolidated financial statements and related disclosures. In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”), which requires companies to measure credit losses for financial assets held at the reporting date utilizing a methodology that reflects current expected credit losses over the lifetime of such assets. ASU 2016-13 is effective for the Company on January 1, 2020 and is generally required to be applied using the modified retrospective approach, with limited exceptions for specific instruments. We do not anticipate that adopting this standard will have an impact on our consolidated financial statements and related disclosures. |
Revenue Recognition
Revenue Recognition | 6 Months Ended |
Jun. 30, 2019 | |
Revenue From Contract With Customer [Abstract] | |
Revenue Recognition | 4. Revenue Recognition Beginning in 2018, we account for revenue from contracts with customers in accordance with Accounting Standards Codification (“ASC”) Topic 606. The unit of account in ASC Topic 606 is a performance obligation, which is a promise in a contract to transfer to a customer either a distinct good or service (or bundle of goods or services) or a series of distinct goods or services provided over a period of time. ASC Topic 606 requires that a contract's transaction price, which is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer, is to be allocated to each performance obligation in the contract based on relative standalone selling prices and recognized as revenue when or as the performance obligation is satisfied. Healthcare Segment Our Healthcare segment earns revenue from three programs, SilverSneakers® senior fitness, Prime® Fitness and WholeHealth Living TM Except for Prime Fitness, our Healthcare segment’s customer contracts generally have initial terms of approximately three years. Some contracts allow the customer to terminate early and/or determine on an annual basis to which of their members they will offer our programs. . The significant majority of Healthcare segment’s customer contracts contain one performance obligation - to stand ready to provide access to our network of fitness locations and fitness programming - which is satisfied over time as services are rendered each month over the contract term. There are generally no performance obligations that are unsatisfied at the end of a particular month. There was no material revenue recognized during the three and six months ended June 30, 2019 from performance obligations satisfied in a prior period. Our fees within the Our Healthcare segment’s customer contracts include variable consideration, which is allocated to each distinct month over the contract term based on eligible members and/or member visits each month. The allocated consideration corresponds directly with the value to our customers of our services completed for the month. Under the majority of Healthcare segment’s contracts, we recognize revenue each month using the practical expedient available under ASC 606-10-55-18, which provides that revenue is recognized in the amount for which we have the right to invoice. Although we evaluate our financial performance and make resource allocation decisions based upon the results of our two reportable segments, we believe the following information depicts how our Healthcare segment revenues and cash flows are affected by economic factors. The following table sets forth Healthcare revenue disaggregated by program. Revenue from our SilverSneakers program is predominantly contracted with Medicare Advantage and Medicare Supplement plans. (In thousands) Three Months Ended June 30, Six Months Ended June 30, 2019 2018 2019 2018 SilverSneakers $ 122,899 $ 122,295 $ 245,922 $ 243,221 Prime Fitness 29,751 25,213 58,494 49,947 WholeHealth Living 4,467 4,228 9,041 8,444 Other 364 129 551 183 $ 157,481 $ 151,865 $ 314,008 $ 301,795 Sales and usage-based taxes are excluded from revenues. Nutrition Segment Our Nutrition segment earns revenue from four sources: direct to consumer, retail, QVC and other. Revenue is measured based on the consideration specified in a contract with a customer and excludes any sales incentives and amounts collected on behalf of third parties. As explained in more detail below, revenue is recognized upon satisfaction of the performance obligation by transferring control over a product to a Nutrition segment customer. Direct-mail advertising costs are expensed as incurred. We recognize an asset for the carrying amount of product to be returned and for costs to obtain a contract if the amortization is more than one year in duration. We expense costs to obtain a contract as incurred if the amortization period is less than one year. We sell pre-packaged foods directly to weight loss program participants primarily through the Internet and telephone (referred to as the direct to consumer channel), through QVC (a television shopping network), and select retailers. Pre-packaged foods include both frozen and non-frozen (ready-to-go), shelf-stable products. Products sold through the direct to consumer channel, both frozen and non-frozen, may be sold separately (a la carte) or as part of a packaged monthly meal plan for which customers pay at the point of sale. Products sold through QVC are payable by QVC upon our shipment of the product to the end consumer. For both the direct to consumer channel and QVC, we recognize revenue at a point in time, i.e., at the shipping point. Direct to consumer customers may return unopened ready-to-go products within 30 days after purchase in order to receive a refund or credit. Frozen products are refundable only if the order is canceled within 14 days after delivery. Products sold to retailers include both frozen and non-frozen products and are payable by the retailer upon receipt. We recognize revenue at a point in time, i.e., when the retailers take possession of the product. Certain retailers have the right to return unsold products. We account for the shipment of frozen and non-frozen, ready-to-go products as separate performance obligations. The consideration, including variable consideration for product returns, is allocated between frozen and non-frozen products based on their standalone selling prices. The amount of revenue recognized is adjusted for expected returns, which are estimated based on historical data. In addition to our pre-packaged foods, we sell prepaid gift cards through a wholesaler that are redeemable through the Internet or telephone. Prepaid gift cards represent grants of rights to goods to be provided in the future to gift card buyers. The wholesaler has the right to return all unsold prepaid gift cards. The wholesaler’s retail selling price of the gift cards is deferred in the balance sheet and recognized as revenue when we have satisfied our performance obligation, i.e., when a gift card holder redeems the gift card with us . We recognize breakage amounts (the estimated amount of unused gift cards) as revenue, in proportion to the actual gift card redemptio ns exercised by gift card holders in relation to the total expected redemptions of gift cards. We utilize historical experience in estimating the total expected breakage and period over which the gift cards will be redeemed. Sales and other taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction and collected by the Company from a Nutrition segment customer are excluded from revenue and presented on a net basis. After control over a product has transferred to a Nutrition segment customer, shipping and handling costs associated with outbound freight are accounted for as a fulfillment cost and are included in revenue and cost of revenue in the accompanying consolidated statements of operations. Revenue from shipping and handling charges for the three and six months ended June 30, 2019 was $6.3 million and $8.1 million, respectively. The following table sets forth Nutrition segment revenue disaggregated by the source of revenue: (In thousands) Three Months Ended June 30, Six Months Ended June 30, 2019 2019 Direct to consumer $ 170,440 $ 223,095 Retail 8,728 13,032 QVC 3,522 4,044 Other 206 292 $ 182,896 $ 240,463 The following table provides information about receivables, contract assets and contract liabilities from contracts with customers: (In thousands) June 30, 2019 Contract assets $ 267 Contract liabilities $ 9,854 The contract assets primarily relate to unbilled accounts receivable and are included as other current assets in the accompanying consolidated balance sheet. The contract liabilities (deferred revenue) primarily relate to sale of prepaid gift cards and unshipped foods, which are deferred until such time as the Company has satisfied its performance obligations. Significant changes in the contract liabilities (deferred revenue) balance during the period are as follows: Six Months Ended June 30, (In thousands) 2019 Revenue recognized that was included in the contract liability (deferred revenue) balance on March 8, 2019 $ (7,420 ) Increases due to cash received for prepaid gift cards sold or unshipped food, excluding amounts recognized as revenue $ 3,935 The following table includes estimated revenue from the prepaid gift cards expected to be recognized in the future related to performance obligations that are unsatisfied (or partially satisfied) at the end of the reporting period: (In thousands) Remaining 2019 $ 5,284 2020 1,282 2021 640 2022 389 2023 385 $ 7,980 We apply the practical expedient in subtopic ASC 606-10-50-14 and do not disclose information about remaining performance obligations that have original expected durations of one year or less. We review the reserves for our customer returns at each reporting period and adjust them to reflect data available at that time. To estimate reserves for returns, we consider actual return rates in preceding periods and changes in product offerings or marketing methods that might impact returns going forward. To the extent the estimate of returns changes, we will adjust the reserve, which will impact the amount of revenue recognized in the period of the adjustment. The provision for estimated returns for the three and six months ended June 30, 2019 The reserve for estimated returns incurred but not received and processed was and has been included in accrued liabilities in the accompanying consolidated balance sheet |
Inventories
Inventories | 6 Months Ended |
Jun. 30, 2019 | |
Inventory Disclosure [Abstract] | |
Inventories | 5. Inventories Inventories consist principally of packaged food held in external fulfillment locations. We value inventories at the of cost or net realizable value, with cost determined using the first-in, first-out method. We continually assess quantities of inventory on hand to identify excess or obsolete inventory and record a provision for any estimated loss. We estimate the reserve for excess and obsolete inventory primarily on forecasted demand and/or our ability to sell the products, our ability to introduce new products, future production requirements, and changes in consumer behavior. The reserve for excess and obsolete inventory was $1.5 million at June 30, 2019 . |
Intangible Assets and Goodwill
Intangible Assets and Goodwill | 6 Months Ended |
Jun. 30, 2019 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Intangible Assets and Goodwill | 6. Intangible Assets and Goodwill We amortize intangible assets subject to amortization on a straight-line basis over the applicable useful lives of the identifiable assets. In connection with our acquisition of Nutrisystem on March 8, 2019, we recorded the following amounts of intangible assets and goodwill. All of the goodwill was recorded to the Nutrition segment, and none of the goodwill is deductible for tax purposes. (In thousands) Fair Value Estimated Useful Life (in years) Intangible assets subject to amortization: Tradename - South Beach Diet 9,000 15 Customer list 110,000 7 Retail customer relationship 8,000 10 Noncompetition agreements 6,000 5 Subtotal $ 133,000 Intangible assets not subject to amortization: Tradename - Nutrisystem 800,000 n/a Total intangible assets $ 933,000 Goodwill 457,056 n/a In addition, as of June 30, 2019, there was $334.7 million of goodwill and $29.0 million of intangible assets not subject to amortization allocated to the Healthcare segment. The change in the carrying amount of goodwill during the six months ended June 30, 2019 was as follows: (In thousands) Balance, January 1, 2019 $ 334,680 Acquisition of Nutrisystem 445,671 Measurement period adjustment (1) 11,385 Balance, June 30, 2019 $ 791,736 (1) See Note 2 for explanation. |
Marketing Expenses
Marketing Expenses | 6 Months Ended |
Jun. 30, 2019 | |
Marketing And Advertising Expense [Abstract] | |
Marketing Expenses | 7. Marketing Expenses Marketing expense includes media, advertising production, marketing and promotional expenses and payroll-related expenses, including share-based payment arrangements, for personnel engaged in these activities. For the three and six months ended June 30, 2019, media expense was $47.3 million and $67.5 million, respectively. Internet advertising expense is recorded based on either the rate of delivery of a guaranteed number of impressions over the advertising contract term or on the cost per customer acquired, depending upon the terms. All other advertising costs are charged to expense as incurred or the first time the advertising takes place. At June 30, 2019, $0.5 million of costs have been prepaid for future advertisements and promotions. Prior to the acquisition of Nutrisystem, Tivity Health historically classified marketing expenses within cost of revenue and selling, general, and administrative expenses, while Nutrisystem presented marketing expenses in a separate line item. Because marketing expense is material to the combined company and for purposes of comparability, we have reclassified historical Tivity Health marketing expenses to a separate line for the three and six months ended June 30, 2019 and 2018. |
Share-Based Compensation
Share-Based Compensation | 6 Months Ended |
Jun. 30, 2019 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Share-Based Compensation | 8 . Share-Based Compensation We currently have h e a e d a d oc n e performance stock units, u h ba a a d a e o l e e o o c l In March 2019, we granted the following Replacement Awards: (i) approximately 258,000 time-vesting restricted stock awards at a fair value of $19.42 per share and (ii) approximately 919,000 time-vesting restricted stock units at a fair value of $19.42 per share. We recognize share-based compensation expense for the market stock units if the requisite service period is rendered, even if the market condition is never satisfied. For the three and six months ended June 30, 2019, we recognized total share-based compensation costs of $6.9 million and $9.3 million, respectively, including $0.5 million and $0.6 million, respectively, recorded to restructuring and related charges. For the three and six months ended June 30, 2018, we recognized total share-based compensation costs of $1.8 million and $3.3 million, respectively. We account for forfeitures as they occur. A summary of our stock options as of June 30, 2019 and the changes during the six months then ended is presented below: Options Shares (In thousands) Weighted Average Exercise Price Per Share Weighted Average Remaining Contractual Term Aggregate Intrinsic Value (In thousands) Outstanding at January 1, 2019 431 $ 17.83 Granted — — Exercised (39 ) 10.93 Forfeited (13 ) 37.44 Expired — — Outstanding at June 30, 2019 379 $ 17.84 4.0 $ 916 Exercisable at June 30, 2019 334 $ 15.17 3.4 $ 916 The follow i o w m e i o c a a activit durin th six months then ended: Restricted Stock Awards Shares (In thousands) Weighted- Average Grant Date Fair Value Nonvested at January 1, 2019 — $ — Granted — — Replacement Awards 258 19.42 Vested (36 ) 19.42 Forfeited (1 ) 19.42 Nonvested at June 30, 2019 221 $ 19.42 The follow i o w m e i o c a a activit durin th six months then ended: Restricted Stock Units Shares (In thousands) Weighted- Average Grant Date Fair Value Nonvested at January 1, 2019 271 $ 24.07 Granted 414 19.72 Replacement Awards 919 19.42 Vested (199 ) 21.39 Forfeited (61 ) 22.87 Nonvested at June 30, 2019 1,344 $ 20.00 The follow i o w m a wel a activit durin th six months then ended: Performance Stock Units Shares (In thousands) Weighted- Average Grant Date Fair Value Nonvested at January 1, 2019 — $ — Granted 806 20.19 Vested — Forfeited (1 ) 20.36 Nonvested at June 30, 2019 805 $ 20.19 The follow i o w m a wel a activit durin th six months then ended: Market Stock Units Shares (In thousands) Weighted- Average Grant Date Fair Value Nonvested at January 1, 2019 45 $ 18.25 Granted — — Vested — — Forfeited (20 ) 19.20 Nonvested at June 30, 2019 25 $ 17.49 |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 9. Incom Taxes For the three months ended June 30, 2019 and 2018, we had an effective income tax rate from continuing operations of 30.9% and 25.3%, respectively. respectively. In 2019, we had additional nondeductible expenses related to the Merger that caused an increase in our effective income tax rate for the three and six months ended June 30, 2019 compared to the prior year. In addition, u we evaluated the realizability of beginning-of-the-year deferred tax assets and increased the valuation allowance on deferred tax assets related to state net operating loss carryforwards by $1.8 million. We also recorded a $0.9 million reduction in deferred tax assets related to state income tax credits. These two adjustments increased our income tax expense for the six months ended June 30, 2019 by approximately $2.7 million. We file income tax returns in the U.S. Federal jurisdiction and in various state and foreign |
Leases
Leases | 6 Months Ended |
Jun. 30, 2019 | |
Leases [Abstract] | |
Leases | 10. Leases On January 1, 2019, we adopted ASC 842 using the modified retrospective approach. Therefore, the comparative information for periods ended prior to January 1, 2019 was not restated. Leases with an initial term of 12 months or less are considered short-term and are not recorded on the balance sheet. We recognize lease expense for these short-term leases on a straight-line basis over the lease term. With the exception of one finance lease related to office equipment, all of our leases are classified as operating leases. We maintain lease agreements principally for our office spaces and certain equipment. In addition, certain of our contracts, such as those with our fulfillment vendor related to our warehouse space or contracts with certain equipment vendors, contain embedded leases. We maintain two sublease agreements with respect to one of our office locations, each of which continues through the initial term of our master lease agreement. Such sublease income and payments, while they reduce our rent expense, are not considered in the value of the right-of-use asset or lease liability. In the aggregate, our leases generally have remaining lease terms of one to six years, some of which include options to extend the lease for additional periods. Such extension options were not considered in the value of the right-of-use asset or lease liability since it is not probable that we will exercise the options to extend . If applicable, a llocations among lease and nonlease components would be achieved using relative standalone selling prices. Upon adoption of ASC 842, we determined our estimated discount rate for existing leases as of January 1, 2019 based on the incremental borrowing rate that most closely aligned with the remaining lease term and payment schedule, as provided by our financial institution. The discount rate for leases in the Nutrition segment was estimated as of the Closing date of the Merger. The following table shows the right-of-use assets and lease liabilities recorded on the balance sheet: June 30, 2019 (In thousands) Right-of-use assets: Operating $ 43,256 Finance 157 Total leased assets $ 43,413 Lease liabilities: Current Operating $ 14,377 Finance 46 Non-current Operating $ 31,714 Finance 112 Total lease liabilities $ 46,249 The following table shows the components of lease expense: Three Months Ended June 30, Six Months Ended June 30, (In thousands) 2019 2019 Finance lease cost: Amortization of leased assets $ 12 $ 24 Interest of lease liabilities 2 4 Operating lease cost 3,804 6,520 Short-term lease cost 116 149 Total lease cost before subleases $ 3,934 $ 6,697 Sublease income (1,356 ) (2,700 ) Total lease cost, net $ 2,578 $ 3,997 The following provides information related to the lease term and discount rate as of June 30, 2019: Weighted Average Remaining Lease Term (years) Operating leases 3.4 Finance leases 3.1 Weighted Average Discount Rate Operating leases 5.4 % Finance leases 4.4 % As of June 30, 2019, m aturities of lease liabilities for each of the next five years and thereafter were as follows. Operating Leases Financing (In thousands) Lease Payments Sublease Receipts Net Leases Remaining 2019 $ 8,603 $ (2,884 ) $ 5,719 $ 26 2020 14,828 (5,730 ) 9,098 52 2021 13,361 (5,699 ) 7,662 52 2022 11,339 (5,732 ) 5,607 39 2023 1,947 (956 ) 991 — 2024 and thereafter 379 — 379 — Total lease payments 50,457 $ (21,001 ) $ 29,456 169 Less: interest (4,366 ) (11 ) Present value of lease liabilities $ 46,091 $ 158 Supplemental cash flow information related to leases was as follows: Three Months Ended June 30, Six Months Ended June 30, (In thousands) 2019 2019 Cash paid for amounts included in the measurement of lease liabilities Operating cash flow attributable to operating leases $ (3,561 ) $ (5,108 ) Operating cash flow attributable to finance leases (2 ) (4 ) Financing cash flows attributable to finance leases (11 ) (22 ) Supplemental noncash information: Right-of-use assets obtained in exchange for operating lease liabilities (1) 48,972 Right-of-use assets obtained in exchange for finance lease liabilities (1) 181 (1) No new leases were entered into during the six months ended June 30, 2019. Amounts shown are due to the adoption of ASC 842 and reflect balances as of January 1, 2019 for the Healthcare segment and as of March 8, 2019 for the Nutrition segment (i.e., the date of our acquisition of Nutrisystem). As of December 31, 2018, future minimum lease payments, net of total cash receipts from subleases of $23.7 million, under all non-cancelable operating leases for each of the next five years and thereafter were as follows. As of December 31, 2018, future minimum lease payments under capital leases were not material. (In thousands) Operating Year ending December 31, Leases 2019 $ 4,022 2020 2,040 2021 910 2022 827 2023 136 2024 and thereafter — Total minimum lease payments $ 7,935 |
Debt
Debt | 6 Months Ended |
Jun. 30, 2019 | |
Debt Disclosure [Abstract] | |
Debt | 11. De b The C o an o i n (In thousands) June 30, 2019 December 31, 2018 Term Loan A $ 306,250 $ — Term Loan B 793,750 — Delayed draw term loan — 25,000 Revolving credit facility 9,275 5,450 Capital lease obligations (1) — 196 1,109,275 30,646 Less: deferred loan costs and original issue discount ("OID") (51,176 ) — 1,058,099 30,646 Less: current portion — (57 ) $ 1,058,099 $ 30,589 (1) Prior to the adoption of ASC 842 on January 1, 2019, our capital leases were recorded as part of debt. Beginning on January 1, 2019, they are classified as financing leases under ASC 842 and are recorded as part of lease liabilities. Credit Facility In connection with the consummation of the Merger, on March 8, 2019, we entered into a new Credit and Guaranty Agreement (the “Credit Agreement”) with a group of lenders, Credit Suisse AG, Cayman Islands Branch, as general administrative agent, term facility agent and collateral agent, and SunTrust Bank, as revolving facility agent and swing line lender (“SunTrust”). The Credit Agreement replaced our prior Revolving Credit and Term Loan Agreement, dated April 21, 2017 (the “Prior Credit Agreement”), with a group of lenders and SunTrust, as administrative agent. The Credit Agreement provides us with (i) a $350.0 million term loan A facility (“Term Loan A”), (ii) an $830.0 million term loan B facility (“Term Loan B” and, together with Term Loan A, the “Term Loans”), (iii) a $125.0 million revolving credit facility that includes a $35.0 million sublimit for swingline loans and a $50.0 million sublimit for letters of credit (the “Revolving Credit Facility”; Term Loan A, Term Loan B and the Revolving Credit Facility are sometimes herein referred to collectively as the “Credit Facilities”), and (iv) uncommitted incremental accordion facilities in an aggregate amount at any date equal to the greater of $125.0 million or 50% of our consolidated EBITDA for the then-preceding four fiscal quarters, plus additional amounts based on, among other things, satisfaction of certain financial ratio requirements. We used the proceeds of the Term Loans, borrowings under the Revolving Credit Facility and cash on hand to pay the Merger Consideration, to repay all of the outstanding indebtedness under the Prior Credit Agreement and all outstanding indebtedness of Nutrisystem under its credit agreement, and to pay transaction costs and expenses. Proceeds of the Revolving Credit Facility also may be used for general corporate purposes of the Company and its subsidiaries. We are required to repay Term Loan A loans in consecutive quarterly installments, each in the amount of 2.50% of the aggregate initial amount of such loans, payable on June 30, 2019 and on the last day of each succeeding quarter thereafter until maturity on March 8, 2024, at which time the entire outstanding principal balance of such loans is due and payable in full. We are required to repay Term Loan B loans in consecutive quarterly installments, each in the amount of 0.75% of the aggregate initial amount of such loans, payable on June 30, 2019 and on the last day of each succeeding quarter thereafter until maturity on March 8, 2026, at which time the entire outstanding principal balance of such loans is due and payable in full. We are permitted to make voluntary prepayments of borrowings under the Term Loans at any time without penalty. From March 8, 2019 through June 30, 2019, we made payments of $80.0 million on the Term Loans, which included prepayments of all amounts due through June 30, 2020. We are required to repay in full any outstanding swingline loans and revolving loans under the Revolving Credit Facility on March 8, 2024. In addition, the Credit Agreement contains provisions that may require annual excess cash flow beginning with fiscal 2019 (as defined in the Credit Agreement and generally designed to equal cash generated by our business in excess of cash used in the business) to be applied towards the Term Loans. We are required to make prepayments on the Term Loans equal to our excess cash flow for a given fiscal year multiplied by the following excess cash flow percentages based on our net leverage ratio (as defined in the Credit Agreement) on the last day of such fiscal year: (a) 75 % if the net leverage ratio is greater than 3.75:1, (b) 50 % if the net leverage ratio is equal to or less than 3.75 :1 but greater than 3.25 :1 (c) 25 % if the net leverage ratio is equal to or less than 3.25:1 but greater than 2.75 :1, and (d) 0 % if the net leverage ratio is equal to or less than 2.75:1. Any such potential mandatory prepayments are reduced by voluntary prepayments. Borrowings under the Credit Agreement bear interest at variable rates based on a margin or spread in excess of either (1) one-month, two-month, three-month or six-month LIBOR (or, with the approval of all lenders holding the particular class of loans, 12-month LIBOR), which may not be less than zero, or (2) the greatest of (a) the prime lending rate of the agent bank for the particular facility, (b) the federal funds rate plus 0.50%, and (c) one-month LIBOR plus 1.00% (the “Base Rate”), as selected by the Company. The LIBOR margin for Term Loan A loans is 4.25%, the LIBOR margin for Term Loan B loans is 5.25% and the LIBOR margin for revolving loans varies between 3.75% and 4.25%, depending on our total net leverage ratio. The Base Rate margin for Term Loan A loans is 3.25%, the Base Rate margin for Term Loan B loans is 4.25% and the Base Rate margin for revolving loans varies between 2.75% and 3.25%, depending on our total net leverage ratio. In May 2019, we entered into eight amortizing interest rate swap agreements, each of which matures in May 2024. Under these agreements, we receive a variable rate of interest based on LIBOR, and we pay a fixed rate of interest equal to approximately 2.2% plus a spread, as described in the preceding sentences. As of June 30, 2019, these interest rate swap agreements had current notional amounts totaling $900.0 million. The Credit Agreement also provides for annual commitment fees ranging between 0.250% and 0.500% of the unused commitments under the Revolving Credit Facility, depending on our total net leverage ratio, and annual letter of credit fees on the daily outstanding availability under outstanding letters of credit at the applicable LIBOR margin for the Revolving Credit Facility, depending on our total net leverage ratio. Extensions of credit under the Credit Agreement are secured by guarantees from substantially all of the Company’s active material domestic subsidiaries and by security interests in substantially all of Company’s and such subsidiaries’ assets. The Credit Agreement contains a financial covenant that requires us to maintain specified maximum ratios or levels of consolidated total net debt to EBITDA, calculated as provided in the Credit Agreement. The Credit Agreement also contains various other affirmative and negative covenants customary for financings of this type that, subject to certain exceptions, impose restrictions and limitations on the Company and certain of the Company’s subsidiaries with respect to, among other things, indebtedness; liens; negative pledges; restricted payments (including dividends, distributions, buybacks, redemptions, repurchases with respect to equity interests, and payments, redemptions, retirements, purchases, acquisitions, defeasance, exchange, conversion, cancellation or termination with respect to junior lien, subordinated or unsecured debt); restrictions on subsidiary distributions; loans, advances, guarantees, acquisitions and other investments; mergers and other fundamental changes; sales and other dispositions of assets (including equity interests in subsidiaries); sale/leaseback transactions; transactions with affiliates; conduct of business; amendments and waivers of organizational documents and material junior debt agreements; and changes to fiscal year. Warrants In July 2013, we sold separate privately negotiated warrants (the “Warrants”) initially relating, in the aggregate, to approximately 7.7 million shares of our Common Stock. The Warrants are call options with an initial strike price of approximately $25.95 per share. Beginning on October 1, 2018, the Warrants were subject to automatic exercise on a pro rata basis each trading day continuing for a period of 160 trading days (i.e., approximately 48,000 warrants were subject to automatic exercise on each trading day), which ended in May 2019. Therefore, as of June 30, 2019, there are no remaining Warrants outstanding. The Warrants were net share settled by our issuing a number of shares of our Common Stock per Warrant with a value corresponding to the excess of the market price per share of our Common Stock (as measured on each warrant exercise date under the terms of the Warrants) over the applicable strike price of the Warrants. If such market price per share was less than the applicable strike price of the Warrants on any given exercise date, then the warrants subject to automatic exercise on such exercise date were not exercised but instead expired. The Warrants met the definition of derivatives under the guidance in ASC Topic 815; however, because these instruments were determined to be indexed to our own stock and met the criteria for equity classification under ASC Topic 815, the Warrants were accounted for as an adjustment to our additional paid-in-capital. During the three and six months ended June 30 , 2019, we did no t issue any shares of Common Stock related to the automatic exercise of the Warrants due to the market price per share of our Common Stock being less than the applicable strike price of the Warrants on each exercise date during such time period. When the market price per share of our Common Stock exceeded the strike price of the Warrants, the Warrants had a dilutive effect on net income per share, and the “treasury stock” method was used in calculating the dilutive effect on earnings per share. See Note 16 for additional information on such dilutive effect. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2019 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 12. Commitment an Contingencies Weiner, Denham, Allen, and Witmer Lawsuits On November 6, 2017, United Healthcare issued a press release announcing expansion of its fitness benefits (“United Press Release”), and the market price of the Company's shares of Common Stock dropped on that same day. In connection with the United Press Release, four lawsuits have been filed against the Company as described below. We are currently not able to predict the probable outcome of these matters or to reasonably estimate a range of potential losses, if any. We intend to vigorously defend ourselves against all four complaints. On November 20, 2017, Eric Weiner, claiming to be a stockholder of the Company, filed a complaint on behalf of stockholders who purchased the Company’s Common Stock between February 24, 2017 and November 3, 2017 (“Weiner Lawsuit”). The Weiner Lawsuit was filed as a class action in the U.S. District Court for the Middle District of Tennessee, naming as defendants the Company, the Company's chief executive officer, chief financial officer and a former executive who served as both chief accounting officer and interim chief financial officer. The complaint alleges that the defendants violated Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 promulgated under the Exchange Act in making false and misleading statements and omissions related to the United Press Release. The complaint seeks monetary damages on behalf of the purported class. On April 3, 2018, the Court entered an order appointing the Oklahoma Firefighters Pension and Retirement System as lead plaintiff, designated counsel for the lead plaintiff, and established certain deadlines for the case. On June 4, 2018, plaintiff filed a first amended complaint. On January 26, 2018, Charles Denham, claiming to be a stockholder of the Company, filed a purported shareholder derivative action, on behalf of the Company, in the U.S. District Court for the Middle District of Tennessee, naming the Company as a nominal defendant and the Company's chief executive officer, chief financial officer, a former executive who served as both chief accounting officer and interim chief financial officer, current directors and a former director of the Company, as defendants (“Denham Lawsuit”). The complaint asserts claims for breach of fiduciary duty, waste, and unjust enrichment, largely tracking allegations in the Weiner Lawsuit. The complaint further alleges that certain defendants engaged in insider trading. The plaintiff seeks monetary damages on behalf of the Company, certain corporate governance and internal procedural reforms, and other equitable relief On August 24, 2018, Andrew H. Allen, claiming to be a stockholder of the Company, filed a purported shareholder derivative action, on behalf of the Company, in the U.S. District Court for the Middle District of Tennessee, naming the Company as a nominal defendant and the Company’s chief executive officer, chief financial officer, a former executive who served as both chief accounting officer and interim chief financial officer, together with nine current or former directors, as defendants (“Allen Lawsuit”). The complaint asserts claims for breach of fiduciary duty and violations of the Securities Act of 1933, as amended (“Securities Act”) and the Exchange Act against all individual defendants, largely tracking allegations in the Weiner Lawsuit and Denham Lawsuit, and breach of fiduciary duty for insider trading against a former executive who served as both chief accounting officer and interim chief financial officer and one of the directors of the Company. The plaintiff seeks to recover damages on behalf of the Company, certain corporate governance and internal procedural reforms, and other equitable relief, including restitution from the two defendants alleged to have engaged in insider trading from all unlawfully obtained profits. On October 15, 2018, the Allen Lawsuit and the Denham Lawsuit were consolidated by stipulation. On March 25, 2019, Colleen Witmer, claiming to be a stockholder of the Company, filed a purported shareholder derivative action, on behalf of the Company, in the Chancery Court for Davidson County, Tennessee, naming the Company as a nominal defendant and the Company's chief executive officer, chief financial officer, a former executive who served as both chief accounting officer and interim chief financial officer, chief legal and administrative officer, certain current directors, and two former directors of the Company, as defendants. The complaint asserts claims for breach of fiduciary duty and unjust enrichment, largely tracking allegations in the Denham Lawsuit. The complaint further alleges that certain defendants engaged in insider trading. The plaintiff seeks monetary damages on behalf of the Company, restitution, certain corporate governance and internal procedural reforms, and other equitable relief. With the agreement of the parties, the Tennessee Supreme Court transferred the case to the Business Court Pilot Project. On June 4, 2019, the Company, as nominal defendant, filed a motion to dismiss or stay the case pending resolution of the consolidated Allen and Denham Lawsuits. Other Additionally, from time to time, we are subject to contractual disputes, claims and legal proceedings that arise in the ordinary course of our business. Some of the legal proceedings pending against us as of the date of this report are expected to be covered by insurance policies. As these matters are subject to inherent uncertainties, our view of these matters may change in the future. We expense legal costs as incurred. |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jun. 30, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | 13. Fai Valu Measu r ments We account for certain assets and liabilities at fair value. Fair value is defined as the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date, assuming the transaction occurs in the principal or most advantageous market for that asset or liability. Fair Value Hierarchy The hierarchy below lists three levels of fair value based on the extent to which inputs used in measuring fair value are observable in the market. We categorize each of our fair value measurements in one of these three levels based on the lowest level input that is significant to the fair value measurement in its entirety. These levels are: Level 1: Quoted prices in active markets for identical assets or liabilities; Level 2: Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-based valuation techniques in which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and Level 3: Unobservable inputs that are supported by little or no market activity and typically reflect management's estimates of assumptions that market participants would use in pricing the asset or liability. Asse t i e i e n i T he following table presents our assets and liabilities measured at fair value on a recurring basis at June 30, 2019. T u i a (In thousands) June 30, 2019 Level 2 Liabilities: Interest rate swap agreements $ 16,304 The fair values of interest rate swap agreements are primarily determined based on the present value of future cash flows using internal models and third-party pricing services with observable inputs, including interest rates, yield curves and applicable credit spreads. Fair Value of Other Financial Instruments The e a n n m a o C a a e y r e o n um e s a o D e i a a b o i u e h A e m u e e e is det e m ine b a s e o th fai val u hierarch a disc u sse a bove T he Term Loans are e o l i a e the last quoted price of the Term Loans through June 30, 2019 Th e volvin redi acilit The estimated fair value and carrying amount of outstanding borrowings under the Term Loans at June 30, 2019 were $1,099 million and $1,100 million, respectively. The estimated fair value and carrying amount of outstanding borrowings under the Revolving Credit Facility at June 30, 2019 were $9.2 million and $9.3 million, respectively. |
Derivative Instruments and Hedg
Derivative Instruments and Hedging Activities | 6 Months Ended |
Jun. 30, 2019 | |
Derivative Instruments And Hedging Activities Disclosure [Abstract] | |
Derivative Instruments and Hedging Activities | 14. Derivative Instruments and Hedging Activities We use derivative instruments to manage differences in the amount, timing, and duration of our known or expected cash payments related to our outstanding debt (i.e., interest rate risk) erivatives are designated and qualify as a hedge of the exposure to variability in expected future cash flows and are therefore considered cash flow hedges. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether we have elected to designate a derivative in a hedging relationship and apply hedge accounting, and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. We do not use derivatives for trading or speculative purposes and currently do not have any derivatives that are not designated as hedges. Cash Flow Hedges of Interest Rate Risk Our objectives in using interest rate derivatives are to add stability to interest expense and to manage our exposure to interest rate movements. To accomplish this objective, we primarily use interest rate swaps as part of our interest rate risk management strategy. The counterparties to the interest rate swap agreements expose us to credit risk in the event of nonperformance by such counterparties. However, at June 30, 2019, we do not anticipate nonperformance by these counterparties. Our interest rate swap agreements with each of the counterparties contain a provision whereby if we either default or are capable of being declared in default on any of our indebtedness, whether or not such default results in repayment of the indebtedness being accelerated by the lender, then we could also be declared in default on our derivative obligations. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for our making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. In May 2019, we entered into eight amortizing interest rate swap agreements, each of which matures in May 2024. Under these agreements, we receive a variable rate of interest based on LIBOR, and we pay a fixed rate of interest equal to approximately 2.2% plus a spread (see Note 11). As of June 30, 2019, these interest rate swap agreements had current notional amounts totaling $900.0 million. We record derivatives that are designated and qualify as cash flow hedges at estimated fair value in the consolidated balance sheet, with the related gains and losses recorded in accumulated other comprehensive income or loss ("accumulated OCI") and subsequently reclassified into interest expense in the same period(s) during which the hedged transaction affects earnings Amounts reported in accumulated OCI related to derivatives will be reclassified to interest expense as we make interest payments on our variable-rate debt. The estimated gross fair values of derivative instruments and their classification on the consolidated balance sheet at June 30, 2019 and December 31, 2018 were as follows: (In thousands) June 30, 2019 December 31, 2018 Liabilities: Derivatives designated as hedging instruments: Current portion of long-term liabilities $ 3,038 $ — Other long-term liabilities 13,266 — $ 16,304 $ — The following table presents the effect of cash flow hedge accounting on accumulated OCI as of June 30, 2019 and June 30, 2018: (In thousands) For the Three Months Ended For the Six Months Ended Derivatives in Cash Flow Hedging Relationships June 30, 2019 June 30, 2018 June 30, 2019 June 30, 2018 Loss related to effective portion of derivatives recognized in accumulated OCI, gross of tax effect $ 16,144 — $ 16,144 — Gain related to effective portion of derivatives reclassified from accumulated OCI to interest expense, gross of tax effect $ 160 — $ 160 — |
Restructuring and Related charg
Restructuring and Related charges | 6 Months Ended |
Jun. 30, 2019 | |
Restructuring And Related Activities [Abstract] | |
Restructuring and Related Charges | 1 5 . Restructuring and Related Charges During the first quarter of 2019, we began a reorganization primarily related to integrating the Healthcare and Nutrition segments and streamlining our corporate and operations support (the "2019 Restructuring Plan"). For the three months ended June 30, 2019, we have incurred restructuring charges of $2.4 million related to the 2019 Restructuring Plan, of which $0.8 million related to the Healthcare segment and $1.6 million related to the Nutrition segment. As of and for the six months ended June 30, 2019, we have incurred cumulative restructuring charges of $3.9 million related to the 2019 Restructuring Plan, of which $1.8 million related to the Healthcare segment and $2.1 million related to the Nutrition segment. These expenses consist entirely of severance and other employee-related costs. The 2019 Restructuring Plan is expected to result in total annualized savings beginning in 2020 of approximately $9.9 million, with $5.5 million relating to the Healthcare segment and $4.4 million relating to the Nutrition segment. The following table shows the activity in accrued restructuring and related charges for the six months ended June 30, 2019 related to the 2019 Restructuring Plan: (In thousands) Severance and Other Employee-Related Costs Accrued restructuring and related charges liability as of January 1, 2019 $ — Restructuring charges 3,330 Payments (797 ) Accrued restructuring and related charges liability as of June 30, 2019 $ 2,533 |
Earnings Per Share
Earnings Per Share | 6 Months Ended |
Jun. 30, 2019 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | 1 6 . Earning Pe Sha r Beginning in March 2019, we use the two-class method to calculate earnings per share (“EPS”) as the unvested restricted stock awards outstanding under our equity incentive plan are participating shares with nonforfeitable rights to dividends. Under the two-class method, we compute earnings per share of Common Stock by dividing the sum of distributed earnings to common stockholders (currently not applicable as we do not pay dividends) and undistributed earnings allocated to common stockholders by the weighted average number of outstanding shares of Common Stock for the period. In applying the two-class method, we allocate undistributed earnings to both shares of Common Stock and participating securities based on the number of weighted average shares outstanding during the period. Any undistributed losses are not allocated to unvested restricted stock as the restricted stockholders are not obligated to share in the losses. F ollow i ng is a r e c o ncili a tion of the n u merat o r a n d denom i nat o r of bas i c and d iluted earnin g s p e r share f o r the three and six months ended June 30, 2019 a n d 2018: (In thousands except per share data) Three June 30, Six June 30, 2019 2018 2019 2018 Numerator: Income from continuing operations - numerator for earnings per share $ 18,137 $ 22,683 $ 22,351 $ 44,019 Income from discontinued operations - numerator for earnings per share — 901 — 901 Net income allocated to unvested restricted stock (93 ) — (77 ) — Net income allocated to shares of Common Stock $ 18,044 $ 23,584 $ 22,274 $ 44,920 Denominator: Shares used for basic income per share 47,790 39,899 45,165 39,841 Effect of dilutive stock options and restricted stock units outstanding: Non-qualified stock options 93 277 110 295 Restricted stock units 578 332 444 368 Market stock units — 489 511 Warrants related to Cash Convertible Notes — 2,287 2,422 Shares used for diluted income per share 48,461 43,284 45,719 43,437 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 Dilutive securities outstanding not included in the computation of earnings per share because their effect is anti-dilutive: Non-qualified stock options 71 59 76 29 Restricted stock units 288 42 172 28 Restricted stock awards 128 — 64 — Market stock units and performance stock units outstanding are considered contingently issuable shares, and certain of these stock units were excluded from the calculations of diluted earnings per share for all periods presented as the performance criteria had not been met as of the end of the reporting periods. |
Accumulated OCI
Accumulated OCI | 6 Months Ended |
Jun. 30, 2019 | |
Accumulated Other Comprehensive Income Loss Net Of Tax [Abstract] | |
Accumulated OCI | 17. Accumulated OCI The following tables summarize the changes in accumulated OCI, net of tax, for the six months ended June 30, 2019: (In thousands) Net Change in Fair Value of Interest Rate Swaps Accumulated OCI, net of tax, as of January 1, 2019 $ — Other comprehensive income (loss) before reclassifications, net of tax of $4,028 (12,116 ) Amounts reclassified from accumulated OCI, net of tax of $40 (120 ) Accumulated OCI, net of tax, as of June 30, 2019 $ (12,236 ) The following table presents details about reclassifications out of accumulated OCI for the six months ended June 30, 2019: (In thousands) Six Months Ended June 30, 2019 Statement of Operations Classification Interest rate swaps $ (160 ) Interest expense 40 Income tax expense $ (120 ) Net of tax See Note 14 for a further discussion of our interest rate swaps. |
Segment Information
Segment Information | 6 Months Ended |
Jun. 30, 2019 | |
Segment Reporting [Abstract] | |
Segment Information | 18. Segment Information Following the acquisition of Nutrisystem in March 2019, we organize and manage our operations within two reportable segments, based on the types of products and services they offer: Healthcare and Nutrition. The Healthcare segment consists of Each segment’s profit is measured as earnings before interest, taxes, depreciation and amortization (“EBITDA”) excluding acquisition and integration costs and restructuring and related charges, as shown below: (In thousands) Three Months Ended June 30, 2019 Six Months Ended June 30, 2019 Healthcare Nutrition Consolidated Healthcare Nutrition Consolidated Revenues $ 157,481 $ 182,896 $ 340,377 $ 314,008 $ 240,463 $ 554,471 Adjusted EBITDA $ 35,681 $ 34,667 $ 70,348 $ 61,810 $ 48,010 $ 109,820 Acquisition and integration costs $ 8,999 $ 26,049 Restructuring and related charges 2,352 3,943 Interest expense 23,661 31,328 Depreciation and amortization 9,084 12,666 Income before income taxes $ 26,252 $ 35,834 Total assets as of June 30, 2019 $ 395,395 $ 1,620,112 $ 2,015,507 |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 6 Months Ended |
Jun. 30, 2019 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Basis of Presentation | Our financial statements and accompanying notes are prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”). In our opinion, the accompanying consolidated financial statements of Tivity Health ® ® We have reclassified certain items in prior periods to conform to current classifications. Following the acquisition of Nutrisystem, we organize and manage our operations within two reportable segments, based on the types of products and services they offer: Healthcare and Nutrition. The Healthcare segment is comprised of our legacy business and includes SilverSneakers senior fitness, Prime Fitness and WholeHealth Living TM ® and the South Beach Diet ® products. Effective July 31, 2016, we sold our total population health services (“TPHS”) business to Sharecare, Inc. Results of operations for the TPHS business have been classified as discontinued operations for all periods presented in the consolidated financial statements. We have omitted certain financial information that is normally included in financial statements prepared in accordance with U.S. GAAP but that is not required for interim reporting purposes. You should read the accompanying consolidated financial statements in conjunction with the financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2018. |
Recent Relevant Accounting Standards | In August 2017, the FASB issued Accounting Standards Update (“ASU”) No. 2017-12, “Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities” (ASU 2017-12”), which amends the hedge accounting recognition and presentation requirements. ASU 2017-12 eliminates the concept of recognizing periodic hedge ineffectiveness for cash flow and net investment hedges and allows the entity to apply the shortcut method to partial-term fair value hedges of interest rate risk. We adopted ASU 2017-12 in May 2019 upon entering into interest rate swap agreements, as described in Note 14. We do not anticipate that adopting this standard will have an impact on our financial position, results of operations, and cash flows. In March 2016, the FASB issued ASU 2016-04, “Liabilities – Extinguishment of Liabilities (Subtopic 405-20): Recognition of Breakage for Certain Prepaid Stored-Value Products” (“ASU 2016-04”). ASU 2016-04 aligns recognition of the financial liabilities related to prepaid stored-value products (for example, gift cards) with ASU 2014-09, Revenue from Contracts with Customers (Topic 606), for non-financial liabilities. In general, these liabilities may be extinguished proportionately in earnings as redemptions occur, or when redemption is remote if issuers are not entitled to the unredeemed stored value. We adopted ASU 2016-04 in March 2019 upon acquiring Nutrisystem. We do not anticipate that adopting this standard will have a material impact on our consolidated financial statements. On January 1, 2019, we adopted ASU We elected to recognize the cumulative effect of initially applying the standard as an adjustment to beginning retained earnings as of January 1, 2019. The significant majority of our leases are classified as operating leases. As of January 1, 2019, we recognized a right-of-use asset of $27.0 million and lease liabilities of $29.7 million. On March 8, 2019, we assumed existing leases from Nutrisystem and recognized additional right-of-use assets and lease liabilities of $22.1 million each. In addition, we elected the following practical expedients available under ASC 842: (1) the package of practical expedients whereby we are not required to reassess upon adoption of ASC 842 (a) whether a contract is or contains a lease, (b) lease classification, and (c) initial direct costs (ASC 842-10-65-1(f)); and (2) the short-term lease measurement and recognition exemption (ASC 842-20-25-2). ASC 842 also requires significant new disclosures about leasing activity In January 2017, the FASB issued ASU No. 2017-04, “Intangibles - Goodwill and Other” (“ASU 2017-04”), which simplifies the subsequent measurement of goodwill by eliminating step two from the goodwill impairment test. ASU 2017-04 is effective for annual and interim impairment tests in fiscal years beginning after December 15, 2019 and is required to be applied prospectively. Early adoption is allowed for annual goodwill impairment tests performed on testing dates after January 1, 2017. We do not anticipate that adopting this standard will have an impact on our consolidated financial statements and related disclosures. In August 2018, the FASB issued ASU No. 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement” (“ASU 2018-13”), which changes the fair value measurement disclosure requirements of ASC 820. ASU 2018-13 is effective for fiscal years beginning on or after December 15, 2019, including interim periods therein, and is generally required to be applied retrospectively, except for certain components that are to be applied prospectively. Early adoption is permitted for any eliminated or modified disclosures. We do not anticipate that adopting this standard will have a material impact on our disclosures. In August 2018, the FASB issued ASU No. 2018-15, “Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract,” which requires implementation costs incurred by customers in cloud computing arrangements to be deferred and recognized over the term of the arrangement, if those costs would be capitalized by the customer in a software licensing arrangement. This standard is effective for annual periods beginning after December 15, 2019, and interim periods within those fiscal years. We do not anticipate that adopting this standard will have a material impact on our consolidated financial statements and related disclosures. In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”), which requires companies to measure credit losses for financial assets held at the reporting date utilizing a methodology that reflects current expected credit losses over the lifetime of such assets. ASU 2016-13 is effective for the Company on January 1, 2020 and is generally required to be applied using the modified retrospective approach, with limited exceptions for specific instruments. We do not anticipate that adopting this standard will have an impact on our consolidated financial statements and related disclosures. |
Business Combinations (Tables)
Business Combinations (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Business Combinations [Abstract] | |
Summary of Component of Merger Consideration | The following table summarizes the components of the Merger Consideration: (In thousands) Cash paid for outstanding Nutrisystem shares (1) $ 1,138,143 Value of Tivity Health Common Stock issued in the merger (2) 132,838 Value of Nutrisystem stock options (3) 6,020 Value of Tivity Health replacement awards attributable to pre-combination service (4) 9,107 Total Merger Consideration $ 1,286,108 (1) Represents the total cash paid to former Nutrisystem stockholders as cash consideration. This amount is based on the shares of Nutrisystem common stock issued and outstanding as of Closing and cash consideration of $ 38.75 per share , plus cash payable in lieu of fractional shares . (2) Represents the fair value of 6.3 million shares of Tivity Health Common Stock issued for outstanding Nutrisystem shares as stock consideration. This amount is based on (a) 29,370,594 Nutrisystem common shares issued and outstanding as of Closing, times (b) the Exchange Ratio of 0.2141, times (c) $21.12, which is equal to the volume-weighted averages of the trading price per share of our Common Stock for the five consecutive trading days up to and including March 6, 2019. (3) Represents the fair value of the cash consideration paid for the net settlement of approximately 204,000 Nutrisystem stock options vested and outstanding as of the closing date. In accordance with the Merger Agreement, each vested and outstanding Nutrisystem stock option was cancelled, and the holder received a cash payment per option equal to approximately $43.27 minus the applicable exercise price of the stock option. (4) U |
Preliminary Allocation of Estimated Merger Consideration to the Identifiable Tangible and Intangible Assets Acquired and Liabilities Assumed | The following table sets forth an allocation of the Merger Consideration to the identifiable tangible and intangible assets acquired and liabilities assumed, with the excess recorded to goodwill (In thousands) Cash, cash equivalents, and short-term investments $ 81,217 Accounts receivable 22,639 Inventory 38,494 Prepaid expenses and other current assets 12,345 Property and equipment 31,233 Right-of-use assets 22,145 Intangible assets 933,000 Other assets/liabilities 7,161 Accounts payable (25,152 ) Accrued salaries and benefits and other liabilities (41,796 ) Deferred revenue (13,339 ) Lease liabilities (22,145 ) Deferred tax liabilities, net (216,750 ) Total identifiable assets and liabilities acquired $ 829,052 Goodwill (1) 457,056 Total Merger Consideration $ 1,286,108 (1) Goodwill represents the excess of Merger Consideration over the preliminary fair value of the underlying assets acquired and liabilities assumed. Goodwill is attributable to the assembled workforce of experienced personnel at Nutrisystem and synergies expected to be achieved from the combined operations of Tivity Health and Nutrisystem. |
Summary of Pro forma Combined Company Results | The following financial information presents the pro forma combined company results as if the acquisition of Nutrisystem had occurred on January 1, 2018: (In thousands) Three Months Ended June 30, Six Months Ended June 30, 2019 2018 2019 2018 Revenue $ 340,377 $ 343,176 $ 687,919 $ 704,036 Net income $ 19,042 $ 30,574 $ 14,808 $ 1,134 |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Summary of Information about Contract Assets and Contract Liabilities from Contracts with Customers | The following table provides information about receivables, contract assets and contract liabilities from contracts with customers: (In thousands) June 30, 2019 Contract assets $ 267 Contract liabilities $ 9,854 Significant changes in the contract liabilities (deferred revenue) balance during the period are as follows: Six Months Ended June 30, (In thousands) 2019 Revenue recognized that was included in the contract liability (deferred revenue) balance on March 8, 2019 $ (7,420 ) Increases due to cash received for prepaid gift cards sold or unshipped food, excluding amounts recognized as revenue $ 3,935 |
Summary of Revenue from Prepaid Gift Cards Expected to be Recognized in Future Related to Performance Obligation Unsatisfied or Partially Satisfied | The following table includes estimated revenue from the prepaid gift cards expected to be recognized in the future related to performance obligations that are unsatisfied (or partially satisfied) at the end of the reporting period: (In thousands) Remaining 2019 $ 5,284 2020 1,282 2021 640 2022 389 2023 385 $ 7,980 |
Healthcare | |
Summary of Revenue Disaggregated | The following table sets forth Healthcare revenue disaggregated by program. Revenue from our SilverSneakers program is predominantly contracted with Medicare Advantage and Medicare Supplement plans. (In thousands) Three Months Ended June 30, Six Months Ended June 30, 2019 2018 2019 2018 SilverSneakers $ 122,899 $ 122,295 $ 245,922 $ 243,221 Prime Fitness 29,751 25,213 58,494 49,947 WholeHealth Living 4,467 4,228 9,041 8,444 Other 364 129 551 183 $ 157,481 $ 151,865 $ 314,008 $ 301,795 |
Nutrition | |
Summary of Revenue Disaggregated | The following table sets forth Nutrition segment revenue disaggregated by the source of revenue: (In thousands) Three Months Ended June 30, Six Months Ended June 30, 2019 2019 Direct to consumer $ 170,440 $ 223,095 Retail 8,728 13,032 QVC 3,522 4,044 Other 206 292 $ 182,896 $ 240,463 |
Intangible Assets and Goodwill
Intangible Assets and Goodwill (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Intangible Assets Subject to and Not Subject to Amortization | (In thousands) Fair Value Estimated Useful Life (in years) Intangible assets subject to amortization: Tradename - South Beach Diet 9,000 15 Customer list 110,000 7 Retail customer relationship 8,000 10 Noncompetition agreements 6,000 5 Subtotal $ 133,000 Intangible assets not subject to amortization: Tradename - Nutrisystem 800,000 n/a Total intangible assets $ 933,000 Goodwill 457,056 n/a |
Change in Carrying Amount of Goodwill | The change in the carrying amount of goodwill during the six months ended June 30, 2019 was as follows: (In thousands) Balance, January 1, 2019 $ 334,680 Acquisition of Nutrisystem 445,671 Measurement period adjustment (1) 11,385 Balance, June 30, 2019 $ 791,736 (1) See Note 2 for explanation. |
Share-Based Compensation (Table
Share-Based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Summary of Stock Options | A summary of our stock options as of June 30, 2019 and the changes during the six months then ended is presented below: Options Shares (In thousands) Weighted Average Exercise Price Per Share Weighted Average Remaining Contractual Term Aggregate Intrinsic Value (In thousands) Outstanding at January 1, 2019 431 $ 17.83 Granted — — Exercised (39 ) 10.93 Forfeited (13 ) 37.44 Expired — — Outstanding at June 30, 2019 379 $ 17.84 4.0 $ 916 Exercisable at June 30, 2019 334 $ 15.17 3.4 $ 916 |
Summary of Restricted Stock Awards | The follow i o w m e i o c a a activit durin th six months then ended: Restricted Stock Awards Shares (In thousands) Weighted- Average Grant Date Fair Value Nonvested at January 1, 2019 — $ — Granted — — Replacement Awards 258 19.42 Vested (36 ) 19.42 Forfeited (1 ) 19.42 Nonvested at June 30, 2019 221 $ 19.42 |
Summary of Restricted Stock Units | The follow i o w m e i o c a a activit durin th six months then ended: Restricted Stock Units Shares (In thousands) Weighted- Average Grant Date Fair Value Nonvested at January 1, 2019 271 $ 24.07 Granted 414 19.72 Replacement Awards 919 19.42 Vested (199 ) 21.39 Forfeited (61 ) 22.87 Nonvested at June 30, 2019 1,344 $ 20.00 |
Summary of Performance Stock Units | The follow i o w m a wel a activit durin th six months then ended: Performance Stock Units Shares (In thousands) Weighted- Average Grant Date Fair Value Nonvested at January 1, 2019 — $ — Granted 806 20.19 Vested — Forfeited (1 ) 20.36 Nonvested at June 30, 2019 805 $ 20.19 |
Summary of Market Stock Units | The follow i o w m a wel a activit durin th six months then ended: Market Stock Units Shares (In thousands) Weighted- Average Grant Date Fair Value Nonvested at January 1, 2019 45 $ 18.25 Granted — — Vested — — Forfeited (20 ) 19.20 Nonvested at June 30, 2019 25 $ 17.49 |
Leases (Tables)
Leases (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Leases [Abstract] | |
Schedule of Right-of-Use Assets and Lease Liabilities | The following table shows the right-of-use assets and lease liabilities recorded on the balance sheet: June 30, 2019 (In thousands) Right-of-use assets: Operating $ 43,256 Finance 157 Total leased assets $ 43,413 Lease liabilities: Current Operating $ 14,377 Finance 46 Non-current Operating $ 31,714 Finance 112 Total lease liabilities $ 46,249 |
Schedule of Components of Lease Expense | The following table shows the components of lease expense: Three Months Ended June 30, Six Months Ended June 30, (In thousands) 2019 2019 Finance lease cost: Amortization of leased assets $ 12 $ 24 Interest of lease liabilities 2 4 Operating lease cost 3,804 6,520 Short-term lease cost 116 149 Total lease cost before subleases $ 3,934 $ 6,697 Sublease income (1,356 ) (2,700 ) Total lease cost, net $ 2,578 $ 3,997 |
Schedule of Weighted Average Remaining Term and Discount Rates | The following provides information related to the lease term and discount rate as of June 30, 2019: Weighted Average Remaining Lease Term (years) Operating leases 3.4 Finance leases 3.1 Weighted Average Discount Rate Operating leases 5.4 % Finance leases 4.4 % |
Schedule of Maturities of Lease Liabilities | As of June 30, 2019, m aturities of lease liabilities for each of the next five years and thereafter were as follows. Operating Leases Financing (In thousands) Lease Payments Sublease Receipts Net Leases Remaining 2019 $ 8,603 $ (2,884 ) $ 5,719 $ 26 2020 14,828 (5,730 ) 9,098 52 2021 13,361 (5,699 ) 7,662 52 2022 11,339 (5,732 ) 5,607 39 2023 1,947 (956 ) 991 — 2024 and thereafter 379 — 379 — Total lease payments 50,457 $ (21,001 ) $ 29,456 169 Less: interest (4,366 ) (11 ) Present value of lease liabilities $ 46,091 $ 158 |
Schedule of Supplemental Cash Flow Information Related to Leases | Supplemental cash flow information related to leases was as follows: Three Months Ended June 30, Six Months Ended June 30, (In thousands) 2019 2019 Cash paid for amounts included in the measurement of lease liabilities Operating cash flow attributable to operating leases $ (3,561 ) $ (5,108 ) Operating cash flow attributable to finance leases (2 ) (4 ) Financing cash flows attributable to finance leases (11 ) (22 ) Supplemental noncash information: Right-of-use assets obtained in exchange for operating lease liabilities (1) 48,972 Right-of-use assets obtained in exchange for finance lease liabilities (1) 181 (1) No new leases were entered into during the six months ended June 30, 2019. Amounts shown are due to the adoption of ASC 842 and reflect balances as of January 1, 2019 for the Healthcare segment and as of March 8, 2019 for the Nutrition segment (i.e., the date of our acquisition of Nutrisystem). |
Summary of Future Minimum Lease Payments Under All Non-cancelable Operating Leases | As of December 31, 2018, future minimum lease payments, net of total cash receipts from subleases of $23.7 million, under all non-cancelable operating leases for each of the next five years and thereafter were as follows. As of December 31, 2018, future minimum lease payments under capital leases were not material. (In thousands) Operating Year ending December 31, Leases 2019 $ 4,022 2020 2,040 2021 910 2022 827 2023 136 2024 and thereafter — Total minimum lease payments $ 7,935 |
Debt (Tables)
Debt (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Debt Disclosure [Abstract] | |
Summary of Debt, Net of Unamortized Deferred Loan Costs And Original Issue Discount | The C o an o i n (In thousands) June 30, 2019 December 31, 2018 Term Loan A $ 306,250 $ — Term Loan B 793,750 — Delayed draw term loan — 25,000 Revolving credit facility 9,275 5,450 Capital lease obligations (1) — 196 1,109,275 30,646 Less: deferred loan costs and original issue discount ("OID") (51,176 ) — 1,058,099 30,646 Less: current portion — (57 ) $ 1,058,099 $ 30,589 (1) Prior to the adoption of ASC 842 on January 1, 2019, our capital leases were recorded as part of debt. Beginning on January 1, 2019, they are classified as financing leases under ASC 842 and are recorded as part of lease liabilities. |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Fair Value Disclosures [Abstract] | |
Schedule of Assets and Liabilities Measured at Fair Value on a Recurring Basis | T he following table presents our assets and liabilities measured at fair value on a recurring basis at June 30, 2019. T u i a (In thousands) June 30, 2019 Level 2 Liabilities: Interest rate swap agreements $ 16,304 |
Derivative Instruments and He_2
Derivative Instruments and Hedging Activities (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Derivative Instruments And Hedging Activities Disclosure [Abstract] | |
Schedule of Estimated Gross Fair Values of Derivative Instruments and Their Classification on Consolidated Balance Sheet | The estimated gross fair values of derivative instruments and their classification on the consolidated balance sheet at June 30, 2019 and December 31, 2018 were as follows: (In thousands) June 30, 2019 December 31, 2018 Liabilities: Derivatives designated as hedging instruments: Current portion of long-term liabilities $ 3,038 $ — Other long-term liabilities 13,266 — $ 16,304 $ — |
Schedule of Effect of Cash Flow Hedge Accounting on Accumulated OCI | The following table presents the effect of cash flow hedge accounting on accumulated OCI as of June 30, 2019 and June 30, 2018: (In thousands) For the Three Months Ended For the Six Months Ended Derivatives in Cash Flow Hedging Relationships June 30, 2019 June 30, 2018 June 30, 2019 June 30, 2018 Loss related to effective portion of derivatives recognized in accumulated OCI, gross of tax effect $ 16,144 — $ 16,144 — Gain related to effective portion of derivatives reclassified from accumulated OCI to interest expense, gross of tax effect $ 160 — $ 160 — |
Restructuring and Related cha_2
Restructuring and Related charges (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Restructuring And Related Activities [Abstract] | |
Schedule of Accrued Restructuring and Related Charges Activity | The following table shows the activity in accrued restructuring and related charges for the six months ended June 30, 2019 related to the 2019 Restructuring Plan: (In thousands) Severance and Other Employee-Related Costs Accrued restructuring and related charges liability as of January 1, 2019 $ — Restructuring charges 3,330 Payments (797 ) Accrued restructuring and related charges liability as of June 30, 2019 $ 2,533 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Earnings Per Share [Abstract] | |
Reconciliation of the Numerator and Denominator of Basic and Diluted Earnings Per Share | F ollow i ng is a r e c o ncili a tion of the n u merat o r a n d denom i nat o r of bas i c and d iluted earnin g s p e r share f o r the three and six months ended June 30, 2019 a n d 2018: (In thousands except per share data) Three June 30, Six June 30, 2019 2018 2019 2018 Numerator: Income from continuing operations - numerator for earnings per share $ 18,137 $ 22,683 $ 22,351 $ 44,019 Income from discontinued operations - numerator for earnings per share — 901 — 901 Net income allocated to unvested restricted stock (93 ) — (77 ) — Net income allocated to shares of Common Stock $ 18,044 $ 23,584 $ 22,274 $ 44,920 Denominator: Shares used for basic income per share 47,790 39,899 45,165 39,841 Effect of dilutive stock options and restricted stock units outstanding: Non-qualified stock options 93 277 110 295 Restricted stock units 578 332 444 368 Market stock units — 489 511 Warrants related to Cash Convertible Notes — 2,287 2,422 Shares used for diluted income per share 48,461 43,284 45,719 43,437 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 Dilutive securities outstanding not included in the computation of earnings per share because their effect is anti-dilutive: Non-qualified stock options 71 59 76 29 Restricted stock units 288 42 172 28 Restricted stock awards 128 — 64 — |
Accumulated OCI (Tables)
Accumulated OCI (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Accumulated Other Comprehensive Income Loss Net Of Tax [Abstract] | |
Changes in Accumulated OCI | The following tables summarize the changes in accumulated OCI, net of tax, for the six months ended June 30, 2019: (In thousands) Net Change in Fair Value of Interest Rate Swaps Accumulated OCI, net of tax, as of January 1, 2019 $ — Other comprehensive income (loss) before reclassifications, net of tax of $4,028 (12,116 ) Amounts reclassified from accumulated OCI, net of tax of $40 (120 ) Accumulated OCI, net of tax, as of June 30, 2019 $ (12,236 ) |
Schedule of Reclassifications Out of Accumulated OCI | The following table presents details about reclassifications out of accumulated OCI for the six months ended June 30, 2019: (In thousands) Six Months Ended June 30, 2019 Statement of Operations Classification Interest rate swaps $ (160 ) Interest expense 40 Income tax expense $ (120 ) Net of tax |
Segment Information (Tables)
Segment Information (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Segment Reporting [Abstract] | |
Schedule of Each Segment's Profit | Each segment’s profit is measured as earnings before interest, taxes, depreciation and amortization (“EBITDA”) excluding acquisition and integration costs and restructuring and related charges, as shown below: (In thousands) Three Months Ended June 30, 2019 Six Months Ended June 30, 2019 Healthcare Nutrition Consolidated Healthcare Nutrition Consolidated Revenues $ 157,481 $ 182,896 $ 340,377 $ 314,008 $ 240,463 $ 554,471 Adjusted EBITDA $ 35,681 $ 34,667 $ 70,348 $ 61,810 $ 48,010 $ 109,820 Acquisition and integration costs $ 8,999 $ 26,049 Restructuring and related charges 2,352 3,943 Interest expense 23,661 31,328 Depreciation and amortization 9,084 12,666 Income before income taxes $ 26,252 $ 35,834 Total assets as of June 30, 2019 $ 395,395 $ 1,620,112 $ 2,015,507 |
Basis of Presentation - Additio
Basis of Presentation - Additional Information (Details) | 6 Months Ended |
Jun. 30, 2019Segment | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Number of reportable segments | 2 |
Business Combinations - Additio
Business Combinations - Additional Information (Details) $ / shares in Units, $ in Thousands | Mar. 08, 2019USD ($)$ / shares | Dec. 09, 2018 | Jun. 30, 2019USD ($) | Jun. 30, 2019USD ($) | Jun. 30, 2018USD ($) |
Business Acquisition [Line Items] | |||||
Increase (decrease) in acquisition, integration, and restructuring costs | $ (33,400) | $ 38,700 | |||
Increase (decrease) in income tax expense | $ (2,700) | 2,700 | |||
Increase in cost of revenue | $ 2,800 | ||||
Nutrisystem, Inc. | |||||
Business Acquisition [Line Items] | |||||
Business acquisition, cash received in conversion | $ / shares | $ 38.75 | ||||
Business acquisition, common stock exchange ratio | 0.2141 | ||||
Merger consideration | $ 1,286,108 | ||||
Decreased estimated fair value of intangible assets due to change in timing of projected revenue | $ (15,000) | ||||
Increase to goodwill | 11,400 | ||||
Decrease in deferred liabilities | $ 3,600 | ||||
Nutrisystem, Inc. | Merger Agreement | |||||
Business Acquisition [Line Items] | |||||
Business acquisition, agreement date | Dec. 9, 2018 | ||||
Business acquisition, effective date of acquisition | Mar. 8, 2019 | ||||
Business acquisition, cash received in conversion | $ / shares | $ 38.75 | ||||
Business acquisition, common stock exchange ratio | 0.2141 |
Business Combinations - Summary
Business Combinations - Summary of Component of Merger Consideration (Details) - Nutrisystem, Inc. $ in Thousands | Mar. 08, 2019USD ($) | |
Business Acquisition [Line Items] | ||
Cash paid for outstanding Nutrisystem shares | $ 1,138,143 | [1] |
Value of Tivity Health Common Stock issued in the merger | 132,838 | [2] |
Value of Nutrisystem stock options | 6,020 | [3] |
Value of Tivity Health replacement awards attributable to pre-combination service | 9,107 | [4] |
Total Merger Consideration | $ 1,286,108 | |
[1] | Represents the total cash paid to former Nutrisystem stockholders as cash consideration. This amount is based on the shares of Nutrisystem common stock issued and outstanding as of Closing and cash consideration of $ 38.75 per share , plus cash payable in lieu of fractional shares . | |
[2] | Represents the fair value of 6.3 million shares of Tivity Health Common Stock issued for outstanding Nutrisystem shares as stock consideration. This amount is based on (a) 29,370,594 Nutrisystem common shares issued and outstanding as of Closing, times (b) the Exchange Ratio of 0.2141, times (c) $21.12, which is equal to the volume-weighted averages of the trading price per share of our Common Stock for the five consecutive trading days up to and including March 6, 2019. | |
[3] | Represents the fair value of the cash consideration paid for the net settlement of approximately 204,000 Nutrisystem stock options vested and outstanding as of the closing date. In accordance with the Merger Agreement, each vested and outstanding Nutrisystem stock option was cancelled, and the holder received a cash payment per option equal to approximately $43.27 minus the applicable exercise price of the stock option. | |
[4] | U |
Business Combinations - Summa_2
Business Combinations - Summary of Component of Merger Consideration (Parenthetical) (Details) - Nutrisystem, Inc. | Mar. 08, 2019$ / sharesshares |
Business Acquisition [Line Items] | |
Number of Shares converted into cash upon acquisition | shares | 29,370,594 |
Cash consideration per share | $ / shares | $ 38.75 |
Business acquisition, share issued in conversion | shares | 6,300,000 |
Business acquisition, common stock exchange ratio | 0.2141 |
Volume-weighted average of trading price of common stock | $ / shares | $ 21.12 |
Number of consecutive trading days | 5 days |
Stock options vested and outstanding | shares | 204,000 |
Business acquisition cash payment per option net of exercise price | $ / shares | $ 43.27 |
Business Combinations - Prelimi
Business Combinations - Preliminary Allocation of Estimated Merger Consideration to the Identifiable Tangible and Intangible Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Mar. 08, 2019 | Dec. 31, 2018 | |
Business Acquisition [Line Items] | ||||
Goodwill, net | $ 791,736 | $ 334,680 | ||
Nutrisystem, Inc. | ||||
Business Acquisition [Line Items] | ||||
Cash, cash equivalents, and short-term investments | $ 81,217 | |||
Accounts receivable | 22,639 | |||
Inventory | 38,494 | |||
Prepaid expenses and other current assets | 12,345 | |||
Property and equipment | 31,233 | |||
Right-of-use assets | 22,145 | |||
Intangible assets | 933,000 | |||
Other assets/liabilities | 7,161 | |||
Accounts payable | (25,152) | |||
Accrued salaries and benefits and other liabilities | (41,796) | |||
Deferred revenue | (13,339) | |||
Lease liabilities | (22,145) | |||
Deferred tax liabilities, net | (216,750) | |||
Total identifiable assets and liabilities acquired | 829,052 | |||
Goodwill, net | $ 457,056 | 457,056 | [1] | |
Total Merger Consideration | $ 1,286,108 | |||
[1] | Goodwill represents the excess of Merger Consideration over the preliminary fair value of the underlying assets acquired and liabilities assumed. Goodwill is attributable to the assembled workforce of experienced personnel at Nutrisystem and synergies expected to be achieved from the combined operations of Tivity Health and Nutrisystem. |
Business Combinations - Summa_3
Business Combinations - Summary of Pro forma Combined Company Results (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Business Combinations [Abstract] | ||||
Revenue | $ 340,377 | $ 343,176 | $ 687,919 | $ 704,036 |
Net income | $ 19,042 | $ 30,574 | $ 14,808 | $ 1,134 |
Recent Relevant Accounting St_2
Recent Relevant Accounting Standards - Additional Information (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Mar. 08, 2019 | Jan. 01, 2019 |
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | |||
Right-of-use asset | $ 43,413 | ||
Lease liabilities | $ 46,249 | ||
ASU 2016-02 | |||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | |||
Right-of-use asset | $ 27,000 | ||
Lease liabilities | $ 29,700 | ||
ASU 2016-02 | Nutrisystem, Inc. | |||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | |||
Right-of-use asset | $ 22,100 | ||
Lease liabilities | $ 22,100 |
Revenue Recognition - Additiona
Revenue Recognition - Additional Information (Details) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019USD ($) | Jun. 30, 2018USD ($) | Jun. 30, 2019USD ($)SegmentProgramObligationSource | Jun. 30, 2018USD ($) | |
Disaggregation Of Revenue [Line Items] | ||||
Number of reportable segments | Segment | 2 | |||
Revenue, Practical Expedient, Initial Application and Transition, Qualitative Assessment | true | |||
Revenues | $ 340,377,000 | $ 151,865,000 | $ 554,471,000 | $ 301,795,000 |
Healthcare | ||||
Disaggregation Of Revenue [Line Items] | ||||
Number of programs | Program | 3 | |||
Number of performance obligations | Obligation | 1 | |||
Number of performance obligation unsatisfied | Obligation | 0 | |||
Revenue recognized from performance obligations satisfied in prior period | 0 | $ 0 | ||
Period of billing in arrears once timing of services to customers is known | 1 month | |||
Number of days for customer to make payment after being invoiced | 30 days | |||
Number of reportable segments | Segment | 2 | |||
Revenues | 157,481,000 | $ 151,865,000 | $ 314,008,000 | $ 301,795,000 |
Nutrition | ||||
Disaggregation Of Revenue [Line Items] | ||||
Number of sources for revenue recognition | Source | 4 | |||
Description of return of obligation | Direct to consumer customers may return unopened ready-to-go products within 30 days after purchase in order to receive a refund or credit. | |||
Return of purchase order to refund or credit, period | 30 days | |||
Purchase order canceled of delivery, period | 14 days | |||
Revenues | 182,896,000 | $ 240,463,000 | ||
Provision for estimated returns | 5,600,000 | 7,000,000 | ||
Nutrition | Accrued Liabilities | ||||
Disaggregation Of Revenue [Line Items] | ||||
Reserve for estimated returns | 1,600,000 | 1,600,000 | ||
Nutrition | Shipping and Handling Charges | ||||
Disaggregation Of Revenue [Line Items] | ||||
Revenues | $ 6,300,000 | $ 8,100,000 |
Revenue Recognition - Summary o
Revenue Recognition - Summary of Revenue Disaggregated by Program (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Disaggregation Of Revenue [Line Items] | ||||
Revenues | $ 340,377 | $ 151,865 | $ 554,471 | $ 301,795 |
Healthcare | ||||
Disaggregation Of Revenue [Line Items] | ||||
Revenues | 157,481 | 151,865 | 314,008 | 301,795 |
Healthcare | SilverSneakers | ||||
Disaggregation Of Revenue [Line Items] | ||||
Revenues | 122,899 | 122,295 | 245,922 | 243,221 |
Healthcare | Prime Fitness | ||||
Disaggregation Of Revenue [Line Items] | ||||
Revenues | 29,751 | 25,213 | 58,494 | 49,947 |
Healthcare | WholeHealth Living | ||||
Disaggregation Of Revenue [Line Items] | ||||
Revenues | 4,467 | 4,228 | 9,041 | 8,444 |
Healthcare | Other | ||||
Disaggregation Of Revenue [Line Items] | ||||
Revenues | $ 364 | $ 129 | $ 551 | $ 183 |
Revenue Recognition - Summary_2
Revenue Recognition - Summary of Revenue Disaggregated by Source (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Disaggregation Of Revenue [Line Items] | ||||
Revenues | $ 340,377 | $ 151,865 | $ 554,471 | $ 301,795 |
Nutrition | ||||
Disaggregation Of Revenue [Line Items] | ||||
Revenues | 182,896 | 240,463 | ||
Nutrition | Direct to Consumer | ||||
Disaggregation Of Revenue [Line Items] | ||||
Revenues | 170,440 | 223,095 | ||
Nutrition | Retail | ||||
Disaggregation Of Revenue [Line Items] | ||||
Revenues | 8,728 | 13,032 | ||
Nutrition | QVC | ||||
Disaggregation Of Revenue [Line Items] | ||||
Revenues | 3,522 | 4,044 | ||
Nutrition | Other | ||||
Disaggregation Of Revenue [Line Items] | ||||
Revenues | $ 206 | $ 292 |
Revenue Recognition - Summary_3
Revenue Recognition - Summary of Information about Receivables, Contract Assets and Contract Liabilities from Contracts with Customers (Details) $ in Thousands | Jun. 30, 2019USD ($) |
Revenue From Contract With Customer [Abstract] | |
Contract assets | $ 267 |
Contract liabilities | $ 9,854 |
Revenue Recognition - Summary_4
Revenue Recognition - Summary of Significant Changes in Contract Liabilities (Deferred Revenue) Balance (Details) $ in Thousands | 6 Months Ended |
Jun. 30, 2019USD ($) | |
Revenue From Contract With Customer [Abstract] | |
Revenue recognized that was included in the contract liability (deferred revenue) balance on March 8, 2019 | $ (7,420) |
Increases due to cash received for prepaid gift cards sold or unshipped food, excluding amounts recognized as revenue | $ 3,935 |
Revenue Recognition - Summary_5
Revenue Recognition - Summary of Revenue from Prepaid Gift Cards Expected to be Recognized in Future Related to Performance Obligation Unsatisfied or Partially Satisfied (Details) $ in Thousands | Jun. 30, 2019USD ($) |
Disaggregation Of Revenue [Line Items] | |
Revenue, remaining performance obligation, amount | $ 7,980 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2019-07-01 | |
Disaggregation Of Revenue [Line Items] | |
Revenue, remaining performance obligation, amount | $ 5,284 |
Revenue, remaining performance obligation, expected timing of satisfaction, period | 6 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2020-01-01 | |
Disaggregation Of Revenue [Line Items] | |
Revenue, remaining performance obligation, amount | $ 1,282 |
Revenue, remaining performance obligation, expected timing of satisfaction, period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2021-01-01 | |
Disaggregation Of Revenue [Line Items] | |
Revenue, remaining performance obligation, amount | $ 640 |
Revenue, remaining performance obligation, expected timing of satisfaction, period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2022-01-01 | |
Disaggregation Of Revenue [Line Items] | |
Revenue, remaining performance obligation, amount | $ 389 |
Revenue, remaining performance obligation, expected timing of satisfaction, period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2023-01-01 | |
Disaggregation Of Revenue [Line Items] | |
Revenue, remaining performance obligation, amount | $ 385 |
Revenue, remaining performance obligation, expected timing of satisfaction, period | 1 year |
Revenue Recognition - Summary_6
Revenue Recognition - Summary of Revenue from Prepaid Gift Cards Expected to be Recognized in Future Related to Performance Obligation Unsatisfied or Partially Satisfied (Details 1) $ in Thousands | Jun. 30, 2019USD ($) |
Revenue From Contract With Customer [Abstract] | |
Revenue, remaining performance obligation, amount | $ 7,980 |
Revenue Recognition - Additio_2
Revenue Recognition - Additional Information (Details 1) | 6 Months Ended |
Jun. 30, 2019 | |
Revenue From Contract With Customer [Abstract] | |
Revenue, practical expedient, financing component [true false] | true |
Inventories - Additional Inform
Inventories - Additional Information (Details) $ in Millions | Jun. 30, 2019USD ($) |
Inventory Disclosure [Abstract] | |
Reserve for excess and obsolete inventory | $ 1.5 |
Intangible Assets and Goodwil_2
Intangible Assets and Goodwill - Intangible Assets Subject to and Not Subject to Amortization (Details) - USD ($) $ in Thousands | 6 Months Ended | |||
Jun. 30, 2019 | Mar. 08, 2019 | [1] | Dec. 31, 2018 | |
Finite Lived Intangible Assets [Line Items] | ||||
Total intangible assets, Fair Value | $ 956,289 | $ 29,049 | ||
Goodwill | 791,736 | $ 334,680 | ||
Nutrisystem, Inc. | ||||
Finite Lived Intangible Assets [Line Items] | ||||
Intangible assets subject to amortization, Fair Value | 133,000 | |||
Total intangible assets, Fair Value | 933,000 | |||
Goodwill | 457,056 | $ 457,056 | ||
Nutrisystem, Inc. | Tradename - Nutrisystem | ||||
Finite Lived Intangible Assets [Line Items] | ||||
Intangible assets not subject to amortization: | 800,000 | |||
Tradename - Nutrisystem | Nutrisystem, Inc. | ||||
Finite Lived Intangible Assets [Line Items] | ||||
Intangible assets subject to amortization, Fair Value | $ 9,000 | |||
Intangible assets subject to amortization, Fair Value, Estimated Useful Life | 15 years | |||
Customer list | Nutrisystem, Inc. | ||||
Finite Lived Intangible Assets [Line Items] | ||||
Intangible assets subject to amortization, Fair Value | $ 110,000 | |||
Intangible assets subject to amortization, Fair Value, Estimated Useful Life | 7 years | |||
Retail customer relationship | Nutrisystem, Inc. | ||||
Finite Lived Intangible Assets [Line Items] | ||||
Intangible assets subject to amortization, Fair Value | $ 8,000 | |||
Intangible assets subject to amortization, Fair Value, Estimated Useful Life | 10 years | |||
Noncompetition agreements | Nutrisystem, Inc. | ||||
Finite Lived Intangible Assets [Line Items] | ||||
Intangible assets subject to amortization, Fair Value | $ 6,000 | |||
Intangible assets subject to amortization, Fair Value, Estimated Useful Life | 5 years | |||
[1] | Goodwill represents the excess of Merger Consideration over the preliminary fair value of the underlying assets acquired and liabilities assumed. Goodwill is attributable to the assembled workforce of experienced personnel at Nutrisystem and synergies expected to be achieved from the combined operations of Tivity Health and Nutrisystem. |
Intangible Assets and Goodwil_3
Intangible Assets and Goodwill - Additional Information (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 |
Indefinite Lived Intangible Assets By Major Class [Line Items] | ||
Goodwill | $ 791,736 | $ 334,680 |
Healthcare | ||
Indefinite Lived Intangible Assets By Major Class [Line Items] | ||
Goodwill | 334,700 | |
Intangible assets not subject to amortization | $ 29,000 |
Intangible Assets and Goodwil_4
Intangible Assets and Goodwill - Change in Carrying Amount of Goodwill (Details) $ in Thousands | 6 Months Ended | |
Jun. 30, 2019USD ($) | ||
Goodwill And Intangible Assets Disclosure [Abstract] | ||
Balance, January 1, 2019 | $ 334,680 | |
Acquisition of Nutrisystem | 445,671 | |
Measurement period adjustment | 11,385 | [1] |
Balance, June 30, 2019 | $ 791,736 | |
[1] | See Note 2 for explanation. |
Marketing Expenses - Additional
Marketing Expenses - Additional Information (Details) $ in Millions | 3 Months Ended | 6 Months Ended |
Jun. 30, 2019USD ($) | Jun. 30, 2019USD ($) | |
Marketing And Advertising Expense [Abstract] | ||
Media expense | $ 47.3 | $ 67.5 |
Prepaid for future advertisements and promotions | $ 0.5 | $ 0.5 |
Share-Based Compensation - Addi
Share-Based Compensation - Additional Information (Details) $ / shares in Units, $ in Millions | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2019USD ($)$ / sharesshares | Jun. 30, 2019USD ($) | Jun. 30, 2018USD ($) | Jun. 30, 2019USD ($)Type$ / sharesshares | Jun. 30, 2018USD ($) | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Types of share based awards | Type | 5 | ||||
Share based awards, desription | We currently have five types of share-based awards outstanding to our employees and directors: stock options, restricted stock awards, restricted stock units, performance stock units, and market stock units. | ||||
Share-based compensation costs | $ | $ 6.9 | $ 1.8 | $ 9.3 | $ 3.3 | |
Restructuring and Related Charges | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Share-based compensation costs | $ | $ 0.5 | $ 0.6 | |||
Time-Vesting Restricted Stock Awards (Replacement Awards) | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Share based awards, granted | shares | 258,000 | ||||
Share based awards, fair value | $ / shares | $ 19.42 | ||||
Time-Vesting Restricted Stock Awards (Replacement Awards) | Employees | Nutrisystem | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Share based awards, granted | shares | 258,000 | ||||
Share based awards, fair value | $ / shares | $ 19.42 | ||||
Time-Vesting Restricted Stock Units (Replacement Awards) | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Share based awards, granted | shares | 919,000 | ||||
Share based awards, fair value | $ / shares | $ 19.42 | ||||
Time-Vesting Restricted Stock Units (Replacement Awards) | Employees | Nutrisystem | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Share based awards, granted | shares | 919,000 | ||||
Share based awards, fair value | $ / shares | $ 19.42 | ||||
Replacement Awards | Nutrisystem | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Fair value of replacement awards attributable to pre-combination service | $ | $ 9.1 | ||||
Post-combination expense expected to be recognized | $ | $ 13.7 | ||||
Minimum | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Each of share based awards, vesting period | 3 years | ||||
Maximum | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Each of share based awards, vesting period | 4 years |
Share-Based Compensation - Summ
Share-Based Compensation - Summary of Stock Options (Details) $ / shares in Units, shares in Thousands, $ in Thousands | 6 Months Ended |
Jun. 30, 2019USD ($)$ / sharesshares | |
Shares [Roll Forward] | |
Outstanding, beginning of period (in shares) | shares | 431 |
Exercised (in shares) | shares | (39) |
Forfeited (in shares) | shares | (13) |
Outstanding, end of period (in shares) | shares | 379 |
Exercisable, end of period (in shares) | shares | 334 |
Weighted-Average Exercise Price [Roll Forward] | |
Outstanding, beginning of period (in dollars per share) | $ / shares | $ 17.83 |
Exercised (in dollars per share) | $ / shares | 10.93 |
Forfeited (in dollars per share) | $ / shares | 37.44 |
Outstanding, end of period (in dollars per share) | $ / shares | 17.84 |
Exercisable, end of period (in dollars per share) | $ / shares | $ 15.17 |
Weighted-Average Remaining Contractual Term [Abstract] | |
Outstanding | 4 years |
Exercisable | 3 years 4 months 24 days |
Aggregate Intrinsic Value [Abstract] | |
Outstanding, end of period | $ | $ 916 |
Exercisable, end of period | $ | $ 916 |
Share-Based Compensation - Su_2
Share-Based Compensation - Summary of Restricted Stock Awards (Details) shares in Thousands | 6 Months Ended |
Jun. 30, 2019$ / sharesshares | |
Restricted Stock Awards | |
Shares [Roll Forward] | |
Vested (in shares) | shares | (36) |
Forfeited (in shares) | shares | (1) |
Nonvested, end of period (in shares) | shares | 221 |
Weighted-Average Grant Date Fair Value [Roll Forward] | |
Vested (in dollars per share) | $ / shares | $ 19.42 |
Forfeited (in dollars per share) | $ / shares | 19.42 |
Nonvested, end of period (in dollars per share) | $ / shares | $ 19.42 |
Restricted Stock Awards Replacement Awards | |
Shares [Roll Forward] | |
Granted (in shares) | shares | 258 |
Weighted-Average Grant Date Fair Value [Roll Forward] | |
Granted (in dollars per share) | $ / shares | $ 19.42 |
Share-Based Compensation - Su_3
Share-Based Compensation - Summary of Restricted Stock Units (Details) shares in Thousands | 6 Months Ended |
Jun. 30, 2019$ / sharesshares | |
Restricted Stock Units (RSUs) | |
Shares [Roll Forward] | |
Nonvested, beginning of period (in shares) | shares | 271 |
Granted (in shares) | shares | 414 |
Vested (in shares) | shares | (199) |
Forfeited (in shares) | shares | (61) |
Nonvested, end of period (in shares) | shares | 1,344 |
Weighted-Average Grant Date Fair Value [Roll Forward] | |
Nonvested, beginning of period (in dollars per share) | $ / shares | $ 24.07 |
Granted (in dollars per share) | $ / shares | 19.72 |
Vested (in dollars per share) | $ / shares | 21.39 |
Forfeited (in dollars per share) | $ / shares | 22.87 |
Nonvested, end of period (in dollars per share) | $ / shares | $ 20 |
Restricted Stock Units (RSUs) Replacement Awards | |
Shares [Roll Forward] | |
Granted (in shares) | shares | 919 |
Weighted-Average Grant Date Fair Value [Roll Forward] | |
Granted (in dollars per share) | $ / shares | $ 19.42 |
Share-Based Compensation - Su_4
Share-Based Compensation - Summary of Performance Stock Units (Details) - Performance Stock Units shares in Thousands | 6 Months Ended |
Jun. 30, 2019$ / sharesshares | |
Shares [Roll Forward] | |
Granted (in shares) | shares | 806 |
Forfeited (in shares) | shares | (1) |
Nonvested, end of period (in shares) | shares | 805 |
Weighted-Average Grant Date Fair Value [Roll Forward] | |
Granted (in dollars per share) | $ / shares | $ 20.19 |
Forfeited (in dollars per share) | $ / shares | 20.36 |
Nonvested, end of period (in dollars per share) | $ / shares | $ 20.19 |
Share-Based Compensation - Su_5
Share-Based Compensation - Summary of Market Stock Units (Details) - Market Stock Units shares in Thousands | 6 Months Ended |
Jun. 30, 2019$ / sharesshares | |
Shares [Roll Forward] | |
Nonvested, beginning of period (in shares) | shares | 45 |
Granted (in shares) | shares | 0 |
Vested (in shares) | shares | 0 |
Forfeited (in shares) | shares | (20) |
Nonvested, end of period (in shares) | shares | 25 |
Weighted-Average Grant Date Fair Value [Roll Forward] | |
Nonvested, beginning of period (in dollars per share) | $ / shares | $ 18.25 |
Granted (in dollars per share) | $ / shares | 0 |
Vested (in dollars per share) | $ / shares | 0 |
Forfeited (in dollars per share) | $ / shares | 19.20 |
Nonvested, end of period (in dollars per share) | $ / shares | $ 17.49 |
Income Taxes- Additional Inform
Income Taxes- Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Operating Loss Carryforwards [Line Items] | ||||
Effective tax rate | 30.90% | 25.30% | 37.60% | 25.20% |
Increase in income tax expense | $ 2.7 | |||
Earliest Tax Year | ||||
Operating Loss Carryforwards [Line Items] | ||||
Open tax year | 2015 | |||
State | ||||
Operating Loss Carryforwards [Line Items] | ||||
Increase in valuation allowance of net operating loss carryforwards | $ 1.8 | |||
Reduction in deferred tax asset related to income tax credits | $ (0.9) |
Leases - Additional Information
Leases - Additional Information (Details) $ in Millions | 6 Months Ended | 12 Months Ended |
Jun. 30, 2019Agreement | Dec. 31, 2018USD ($) | |
Lessee Lease Description [Line Items] | ||
Number of sublease agreements | Agreement | 2 | |
Total cash receipts from subleases | $ | $ 23.7 | |
Minimum | ||
Lessee Lease Description [Line Items] | ||
Remaining lease terms | 1 year | |
Maximum | ||
Lessee Lease Description [Line Items] | ||
Remaining lease terms | 6 years |
Leases - Schedule of Right-of-U
Leases - Schedule of Right-of-Use Assets and Lease Liabilities (Details) $ in Thousands | Jun. 30, 2019USD ($) |
Right-of-use assets: | |
Operating | $ 43,256 |
Finance | 157 |
Total leased assets | 43,413 |
Current | |
Operating | 14,377 |
Finance | 46 |
Non-current | |
Operating | 31,714 |
Finance | 112 |
Total lease liabilities | $ 46,249 |
Leases - Schedule of Components
Leases - Schedule of Components of Lease Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended |
Jun. 30, 2019 | Jun. 30, 2019 | |
Leases [Abstract] | ||
Amortization of leased assets | $ 12 | $ 24 |
Interest of lease liabilities | 2 | 4 |
Operating lease cost | 3,804 | 6,520 |
Short-term lease cost | 116 | 149 |
Total lease cost before subleases | 3,934 | 6,697 |
Sublease income | (1,356) | (2,700) |
Total lease cost, net | $ 2,578 | $ 3,997 |
Leases - Schedule of Weighted A
Leases - Schedule of Weighted Average Remaining Term and Discount Rates (Details) | Jun. 30, 2019 |
Weighted Average Remaining Lease Term (years) | |
Operating leases, Weighted average remaining lease term (years) | 3 years 4 months 24 days |
Finance leases, Weighted average remaining lease term (years) | 3 years 1 month 6 days |
Weighted Average Discount Rate | |
Operating leases, Weighted average discount rate | 5.40% |
Finance leases, Weighted average discount rate | 4.40% |
Leases - Schedule of Maturities
Leases - Schedule of Maturities of Lease Liabilities (Details) $ in Thousands | Jun. 30, 2019USD ($) |
Operating Leases Lease Payments | |
Remaining 2019 | $ 8,603 |
2020 | 14,828 |
2021 | 13,361 |
2022 | 11,339 |
2023 | 1,947 |
2024 and thereafter | 379 |
Total lease payments | 50,457 |
Less: interest | (4,366) |
Present value of lease liabilities | 46,091 |
Operating Leases Sublease Receipts | |
Remaining 2019 | (2,884) |
2020 | (5,730) |
2021 | (5,699) |
2022 | (5,732) |
2023 | (956) |
Total Operating Leases Sublease Receipts | (21,001) |
Operating Leases Net | |
Remaining 2019 | 5,719 |
2020 | 9,098 |
2021 | 7,662 |
2022 | 5,607 |
2023 | 991 |
2024 and thereafter | 379 |
Total operating lease payments Net | 29,456 |
Financing Leases | |
Remaining 2019 | 26 |
2020 | 52 |
2021 | 52 |
2022 | 39 |
Total lease payments | 169 |
Less: interest | (11) |
Present value of lease liabilities | $ 158 |
Leases - Schedule of Supplement
Leases - Schedule of Supplemental Cash Flow Information Related to Leases (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2019 | ||
Cash paid for amounts included in the measurement of lease liabilities | |||
Operating cash flow attributable to operating leases | $ (3,561) | $ (5,108) | |
Operating cash flow attributable to finance leases | (2) | (4) | |
Financing cash flows attributable to finance leases | $ (11) | (22) | |
Supplemental noncash information: | |||
Right-of-use assets obtained in exchange for operating lease liabilities | [1] | 48,972 | |
Right-of-use assets obtained in exchange for finance lease liabilities | [1] | $ 181 | |
[1] | No new leases were entered into during the six months ended June 30, 2019. Amounts shown are due to the adoption of ASC 842 and reflect balances as of January 1, 2019 for the Healthcare segment and as of March 8, 2019 for the Nutrition segment (i.e., the date of our acquisition of Nutrisystem). |
Leases - Summary of Future Mini
Leases - Summary of Future Minimum Lease Payments Under All Non-cancelable Operating Leases (Details) $ in Thousands | Dec. 31, 2018USD ($) |
Leases [Abstract] | |
2019 | $ 4,022 |
2020 | 2,040 |
2021 | 910 |
2022 | 827 |
2023 | 136 |
Total minimum lease payments | $ 7,935 |
Debt - Summary of Debt, Net of
Debt - Summary of Debt, Net of Unamortized Deferred Loan Costs And Original Issue Discount (Details) - USD ($) $ in Thousands | Jun. 30, 2019 | Dec. 31, 2018 | |
Debt Instrument [Line Items] | |||
Debt, net of unamortized original issue discount | $ 1,109,275 | $ 30,646 | |
Less: deferred loan costs and original issue discount ("OID") | (51,176) | ||
Total debt | 1,058,099 | 30,646 | |
Less: current portion | (57) | ||
Long-term debt | 1,058,099 | 30,589 | |
Term Loan A | |||
Debt Instrument [Line Items] | |||
Debt, net of unamortized original issue discount | 306,250 | ||
Term Loan B | |||
Debt Instrument [Line Items] | |||
Debt, net of unamortized original issue discount | 793,750 | ||
Delayed Draw Term Loan | |||
Debt Instrument [Line Items] | |||
Debt, net of unamortized original issue discount | 25,000 | ||
Revolving Credit Facility | |||
Debt Instrument [Line Items] | |||
Debt, net of unamortized original issue discount | $ 9,275 | 5,450 | |
Capital Lease Obligations | |||
Debt Instrument [Line Items] | |||
Debt, net of unamortized original issue discount | [1] | $ 196 | |
[1] | Prior to the adoption of ASC 842 on January 1, 2019, our capital leases were recorded as part of debt. Beginning on January 1, 2019, they are classified as financing leases under ASC 842 and are recorded as part of lease liabilities. |
Debt - Credit Facility - Additi
Debt - Credit Facility - Additional Information (Details) | Mar. 08, 2019USD ($) | May 31, 2019Agreement | Jun. 28, 2019USD ($) | Jun. 30, 2019USD ($) |
Interest Rate Swap Agreements | ||||
Line Of Credit Facility [Line Items] | ||||
Number of agreements held for maturity | Agreement | 8 | |||
Derivative maturity month and year | 2024-05 | |||
Derivative, notional amount | $ 900,000,000 | |||
Interest Rate Swap Agreements | LIBOR | ||||
Line Of Credit Facility [Line Items] | ||||
Derivative, fixed interest rate | 2.20% | |||
Prior Credit Agreement | ||||
Line Of Credit Facility [Line Items] | ||||
Initiation date | Apr. 21, 2017 | |||
Credit Agreement | ||||
Line Of Credit Facility [Line Items] | ||||
Initiation date | Mar. 8, 2019 | |||
Debt instrument, prepayments description | We are required to make prepayments on the Term Loans equal to our excess cash flow for a given fiscal year multiplied by the following excess cash flow percentages based on our net leverage ratio (as defined in the Credit Agreement) on the last day of such fiscal year: (a) 75% if the net leverage ratio is greater than 3.75:1, (b) 50% if the net leverage ratio is equal to or less than 3.75:1 but greater than 3.25:1 (c) 25% if the net leverage ratio is equal to or less than 3.25:1 but greater than 2.75:1, and (d) 0% if the net leverage ratio is equal to or less than 2.75:1. | |||
Credit Agreement | Federal Funds Rate | ||||
Line Of Credit Facility [Line Items] | ||||
Basis spread on variable rate | 0.50% | |||
Credit Agreement | One-Month LIBOR | ||||
Line Of Credit Facility [Line Items] | ||||
Basis spread on variable rate | 1.00% | |||
Credit Agreement | Net Leverage Ratio Greater Than 3.75:1 | ||||
Line Of Credit Facility [Line Items] | ||||
Excess cash flow percentage | 75.00% | |||
Net leverage ratio | 375.00% | |||
Credit Agreement | Net Leverage Ratio Equal To or Less Than 3.75:1 but Greater Than 3.25:1 | ||||
Line Of Credit Facility [Line Items] | ||||
Excess cash flow percentage | 50.00% | |||
Net leverage ratio | 325.00% | |||
Credit Agreement | Net Leverage Ratio Equal To or Less Than 3.25:1 but Greater Than 2.75:1 | ||||
Line Of Credit Facility [Line Items] | ||||
Excess cash flow percentage | 25.00% | |||
Net leverage ratio | 275.00% | |||
Credit Agreement | Net Leverage Ratio Equal To or Less Than 2.75:1 | ||||
Line Of Credit Facility [Line Items] | ||||
Excess cash flow percentage | 0.00% | |||
Credit Agreement | Minimum | ||||
Line Of Credit Facility [Line Items] | ||||
Unused commitment fee percentage | 0.25% | |||
Credit Agreement | Minimum | LIBOR | ||||
Line Of Credit Facility [Line Items] | ||||
Variable rate basis | 0.00% | |||
Credit Agreement | Maximum | ||||
Line Of Credit Facility [Line Items] | ||||
Unused commitment fee percentage | 0.50% | |||
Credit Agreement | Revolving Credit Facility | ||||
Line Of Credit Facility [Line Items] | ||||
Maximum borrowing capacity | $ 125,000,000 | |||
Maturity date | Mar. 8, 2024 | |||
Credit Agreement | Revolving Credit Facility | Minimum | LIBOR | ||||
Line Of Credit Facility [Line Items] | ||||
Margin rate | 3.75% | |||
Credit Agreement | Revolving Credit Facility | Minimum | Base Rate | ||||
Line Of Credit Facility [Line Items] | ||||
Margin rate | 2.75% | |||
Credit Agreement | Revolving Credit Facility | Maximum | LIBOR | ||||
Line Of Credit Facility [Line Items] | ||||
Margin rate | 4.25% | |||
Credit Agreement | Revolving Credit Facility | Maximum | Base Rate | ||||
Line Of Credit Facility [Line Items] | ||||
Margin rate | 3.25% | |||
Credit Agreement | Swingline Sub Facility | ||||
Line Of Credit Facility [Line Items] | ||||
Maximum borrowing capacity | $ 35,000,000 | |||
Maturity date | Mar. 8, 2024 | |||
Credit Agreement | Letters of Credit Sub Facility | ||||
Line Of Credit Facility [Line Items] | ||||
Maximum borrowing capacity | 50,000,000 | |||
Credit Agreement | Term Loan Facility A | ||||
Line Of Credit Facility [Line Items] | ||||
Debt instrument, face amount | $ 350,000,000 | |||
Periodic principal payment as percentage of aggregate principal amount | 2.50% | |||
Maturity date | Mar. 8, 2024 | |||
Credit Agreement | Term Loan Facility A | LIBOR | ||||
Line Of Credit Facility [Line Items] | ||||
Margin rate | 4.25% | |||
Credit Agreement | Term Loan Facility A | Base Rate | ||||
Line Of Credit Facility [Line Items] | ||||
Margin rate | 3.25% | |||
Credit Agreement | Term Loan Facility B | ||||
Line Of Credit Facility [Line Items] | ||||
Debt instrument, face amount | $ 830,000,000 | |||
Periodic principal payment as percentage of aggregate principal amount | 0.75% | |||
Maturity date | Mar. 8, 2026 | |||
Credit Agreement | Term Loan Facility B | LIBOR | ||||
Line Of Credit Facility [Line Items] | ||||
Margin rate | 5.25% | |||
Credit Agreement | Term Loan Facility B | Base Rate | ||||
Line Of Credit Facility [Line Items] | ||||
Margin rate | 4.25% | |||
Credit Agreement | Uncommitted Incremental Accordion Facility | Minimum | ||||
Line Of Credit Facility [Line Items] | ||||
Maximum borrowing capacity | $ 125,000,000 | |||
Percentage of consolidated EBITDA requirement | 50.00% | |||
Credit Agreement | Term Loans | ||||
Line Of Credit Facility [Line Items] | ||||
Payments on term loans | $ 80,000,000 | |||
Maturity date | Jun. 30, 2020 |
Debt - Cash Convertible Notes -
Debt - Cash Convertible Notes - Additional Information (Details) - $ / shares | 3 Months Ended | 6 Months Ended | 8 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2019 | May 31, 2019 | Jul. 31, 2013 | |
Debt Instrument [Line Items] | ||||
Shares issued upon conversion of debt | 0 | 0 | ||
Number of trading days, warrants automatically exercised on a pro rata basis | 160 days | |||
Number of warrants are automatically exercised on each trading day | 48,000 | |||
Common Stock | ||||
Debt Instrument [Line Items] | ||||
Common stock shares issued related to automatic exercise of warrants | 0 | 0 | ||
Common Stock | Warrants | Cash Convertible Notes Hedge | ||||
Debt Instrument [Line Items] | ||||
Shares issued upon conversion of debt | 7,700,000 | |||
1.50% Cash Convertible Senior Notes Due 2018 | ||||
Debt Instrument [Line Items] | ||||
Warrants strike price (in dollars per share) | $ 25.95 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information - (Details) | Nov. 06, 2017Lawsuit |
Commitments And Contingencies Disclosure [Abstract] | |
Number of lawsuits filed | 4 |
Fair Value Measurements - Addit
Fair Value Measurements - Additional Information (Details) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Revolving Credit Facility | ||
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
Line of credit | $ 9,300,000 | |
Line of credit fair value | 9,200,000 | |
Carrying Value | ||
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
Cash and cash equivalents | 4,400,000 | |
Cash Convertible Notes Hedges and Cash Conversion Derivative | ||
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
Assets and liabilities measured at fair value on a recurring basis | $ 0 | |
Term Loans | ||
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
Debt instrument fair value | 1,099,000,000 | |
Debt instrument carrying amount | $ 1,100,000,000 |
Fair Value Measurements - Sched
Fair Value Measurements - Schedule of Assets and Liabilities Measured at Fair Value on a Recurring Basis (Details) $ in Thousands | Jun. 30, 2019USD ($) |
Interest Rate Swap Agreements | Fair Value, Measurements, Recurring | Level 2 | |
Liabilities: | |
Liabilities measured at fair value | $ 16,304 |
Derivative Instruments and He_3
Derivative Instruments and Hedging Activities - Additional Information (Details) - Cash Flow Hedges - Derivatives Designated as Hedging Instruments - Interest Rate Swap Agreements | 1 Months Ended | |
May 31, 2019Agreement | Jun. 30, 2019USD ($) | |
Derivative [Line Items] | ||
Number of amortizing interest rate swap agreements | Agreement | 8 | |
Derivative maturity month and year | 2024-05 | |
Derivative, fixed interest rate | 2.20% | |
Derivative, notional amount | $ 900,000,000 | |
Derivative amount reclassify from accumulated OCI to interest expense within next 12 months | $ 3,100,000 |
Derivative Instruments and He_4
Derivative Instruments and Hedging Activities - Schedule of Estimated Gross Fair Values of Derivative Instruments and Their Classification on Consolidated Balance Sheet (Details) - Cash Flow Hedges - Derivatives Designated as Hedging Instruments - Interest Rate Swap Agreements $ in Thousands | Jun. 30, 2019USD ($) |
Liabilities: | |
Derivative liabilities | $ 16,304 |
Current Portion of Long-term Liabilities | |
Liabilities: | |
Current portion of long-term liabilities | 3,038 |
Other Long-term Liabilities | |
Liabilities: | |
Other long-term liabilities | $ 13,266 |
Derivative Instruments and He_5
Derivative Instruments and Hedging Activities - Schedule of Effect of Cash Flow Hedge Accounting on Accumulated OCI (Details) - Cash Flow Hedges - Derivatives Designated as Hedging Instruments - Interest Rate Swap Agreements - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended |
Jun. 30, 2019 | Jun. 30, 2019 | |
Derivative Instruments Gain Loss [Line Items] | ||
Loss related to effective portion of derivatives recognized in accumulated OCI, gross of tax effect | $ 16,144 | $ 16,144 |
Interest Expense | ||
Derivative Instruments Gain Loss [Line Items] | ||
Gain related to effective portion of derivatives reclassified from accumulated OCI to interest expense, gross of tax effect | $ 160 | $ 160 |
Restructuring and Related Cha_3
Restructuring and Related Charges - Additional Information (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Restructuring Cost And Reserve [Line Items] | ||||
Restructuring and related charges | $ 2,352 | $ 118 | $ 3,943 | $ 124 |
2019 Restructuring Plan | ||||
Restructuring Cost And Reserve [Line Items] | ||||
Restructuring and related charges | 2,400 | 3,900 | ||
Total annualized savings | 9,900 | 9,900 | ||
Healthcare | 2019 Restructuring Plan | ||||
Restructuring Cost And Reserve [Line Items] | ||||
Restructuring and related charges | 800 | 1,800 | ||
Total annualized savings | 5,500 | 5,500 | ||
Nutrition | 2019 Restructuring Plan | ||||
Restructuring Cost And Reserve [Line Items] | ||||
Restructuring and related charges | 1,600 | 2,100 | ||
Total annualized savings | $ 4,400 | $ 4,400 |
Restructuring and Related Cha_4
Restructuring and Related Charges - Schedule of Accrued Restructuring and Related Charges Activity (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Restructuring Cost And Reserve [Line Items] | ||||
Restructuring and related charges | $ 2,352 | $ 118 | $ 3,943 | $ 124 |
2019 Restructuring Plan | ||||
Restructuring Cost And Reserve [Line Items] | ||||
Restructuring and related charges | 2,400 | 3,900 | ||
Accrued restructuring and related charges liability as of June 30, 2019 | 9,900 | 9,900 | ||
2019 Restructuring Plan | Severance and Other Employee-Related Costs | ||||
Restructuring Cost And Reserve [Line Items] | ||||
Restructuring and related charges | 3,330 | |||
Payments | (797) | |||
Accrued restructuring and related charges liability as of June 30, 2019 | $ 2,533 | $ 2,533 |
Earnings Per Share - Reconcilia
Earnings Per Share - Reconciliation of the Numerator and Denominator of Basic and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Numerator [Abstract] | ||||
Income from continuing operations - numerator for earnings per share | $ 18,137 | $ 22,683 | $ 22,351 | $ 44,019 |
Income from discontinued operations - numerator for earnings per share | 901 | 901 | ||
Net income allocated to unvested restricted stock | (93) | (77) | ||
Net income allocated to shares of Common Stock | $ 18,044 | $ 23,584 | $ 22,274 | $ 44,920 |
Denominator [Abstract] | ||||
Shares used for basic income per share | 47,790 | 39,899 | 45,165 | 39,841 |
Effect of dilutive stock options and restricted stock units outstanding [Abstract] | ||||
Shares used for diluted income per share | 48,461 | 43,284 | 45,719 | 43,437 |
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 |
Non-Qualified Stock Options | ||||
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | ||||
Dilutive securities outstanding not included in the computation of earnings (loss) per share because their effect is anti-dilutive (in shares) | 71 | 59 | 76 | 29 |
Restricted Stock Units | ||||
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | ||||
Dilutive securities outstanding not included in the computation of earnings (loss) per share because their effect is anti-dilutive (in shares) | 288 | 42 | 172 | 28 |
Non-Qualified Stock Options | ||||
Effect of dilutive stock options and restricted stock units outstanding [Abstract] | ||||
Effect of dilutive stock options and restricted stock units outstanding (in shares) | 93 | 277 | 110 | 295 |
Restricted Stock Units | ||||
Effect of dilutive stock options and restricted stock units outstanding [Abstract] | ||||
Effect of dilutive stock options and restricted stock units outstanding (in shares) | 578 | 332 | 444 | 368 |
Market Stock Units | ||||
Effect of dilutive stock options and restricted stock units outstanding [Abstract] | ||||
Effect of dilutive stock options and restricted stock units outstanding (in shares) | 489 | 511 | ||
Warrants Related to Cash Convertible Notes | ||||
Effect of dilutive stock options and restricted stock units outstanding [Abstract] | ||||
Effect of dilutive stock options and restricted stock units outstanding (in shares) | 2,287 | 2,422 | ||
Restricted Stock Awards | ||||
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | ||||
Dilutive securities outstanding not included in the computation of earnings (loss) per share because their effect is anti-dilutive (in shares) | 128 | 64 |
Accumulated OCI - Changes in Ac
Accumulated OCI - Changes in Accumulated OCI, Net of Tax (Details) - Net Change in Fair Value of Interest Rate Swaps $ in Thousands | 6 Months Ended |
Jun. 30, 2019USD ($) | |
Changes in accumulated OCI, net of tax [Roll Forward] | |
Balance | $ 0 |
Other comprehensive income (loss) before reclassifications, net | (12,116) |
Amounts reclassified from accumulated OCI, net of tax | (120) |
Balance | $ (12,236) |
Accumulated OCI - Changes in _2
Accumulated OCI - Changes in Accumulated OCI, Net of Tax (Parenthetical) (Details) $ in Thousands | 6 Months Ended |
Jun. 30, 2019USD ($) | |
Accumulated Other Comprehensive Income Loss Net Of Tax [Abstract] | |
Other comprehensive income before reclassifications, tax | $ 4,028 |
Amounts reclassified from accumulated OCI, tax | $ 40 |
Accumulated OCI - Schedule of R
Accumulated OCI - Schedule of Reclassifications Out of Accumulated OCI (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Reclassification Adjustment Out Of Accumulated Other Comprehensive Income [Line Items] | ||||
Interest expense | $ (23,661) | $ (3,482) | $ (31,328) | $ (6,936) |
Income tax expense | $ 8,115 | $ 7,669 | 13,483 | $ 14,826 |
Interest Rate Swap Agreements | ||||
Reclassification Adjustment Out Of Accumulated Other Comprehensive Income [Line Items] | ||||
Net of tax | (120) | |||
Reclassifications Out of Accumulate OCI | ||||
Reclassification Adjustment Out Of Accumulated Other Comprehensive Income [Line Items] | ||||
Income tax expense | 40 | |||
Net of tax | (120) | |||
Reclassifications Out of Accumulate OCI | Interest Rate Swap Agreements | ||||
Reclassification Adjustment Out Of Accumulated Other Comprehensive Income [Line Items] | ||||
Interest expense | $ (160) |
Segment Information - Additiona
Segment Information - Additional Information (Details) | 6 Months Ended |
Jun. 30, 2019Segment | |
Segment Reporting [Abstract] | |
Number of reportable segments | 2 |
Segment Information - Schedule
Segment Information - Schedule of Each Segment's Profit (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | |
Segment Reporting Information [Line Items] | |||||
Revenues | $ 340,377 | $ 151,865 | $ 554,471 | $ 301,795 | |
Adjusted EBITDA | 70,348 | 109,820 | |||
Acquisition and integration costs | 8,999 | 26,049 | |||
Restructuring and related charges | 2,352 | 118 | 3,943 | 124 | |
Interest expense | 23,661 | 3,482 | 31,328 | 6,936 | |
Depreciation and amortization | 9,084 | 1,135 | 12,666 | 2,257 | |
Income before income taxes | 26,252 | 30,352 | 35,834 | 58,845 | |
Total assets | 2,015,507 | 2,015,507 | $ 482,079 | ||
Healthcare | |||||
Segment Reporting Information [Line Items] | |||||
Revenues | 157,481 | $ 151,865 | 314,008 | $ 301,795 | |
Adjusted EBITDA | 35,681 | 61,810 | |||
Total assets | 395,395 | 395,395 | |||
Nutrition | |||||
Segment Reporting Information [Line Items] | |||||
Revenues | 182,896 | 240,463 | |||
Adjusted EBITDA | 34,667 | 48,010 | |||
Total assets | $ 1,620,112 | $ 1,620,112 |