TVTY - Earnings call transcript Q1 2020

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Operator

Good afternoon and welcome to the Tivity Health First Quarter 2020 Financial Results Conference Call.

At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session.[Operator Instructions] Please be advised that today's conference is being recorded.[Operator Instructions]

To the extent any non-GAAP financial measure is discussed in today's call, you will also find a reconciliation of that measure to the most directly comparable financial measure calculated in accordance with GAAP in today's news release, which is also posted on the company's website.

This conference call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements, among others, regarding Tivity Health's expected quarterly and annual operating and financial performance for 2020 and beyond.

statements historical this to fact statements. any not that be purpose, of statements may this made call during are forward-looking For be deemed limiting plans, believes, are Without to the similar intended statements. and expressions anticipates, forward-looking identify foregoing, the expects, words

the differ publicly whether these that The information, to release. and result forth results to And the Commission forward-looking undertakes set company over company's may be statements. new call Tivity and otherwise. from and the discussed in Greczyn. And any Exchange the Health's Interim operations now no filings materially in obligation cautioned important hereby the Bob I'll affected may future among of news factors, as consequently, are update actual events or results statements You statements, turn forward-looking a Securities CEO, today's others, in by with the

begin, sir. may You

Bob Greczyn

President; Business With Chief Business call Good are Steve Steve Thank joined will has you, welcome more cover CFO. you first will with Healthcare the their and President; who operator. and about financials. adapted Adam to and Interim me Nutrition today quarter how and Officer share units everyone detail Holland, business and Unit, our Tommy Adam afternoon Tommy today. and Janicak, Operating have Unit, performed Lewis, our

customers of most us memory. with solutions. in enhance to to in serve well to order worked These health has and This as allowed during the to the sure are of around maintain to Tivity business, times. Health I resilience to and Health one is responding make these provide how times economic unprecedented during want has provide our our Tivity times ample color coronavirus. adapt difficult innovative impacts our customers as

start our solid XXXX a businesses. and Fitness had both Nutrition with We to

we able solid to with action, coronavirus performance, quickly began adapt businesses performance. initial strategies go-to-market that our QX significantly us deliver were to a combined our and in mid-March, strong to impact As led

Tivity emerging this solutions be both challenges the nimble, we compassion proud presented of and While pandemic, has by creativity sides business. more colleagues. not delivering I the faced Health our been could our by of on shown

plan needs We their Nutrition to the service our accomplished and partners this customers to have all without able active. our colleagues This home better during with our also transitioning We've safe customers. of impacting meet been while work to was worked membership health to X,XXX at keep time.

the Health Fitness part be exercise side, virtual the will and our has offerings have activity This class core delivered even engagement are On we disrupted. of that expanded an a channels quickly shown SilverSneakers, if social Living Tivity and digital are pandemic platform. subsides. on even after Prime our traditional and offering, enhanced health, focused WholeHealth

virtual averaging per platform, programming We both means expanding we this In the of reach participants addition important as an exercise to view are XX,XXX Facebook delivering the senior free our on service SilverSneakers Live, brand. exercise also public session. a of and

home at more This sheltering food On side, avoiding nationwide as that customers' the homes. offerings deliver shopping our we've to capability public experiences. important have and people are focused directly is Nutrition on delivered to been

product bars, nutrition greater carte la and have shakes. our on more variety added also bundles, focused a been We and has received items, to well which

good QX As sales or been on able a to result, build meeting exceeding we've a expectations. consistently with April

reduce XXX for XXX including to cuts included approximately of another in but necessary actions coronavirus. for of strength taken difficult have cash as and well These the of financial action executives. have colleagues impacts all XX% preservation as We cut costs colleagues, salary furloughs

ending the August. Additionally, for in next four the cash These will continue Board planned forego are compensation. least to months actions at

enhance of additive management million advantage for liquidity. to applicable $XX XXXX, including tax cash these initiatives provisions further believe will of cash taking CARES over proactive to be We by Act the

will diligent in company. long to success We term ensure our be the the actions to of continue

Tivity Nutrition our the strategic Health's long strategy, of this core that release, has As noted the engaged past been of and team value company's alternatives balance in shareholder for deliver Board to the capabilities a to best explore the ability review value. advisor. best its Board through has focus engaged February, possible decided comprehensive including term Lazard our the transaction including a business, on Since actions improve as our press would financial increased creation in and the sheet and has

delivered our of expectations results quarter. ahead this Our business Nutrition

unrealized this which drove of of is what guarantees of any alternatives decision. no we However, particular is believe exploration. there strategic course, outcome value, this There are,

all will a Nutrition business for successful operate we meantime, our XXXX serve better the continue opportunities the customers, to season. and diet prepare maximize In to our business and grow

of search We've been pleased by highly next process well our a leading individuals. of Importantly, is CEO been for group company the interview in completion. Tivity company's Candidates the have the identified way. under from qualified is Health and interest nearing the

the this in term. to near successfully expect search We conclude

Before with I results ingenuity I turn want segments our reflect weeks XXXX and seen showcases have I for once from the XX brands again and that power over emphasize the our the Steve, our to of QX, of strength the call of our customers. first business to and team, the partnerships from our

Janicak Healthcare over share Now, Business to details I'll to the more call Unit. turn Steve? the about Steve

Steve Janicak

Thank you, Bob.

the solid February, metrics Prime key a and the quarter. start our for period same significant mentioned, increases January saw first had we to to businesses. Compared we SilverSneakers XXXX, Bob in positive As through to

up Prime approximately were subscriptions approximately up in XX%, revenue For were SilverSneakers, XXXX X.X% was up were compared to X.X%. XXXX Prime in up participation to and X.X% up revenues visits XX.X% was XX%. and

business. you first under safety. pivoted some to people see the before began and impact alternative identify locations mid-March, Partner ensuring home. walk through locations the we ways members for these. When keep population across the were team all I'll issued, were the orders senior our country while orders our stay of active, to of to those closing pandemic to began their shuttered end in nearly on the of Starting however, our quarter,

our hosted hosted hosted date, FLEX SilverSneakers virtual XXX virtual our a started national launched had ago, network. instructors events over we in classes a members When know social But classes to X,XXX bound instructor-led history. with enjoy. only they maintaining live energy from SilverSneakers we interaction this we've experience that home Virtual and and keep in while about exposure, the month events. by safe

evident members The numerous and continuing popularity Live brand received emails We the the to our Facebook stay thanking in SilverSneakers strength Events. us to SilverSneakers provide active for an with is of connected. opportunity of

service, an views and opportunity XX,XXX view a brand. we reach expand Bob's of Echoing to well We over participants have the to per these with as the averaged as date. strengthen over events sentiment, as total public X.X million event SilverSneakers free

for plan pleased our work ensuring that creative seniors are looked We health the of approaches that and during When hit, to time. this our health went some Tivity would others Health pandemic have plan to to of continue partners I'm developing proud shakes that ready able food, snacks meals, bound. for while were home their receiving and initiatives home our healthy partners support by say to delivery. we and bundles plan with partners health

As of Well health a Wisely of partners inventory our bought entire plan result, meals. our a number

offering in our our meal We enrolled SilverSneakers who have are portal. to bundles members directly also

illustrates our it full the this revenue power Although, impact, of our small of brands. relatively power partnerships the platform has a of and

how their share that since across with to have help and XXXX, were programs worked innovated. network available we also support want to developed them their who Walmart a associates partner a help Walmart management with to distribution I they Walmart, centers. made distribution where asked us called instance We another we us having and nationwide challenge centers. to of stress

COVID-XX Turning began help we engaged increased members in stay we cases our when lower both to started increasing goals but virtual reduced in through March, to them a to active the Prime, with feel enrollment and and our received. positively cost has met offering, February been impact which We quickly Prime enrollment suspensions. January

this Unit, the it's benefits enjoys conclude Fitness they is I that Medicare to with growing like plans macro important members health our my strong are value comments business providing As membership is that remember turn Unit. on Advantage Business tailwinds. With active and to Healthcare call fitness SilverSneakers. well-established to age space. benefits staying SilverSneakers I'll that, The you health Tommy and leading Business Nutrition the the of partner the as discuss in Tommy? Lewis are over

Tommy Lewis

good and Steve everyone. you, Thank afternoon

of growth great first saw year-over-year, quarter. we momentum the some the is business revenue the While down in Nutrition

Direct-To-Consumer the with of diet during performance start Let's Nutrisystem season our business XXXX. solid

Our program, messaging and offers seem to be with resonating consumers.

program year led our the first top indicating the half prior during step range as starts the of lives second to flagship experienced EBITDA brand, guidance a the revenue the the quarter We upended the down strong Nutrition Nutrisystem Americans. many late start March of COVID-XX. in Despite exceeded by the end COVID-XX for March a of to and impact, business,

where pleased are positive momentum quarter. starts perspective, in new pressure, for operational were first an we in with March feel we From Despite up for we our year-over-year. about Nutrisystem QX the customer the the growth good

the growth the in to expect We new continue year. throughout customers

that the remember were told we will so. on we we earnings call in going increase were and selling average You successful price to that fourth you doing quarter

month our down able to the successfully was were year-over-year, increase selling we a in on Although average basis QX price prices sequential quarter.

our part Men's starts the to of Program our new well continues men's for addition, year-over-year, XXXX. Program driven launch XX% campaign season In by diet up in perform Men's with

buys. as customers the favorable, as by the In and and favorable offers cost communicating be media to acquire to messaging right April, conditions conversion, with for customers resonate market efficient spending, well media continues driven that effective

expectations, shift media more mix and customer TV with on a spend of year-over-year, reach cost toward stay metrics key lower to our are with linear and our at thus heavily customer, continue down other our expanding We length digital satisfaction significantly track rates. per revenue our

focus priorities, group differentiator to and key began perspective, broader support on Home delivery messaging to pressure changing shakes marketing offers was of a COVID-XX and From of our healthy a our meals pivot is competitive meals, Americans' that immunity, feel ability quickly able to snacks. when Nutrisystem. for we deliver the to our

supply In without Amazon, Walmart could customers with collaborated partners we and we interruption. ensure to our chain our support addition,

starts With through the April began March to our and new and April creative, digital spring We good late a out positive on launch note into and selling a delivery, of home program in March TV spots emphasizing season. led closed improve. and new

flexibility in this creative I'm demonstrates we to positive the meals DTC times. Further, marketing Nutrisystem healthy TV up trending with customer by I'm in digital leaning in need pantry our stocking. the into of new home-delivered with for pleased ability that showed better enhance with resonate growth Nutrisystem is spots proud customer believe that promotions efficiency. standing these and We new quickly the brand and needs and

We when could will many opportunity an of that from the for to begin cocooning, provide we outdoor on and consumers snacking, exercise pounds lack stress-eating, us believe they realize demand. to which reduction pandemic, of recover that from put activity, generate

conditions chronic and obesity, a ahead, Nutrisystem already these underlying work strategy at respond our macro natural hard trends as health executing is and to of and wellness Looking needs. beneficiary such to consumer we're

brand, expanding beyond In way. the I'll the meals home-delivered our for to momentum improving starts, of customer our conclusion, selling healthy year and for media began our we digital brand now turn Adam then review over diversifying flagship customers, enhancing Adam? to building driving growing a along the our Nutrisystem message messaging Holland average diet our the new call price, equity financials. and the for

Adam Holland

Thank you, to guidance. good as afternoon liquidity results, withdraw well cover to related I Tommy. quarter additional first and will XXXX our And our fortification, decision balance as information sheet everyone.

to members $XXX points the X.X%, Average quarter with revenues million, Our generating last in down enrolled. was to million total participation X.X plan center XX.X increase basis $XXX.X visits over SilverSneakers, million, related from for QX the year million, period about March eligible generated monthly million the quarter same year. approximately year. X% compared fewer We to ended for last an last of XX.X Healthcare X% revenue SilverSneakers were due down fitness health to X% down And year. closures. revenue the visits compared segment was XX quarter with last of for

ended $XX members decided the Moving approximately end last Prime XX,XXX XXXX to XX,XXX who increase subscribers, of QX by year. onto the to million in XX% Prime, March. suspend quarter we compared includes approximately and with revenue generated accounts which increased XXX,XXX of of over subscribers in their we an QX,

EBITDA, fitness drove started are these Healthcare per-visit down summary, a mid-March strong XX.X% basis. costs since visit in our then SilverSneakers adjusted the This paid although In we wave translated our a fee to revenue, variable $XX.X fitness on was QX year. last of over also million our lowered closures centers increase predominantly Unit in center closures which

I'll segment, turn now and QX the to for the both guidance which of adjusted EBITDA. Nutrition results revenue exceeded

quarter same million, $XXX to quarter approximately at XXX% the First revenues increase compared year. in last Nutrition a came

As a through reminder, we XX, on results March acquisition X XXXX. X, March March are QX the Nutrisystem closed on from therefore XXXX, XXXX

year-over-year. basis, on Nutrition revenue full-quarter X% segment declined Although, a comparison

said, revenue prior approximately down basis. business generating $XX.X a in DTC million customer DTC compared a revenue, That by was X% of than were new year reactivation partially at million length expectations, the performed and just The revenue remained average down both increase full-quarter X% was in decline on revenue at new in customer customer brand which growth offset $XX.X in Nutrisystem $XXX a price. better Nutrisystem million. X.X% consistent an starts stay, by and to new the year-over-year of sales driven

QVC revenue, contributed combined on, year-over-year South down XX% Moving revenue million year-over-year. was Diet and retail and XX% $XX.X Beach million, QX in down a $X.X

than better First for our loss adjusted EBITDA $X.X several expectations million, a reasons. quarter Nutrition showed of

increases businesses. implemented DTC in we the tested First, price and successfully

revenue Second, DTC third, both in businesses. in managing QX was while of a spend of effectively have percentage efficiency percentage our we higher a and And our on revenue year-over-year, a marketing we dollar gains as basis. G&A are seen

These changing In conditions. QX regards our closure followed of used calculation, to experienced In COVID-XX fitness assumptions our the a we in market impairment March our a network, based in decline charge and driven significant a rapidly to press cost evaluation. capitalization. economic by of release, in center our in capital together pandemic perform sudden the today's factors, with market impairment noted has adverse XXXX, an decision change drove the

not covenants do goodwill. in and nor agreement. have credit in cost capital assumptions from impairment future these decline market-based any value current the forth fair both used of affect liquidity, we recorded assessment, primarily in our operations, was the cash financial expect set or the tradename We driven to this non-cash by charge charges impact Nutrisystem The impairment flows on to compliance Following our change operations or our with in a calculation.

cash precautionary the our network to to of with end we proactively Turning million $XX of financial to the a have pay when revolving membership is at better from still $XX ended balance QX. credit facility March, as borrow when decision we with on includes credit a on we fitness quarter to million largely center borrow to of sense In participation $XX our this QX our million, first made available facility. our intention and sheet cash our cash and measure which back revolving flow, our late maintain the hand It reopens levels. flexibility,

in with QX payment next covenant XXXX. ended term we in in was of as our agreement. ratio $XX the our XX, compliance with June of maintenance X.XX meaning times calculated billion below our amortization under ended principle, We not times X.XX $X until term loan paid credit required quarter quarterly loan and We which due February, debt million ratio, down our is

working reflecting the free Our of cash capital with at favorable QX $XX.X coupled dynamics. a flow strong million, units, performance business both positive for was operational

and both March strengthen units. we reducing by business approach or across liquidity our eliminating during mentioned, to April, programmatic costs Bob As instituted a

prudently We have with managing ensure are and we robust throughout COVID-XX to to the discretionary both on laser expenses to our runway confidence crisis. focused businesses liquidity operate continue

With credit will next we be ratio compliance with regard the our facility, we to the covenant in over net XX believe months. leverage

as of level including locations is average factors. key assumptions, of other as locations based on fitness reopen and our belief participation the Our these once the temporary certain closure members, well

the press Finally, are the as pandemic, evolving given mentioned release for nature XXXX. in our withdrawing guidance our rapidly today, COVID-XX we of

of to back to I'll periodically Bob? Bob. And report that, operations over developments. ongoing our continue monitor the turn results will and We call with the

Bob Greczyn

Adam. you, Thank

a thrive. trends, normal, and end with relationships, bit plan confident country more pandemic emerges will the favorable brand life positions, of our from trusted significant Health's that begins Tivity backdrop market I'm our the to look As the and health business

I the virtual questions. additional to made up value in delivery think and new of the that in now drive advances the to have at-home Operator? food us have open we We'll fitness call models for pathways future. opened

Operator

Craig-Hallum [Operator line of first Instructions] Alex from comes the Fuhrman Capital. question Your with

Your line is open.

Alex Fuhrman

hard giving taking much kind outlook know be very for I Thanks of obviously any Great. year. question. this it's to my for an

guidance. certainly us walk side the business? you the sense XXXX dynamics, fitness So of you little of the can bit that But makes pulled a especially on help through the

bunch cash fitness your revenues, margins, general here obviously, the then Just a vast but to of fitness you impact closed, in of of closed. are with, centers with to a variable, majority can give just sense second as you network all as to down mention in revenue your presumably us so just that quarter that long remains well, flow, most costs seeing there of the did as come your the

Bob Greczyn

you join that question can in? with can deal Steve or Adam, perhaps

Adam Holland

under eligible of happy as you are did plan associated a from paid with gym. we PMPM Sure, you is I to where a happy a model, construct. that take is call. two said is broken revenue that I'll February don't up what lives we guidance. statements, that the remaining visit a visit And the into questions. in lives hybrid our small to back fee constructs. Alex, XX% we if -- contract, well. really get when is pure a majority that given the occurs want eligible the also get between The recall, XXXX SilverSneakers There from earnings different withdraw at fee, forward-looking Alex, under a what hey, But on to of PMPM take meaning we a to of XX% maybe call

revenue for impacted and that visits SilverSneakers gyms the the dynamic through fee not of you rest be the while taking going not will revenue And year, place, are piece the of occur. are if will when closed, are revenue. the gyms most the visit of closed so And to think that's be

remarks, fees in prepared as I Now, gym happening. visits those the won't incur said we related similarly, they're to because visit not

bit is last in start payments under plans an through due like we're to Steve, April you'd and we have there PMPM, else gyms So receiving if add? little offset in reopen, some the here we've far, we'll able from we a the and few to course. be so But and reopen are are strong anything paid hopeful up the more relationships report do of that there. seen to weeks, been

Steve Janicak

Adam. Sure,

now the but see reopen, members all seeing to what we thing remain is, some our one other what our SilverSneakers research prior of quickly did did some safe markets go reopen, Just see course, is, gyms want these to and we we are see would when some and of how we seniors means, we we they that, of by of the when gyms. into back to is,

people was saying, as seeing that we research will research markets And we're people it's are back. are actually back in these were what and The as we're the to opening, that very soon have. see as on executing and go positive starting is, and gym safe, we opening gyms

positive So in momentum. early the process, but

Alex Fuhrman

That's you just you've that little if of Thank through really a the wondering even prepared content and from presence that economics a virtual then future how after Okay. the us offering I that. content have talk looking could And a for SilverSneakers, level, you just been associated you you virtual about the more us bit could high if you that. to of content remarks helpful. And walk gyms for for costs the those in get the to reopened. think a paid with be any views you'd mentioned bit little in then

that us there's with motivated just that seen as be that by well? Is there helpful. the for anything implications virtual can content financial or would with you share about are If you've the content virtual success

Bob Greczyn

Steve.

Steve Janicak

Sure, Bob. question. Great

we break had had payments with -- your we we're was let it. pivot the down. team respond to forward. pull receiving -- going -- It's what on really received some out are it's together and question and So seeing were in most we to We expand it well our our Yes, from the but virtual. offering very to process there plans health able me early is and and trying

charged. play out that We're of is going going how and not exactly actually is sure to what to all be

going through look tomorrow, it try to but our to is figure of out what actually forward from does look it to is going we As percent today, what revenue and look like going then this. like come what

piece portion our good interaction and seniors connectivity. is we in of well. to social and brand important A our as SilverSneakers is our do what around social That

see to we'll going to call. back it people word have more get we to as, our more be process, get probably So wait going Is into going quicker -- early have we a virtual? in the to are interactions? So move on closer August as social thereof? the our earnings combination their they to to and gym but Are use

Alex Fuhrman

the That's terrific. much. very at best over all you And Well, everyone thank to Tivity.

Bob Greczyn

Alex. Thanks,

Operator

Cantor Halper question line comes next Your Steve from with the of Fitzgerald.

is open. line Your

Steve Halper

Hi. hybrid Appreciate the pure the and PMPM. detail on

on offset visit, what historically variable away? the for the to -- the the On visit, the typically would on be gym the goes payment a that cost

Bob Greczyn

might with you that. to Adam, want deal

Adam Holland

vast Steve. Predominantly, Thanks to see majority paid when a are sales of cost the you for there Yeah, to that gym Healthcare gym. to leftover there is I'd Adam. be that amount the It's of And visit sure. no immaterial have relates that say the fees. would business, question. very of in visits, the the Hey, cost sales

for large quarter. the So, given gym fees no visits of a part means no

Steve Halper

for Thanks -- that's you. it. Got the Thank helpful.

think so paid like, you you're payers The something you "oh! for from something wouldn't when getting the feel at said and the about PMPM". other getting the virtual, the question, economics I'm least

sort virtual. visits don't of just, away for the temporary not this with pay have give you of, in wouldn't you're to the you'll gyms, -- because the So period you sort that -- right,

Bob Greczyn

So, is Steve, this Bob.

of part those for. For they're no under the arrangements, visit. those is That's visits, virtual PMPM us what paying for charge a there

Steve Halper

Okay.

the some for? getting side, the we're what payments around, So virtual on comment was

Bob Greczyn

where paid would I'm side hybrid check And if me payments per be the please, we normally anybody We're getting visit. from on wrong on the models virtual that.

Adam Holland

No, absolutely Bob, correct. you're

Steve Halper

business. have than even normal a theory, gym in the gross that higher right, would So, margin,

virtual good. So is

Steve Janicak

to have going shut that virtual completely of being a our all of other not visits locations is as the result Virtual down. offset lost we of is good, but all

Steve Halper

Got it.

Okay. Thanks, the I appreciate commentary.

Steve Janicak

Steve. You're welcome,

Operator

line Your next Jefferies. of question Styblo from with Dave comes the

Your is line open.

Dave Styblo

Hi, the there, question. good afternoon. Thanks for

that your of savings the on that and first $XX I landed did for just the I year. -- quarter? think the actions about reductions heard the so forth were collectively million curious, and was in furloughs much of I compensation worth how comment

Bob Greczyn

Adam.

Adam Holland

I Dave. that. hey, can Yeah, to. has take number. an is It Everything executed annualized been

So have -- components been also of tax savings to year. we Act. to cash such the to will we'll But our realized. that be actions and It's be and there the is it for combination cash as expect follow -- have with tax have a CapEx CARES the get that But the in. outlays fully lowering taken

and things these control So all have done. our inside that are been are of

are we helpful. are they think be We meaningful will and --

our to we And quarter. that will so, and you go progress we update as next

Dave Styblo

that that Okay. fair the to say? there. I expanding the EBITDA to Is landed some higher some outperformance imagine was I just and of of understand that's trying in that first quarter perhaps

Adam Holland

It some little the that late it was I'd probably in end was April. bulk say, Yeah, March, of bit. instituted. very a of of very quarter, in the

show in QX like you So QX. when see of SG&A you'll that components more get probably versus into up

Dave Styblo

Got it.

that that we're think that is don't know a too you revenue pressure I the have February rough but don't month year-over-year maybe roughly from suggests forward is Fitness in might while and revenue if in year-over-year math what the on about fair a of -- looking this go of proxy through my amount to said some you business. XX% Okay. reasonable much, of taken back-of-the-envelope the of know, down couple the a for of first want March lockdown? state complete And the math was experience of then, I I've months to that guys a comparison, Is you standpoint

Adam Holland

tough be. It was as Well, March it Dave, until say, it sudden. as gradual thought to because we very didn't. It had visits I robust very would it's -- still was wasn't

matter fact, March kind quarter. month-over-month got were think, like the As number for down actually for to down that I of of you visits XX%, X% which our

on be variable it just depending changing it's and network think to I rapidly the So out going is there. gym

who have this just, And and some have in And have Steve it's as albeit -- amounts. very rethink it change, tell. soon in prudent mentioned, too point environment, States withdraw already guidance We we this members that decision. reopen, just circumstances as some would to be it's at small to we'll we certainly thought returned,

Dave Styblo

could Okay. offsets revenue because think within would counter Prime, the lot And on because be Prime think I just degree many from revenue some cancelled, that SilverSneakers, of fixed better sense EBITDA suspensions. natural some a that plans, from the I get curious me go the I'm you it? but But of cancel a completely you seeing of get members back folks and away if last there just think are the those delays plans. to or how of one in out have quickly you've I of maybe business, talked about not the

environment? where in return is that you benefits I ramping back the U.S. who ones what the are would environment maybe do -- across lot, these thought of enjoy about a about that up how normalized in then lot might a where customers at that would there think Is an element of gyms a being to different you And an Prime think travel have

Bob Greczyn

Steve.

Steve Janicak

Yeah, We so suspend apart could of for with virtual let advantage one them or you you options. members to Reach me three you or a as take fee reduced well. take your could so months see reached said, option we cancel. the through that gave closing, kind back a really and subscribers could of and account, active as our we back walk gyms we to Prime -- out started

had many So XX,XXX it's through the March, of of end included that subscribers actually the were quoted how suspended. we number that Adam

may members few" accounts we of the few back stay and holding their longer, closed -- Now as opening bit, steady. out word right little gym and a to now, calling a as the on are it's turn and come up. time goes had actually "a on We've if is that see operative increase pretty States but suspend the

early again, think I tell. to So it's

of seen We we but of cancellations, either. onslaught opportunities haven't an seen haven't onslaught new the

Dave Styblo

Okay. Thanks so much.

Operator

Ryan of Daniels with Your next the from William line question comes Blair.

line Your open. is

Ryan Daniels

the Yeah, Healthcare seniors, continue to how for within bringing questions and in feel thus doing subside division those fall I'm your them to back going for and them will engage orders far. comfortable all taking curious to get the for and on-demand not, make comfortable the marketing have efforts forward to activities. at-home changed them the thanks are details do see that both when these change we stay-at-home

Steve Janicak

Sure, I'd question. to good answer happy Ryan, be that,

developing we're that we're the options digital. right is in We're is get the people everything a both into standpoint going people how that plan what again. it's have. the So is marketing and Prime and a doing we're back to from doing and process done active communicating a back and media either engaged social where now we're actually from for now of gym SilverSneakers email, right

the as again be by to that is make our level driven of senior what's main that and gym have be able to as to the goal stay within a to before, what sure before healthy, is to State our happening but said we done precautions at taken and could level into lot be local gym. go the that a someone going Now, is being

precautions also healthy eager they those hand-in-hand are partners right whole in, plans safe need. our with they evolving it's to and are taking when through back get and plan health members that are now they to to their make that we're they the working and we're also the folks but they So develop it plans, those sure do want

Bob Greczyn

to one If to tell this Steve And, it. virtual at that a to is could just our who I our of exactly safe. out and that, is a leader loved seniors right. touch do one his We're Ryan, just that tell will very think being I going add she'd senior not anything undermines that a Bob. me of mother way done story, of his health visit partners had went plan quick our I

I are So virtual very back to is the know there acceptance I but safe. out that these visits, think it's anxious when there get gym strong to of people

Ryan Daniels

of the the to business type if would there think that things. with bit things turnaround one under for integrates of color Is there to helpful. obviously working potentially more And discharge a then, would is it way. the you provide be color that reflection damage that. -- can core to is I the current I'm Board's balance you given in strategic pursue to or the and an with working think thoughts the a for of longer question on alternative Nutrition that be you nature? Just curious well no But any is regards Thanks. thank this decision done environment Healthcare of Great, the sheet, or just up already is payers, I business? little wanting on a meals, offer that more asset some as post clean guess the

Bob Greczyn

Sure, shot. sure. I'll take a

would. plan anticipated that year, since So of Board I once strategic our review of think we recognition Nutrisystem, go-forward that the performed took management bought complete opportunity the number changes as this a is like, company the and we there our it it do earlier what we in has and had to had a a looked not clear

best be but will announce doesn't Lazard of enhancing part to a have and that but that to path to transaction Board it does advisor, the do strategic determined and as happen transaction necessarily that, of And that mean that for we're engage alternatives our credit financial that company. exploration the as an forward was we a would mean to open that any the

basis transaction, and going Nutrisystem with event occurred, Wisely work with the own under I'd that on we expand the Steve plans perhaps manufacture is Tivity work product a would is I'll And arrangement. interest to that that to continue we us in much brand to In would there that. Health forward Nutrition. have Well still -- in let very continue transaction also health on would and work there a in the to the a that to hope them say event through hope

Steve Janicak

Sure, Bob.

it as sales pipeline robust products to for we're as our well. only Wisely So having a relates very not SilverSneakers Well for but strong that,

really standpoint. we So seen haven't from a that slowdown

do submissions, meals for Our for both right we now, seniors they're health our that on that get plan XXXX their health to our on several lot how in they're still now, are to primarily. able been And they're focused plans it. Nutrition bid interested we've discharge, working including provide of then in which need partners. them Right more as a

-- we'll more More have our August there. opportunity release. good earnings So communicate details to to in

Ryan Daniels

very data are Those you. thank Okay, Thanks. helpful points.

Operator

question from Research. Mike next comes with Barrington Your the Petusky line of

Your line open. is

Mike Petusky

actually I good members up percentage thank guys How that you. I what -- -- in guys of content. on options information, hear offered Prime if folks that? it, guys. mentioned a Hey, didn't was you it, virtual catch you you did took the of that many Lots of one fee Prime reduced for

Adam Holland

at back answer. don't on you I'll I Mike, get that have Yeah, my fingertips. to that

Mike Petusky

go to I just And to SilverSneakers. I -- then go Okay. wanted to wanted back

it, month of Is currently correct? action essentially that eligibles, per for you understanding I'm the XX% if guys are getting digital providing XXX% option. member, the So per just that

Steve Janicak

has and mean, for there a that of chunk network not reopened I that reopened is the it's fully it network well. April. has but late sure, the Yeah, as in

give go we're that's period away important going when that that still come to reopening of ready think gyms now thing the in are those I is access to if back. a where PMPM to here So members is to members

Mike Petusky

I I'm tried Right. whether PMPM any the of the But aspect guess at, contracts, the hybrid payers these PMPM? have straight renegotiate to what it's getting or

Steve Janicak

quite... Yeah,

Bob Greczyn

All of our...

Steve Janicak

Go ahead, Bob.

Bob Greczyn

Steve. ahead, Go

Steve Janicak

No, no. no,

Bob Greczyn

all up say, and intact through would I Mike, that fully paid are we're contracts our April. of

Mike Petusky

terms heard correct? cuts pay in then that of XXX XXX cost And just you XX% headcount I the right. cuts, but I colleagues Is -- and all permanent reduction, execs furloughs. XXX guys true including no Okay, then think furloughs, taking

Bob Greczyn

Mike. furloughs, XXX It's

Mike Petusky

all Okay, what be the... would right. And

Bob Greczyn

back most of servicing other the And in we'll and gyms the begin those least out gyms them the we'll our bring them, back we as of back need to people field up parts customers. or open at bring and them

Mike Petusky

Okay. And the on Tommy then I'll get action. in

I perceived seems what do a than trying seeing you're be -- seemed or Beach sort Can on better to have indicate. results just that more you actually you're there? business the South to of to to what mess a of comment there

Tommy Lewis

Mike. Thanks Hi, well. the I hope for question. Yeah. you're

that. met Diet QX, Beach our expectations for me South so say off, let First

was scale Beach, We South acquisition that because the what point, we've at don't it's in primarily alumni issue are see with to gone done lower Beach all heavily, have pivoted as many January, a But this we digital. through virtually, continue program. pressure South after costs reacts have are higher,

and the front. digital on So spend is all media promotion our of

we've been able So improve to significantly. EBITDA

We just while haven't we're model. cracked So currently the managing we on now yet evaluate the EBITDA, code business the alternatives.

Mike Petusky

so shape flat? that Yeah, quarter X%. mean though second worse fairly we're guess, I there down your that. only was the mean perceiving tracking than be that early rates is I to to close I me to I -- in

Tommy Lewis

comment mean, guidance want since forward-looking, clearly, don't to retracted revenues I I Yeah, are down but, year-over-year. we on

see growing. look quarter, you the as We'd If down yet. to haven't we it's at code the the happy But about in Adam first remarks. XX%, that. cracked like not that business alluded We're to with

So on model. we're working the business

Mike Petusky

Beach South I'm down XX%? sorry, was

Tommy Lewis

That's right.

Mike Petusky

misheard I Okay, sorry. earlier.

Okay, thanks it. appreciate guys. really I

Operator

[Operator the from line of Instructions] Jailendra comes next Your question with Suisse. Singh Credit

is open. line Your

Jailendra Singh

Hey. everyone. Hello,

mentioned growth clarification. guys Just to end was company you about at you you X% a slightly XX.X and of X%. had down of the X% XXXX. Adam, eligibles had million from at talked like the in up sequentially QX quick of end the that only QX. mean, That million -- I XX.X

eligibles least least market. number Any at didn't line why at like wondering with go thoughts in on MA that? Just

Adam Holland

in Jailendra. million. It certainly Recall, QX of end our XX.X in We age-ins, year guidance to we XXXX where to were, expectations here million couple ended there close eligible. pieces. the was our had with came Yeah, is XX.X

that so seniors XX.X and target grow to million see number. will like we we will feel on number eligibility age-in And what as throughout hit eligible the that we're year,

Jailendra Singh

visits for before PMPM number you then minimum of And of for up criteria visits? right? these Mike's contracts, PMPM following minimum clear not mean, these eligible contracts is in so that the least be To include have or do OK, constraint a on any annually number around I are revenue, you that, language contracts. the around at on that, question There no right, have to Okay. like

Steve Janicak

Yeah, this don't contracts our We Steve. specific clients. with is on comment

Jailendra Singh

any for repriced these contracts Okay. the the in renewal lower just renewal because these wondering contracts getting utilization? you at these I any date if near-term? in low for I of in thoughts coming of are but contracts risk any But, have term. terms real of April, know got any till mean, of mean, up And renewals, coming I of level -- up on

Adam Holland

is No, the the contracts that to renewals that XXXX. talking in period earlier are will in start January just of relate about force, Steve the contract

and fully plans in and important these interactions the -- have very in we have those the Bob last and force. through And and months. been two interaction now relationships So paid as over April contracts mentioned have relationships this fully positive earlier, are the is more been part,

to engage make a the had there, have at the digital gym. them them stone seniors through to A lot home socially on The have is into they're back touch sure to to seniors there help and when right, we'll time leaned is of platform isolate. those us the get while that

Jailendra Singh

your we or are Any lot and geography. and similar us going it PMPM because will reopen a Medicare Does idea then vary that? it thoughts it and is one. remind by very on the contracts? on country mean the country The way the mean, I will to -- on is, Advantage exposure for hybrid Okay reopen, the I enrollment is my last revenue? your Can you in mirror geographical primarily

in trying stands markets. understand to Just how your different exposure

Adam Holland

out we X XX all have Well, Lower broad and of in Advantage are the exposure. clients. Medicare it's I we mean top-XX

their else could we in footprint So are visit and that? derive add you you'd membership. anything on of see where terms Steve,

Steve Janicak

you think it. I No, covered

Jailendra Singh

And there or how did similar, PMPM geographies of -- exposure right, much pretty you heavily PMPM, both, in terms skewed mean, is that I geographical versus will variances toward say others? any certain are

Adam Holland

the blended account XX% just -- other. of that are are Yeah, into States them that you XX-plus million there many of way that or are say, hybrid but under the eligibles to form of I'd have some skew a one contract. take

the naturally So, lean we're going eligibles. because just of toward of the -- to going lean we're mix direction that to

Jailendra Singh

Okay, got it. Thanks.

Operator

with Jessica Your Tassan Piper next line from question Sandler. comes of the

open. is line Your

Jessica Tassan

PMPM a that thank are I know my ratable in the on over you of visit not of hybrid the kind a sorry, that, portion year? that's question. that or start-up cost, start-up a quarters that the taking of recognized one first Hi, is revenue. related volumes. of for and course revenue -- there's more had the a to just Is I that's

Adam Holland

like PMPM. more ratable It a behaves

because albeit So of hybrid, our XX% to that not our come revenue see per which our per is that means component, fee a member our you answer than month, in pure portion a PMPM a smaller a contract. -- of contracts would in your hybrid are what XX% at question, a that have does of does smaller visits, piece, from PMPM that smaller

Jessica Tassan

with some your to if thinking hybrid hybrid know you. of changed, PMPM contracts more contracts to with back the and has just moving or And versus to for with if to respect contracts, conversations any interested discuss weighted at toward to just PMPM. how heavily hybrid plans those just all, health had thank regards then COVID Okay, potential the of the if kind you've

Steve Janicak

good question. Jessica, So,

I think at time, to this point too tell. in it's early

of conversations our not with had those have health any plans. We

have how We this plays out, going to long this all to see last. and how is wait

it's right of wait me, So kind now, to too a see. little again, a excuse early and tell. And

Bob Greczyn

that rid back, depends on though add equation, get I going more would I it our And and even in no hope matter never come certainly it that, on of lot you there's probably to coronavirus which what's that then mean, Jessica, direction market. a it. go the everyone's will something hope once think of of the waves be going that is know we is I we on

Jessica Tassan

Exactly.

you appreciate helpful. taking the That's you. I questions. thank Okay,

Bob Greczyn

Jessica. Thanks,

Operator

to There time. over this the I are at Mr. no further Greczyn. call back turn will questions

Bob Greczyn

to Thank joining you you, to operator. a final I everyone us thank afternoon. this say for just want

been and each with you forward to any have great Thank again. look Your questions very for questions questions we of will catching follow-up you up shortly.

Operator

this Thank you Ladies gentlemen, concludes and participating. conference for today's call.

disconnect. now may You

Tivity Health (TVTY) 9 May 202020 Q1 Earnings call transcript