•

Exceeded the financial guidance ranges for revenue and adjusted EBITDA:  

o

Revenue from continuing operations was $100.6 million during the fourth quarter and $437.7 million for 2020;  

o

Income from continuing operations for 2020 was $56.9 million, an increase of $11.7 million, or 25.8%, over 2019;  

o

Adjusted EBITDA from continuing operations was $147.9 million for 2020, representing an increase of $5.3 million, or 3.7%, as compared to the prior year;

•

In-person gym visits totaled 45.9 million for 2020 and 9.3 million for the fourth quarter, growing by 9% over the third quarter.  

•

Virtual visits totaled 0.8 million during the quarter, a 63% increase over the third quarter, with 36% of virtual visit participants being new to SilverSneakers;

•

Growth in virtual visits has continued into 2021, with January visits totaling 0.4 million, an increase of 25% compared to December 2020;

•

The Company ended the quarter with cash on hand of $100.4 million and a leverage ratio of 2.36, as calculated under its credit agreement.  In January 2021, the Company prepaid $45.0 million of principal amortization of term loan debt.  The Company’s next quarterly installment is due in December 2022.

Three Months Ended

December 31,

Twelve Months Ended

December 31,

2020

2019

2020

2019

Revenues from Continuing Operations

$100.6

$159.1

$437.7

$633.1

Income from Continuing Operations

$14.6

$17.9

$56.9

$45.2

Income from Continuing Operations Margin

14.6%

11.2%

13.0%

7.1%

Adjusted EBITDA from Continuing Operations

$35.2

$41.6

$147.9

$142.6

Adjusted EBITDA from Continuing Operations Margin

35.0%

26.1%

33.8%

22.5%

Diluted Earnings Per Share from Continuing Operations

$0.29

$0.37

$1.16

$0.96

Adjusted Diluted Earnings Per Share from Continuing Operations

$0.38

$0.43

$1.46

$1.51

Cash Flows from Operating Activities

$4.5

$(2.5)

$169.4

$82.3

Free Cash Flow

$0.7

$(11.9)

$152.4

$57.6

Cash Flows from Operating Activities – former Healthcare segment

$8.4

$(0.5)

$93.4

$13.9

Free Cash Flow – former Healthcare segment

$5.8

$(5.5)

$83.2

$(0.6)

Year Ending

December 31, 2021

Revenues

$455 - $485

Income from Continuing Operations

$70.5 - $74.3

Adjusted EBITDA ⁽¹⁾

$150 - $155

Depreciation Expense

Approximately $14

Interest Expense

Approximately $37, including $6 of non-cash

Effective Tax Rate

Approximately 25%

Weighted Average Diluted Shares Outstanding

50.0 million – 50.5 million

Earnings per Diluted Share

$1.40 - $1.49

Adjusted Earnings per Diluted Share ⁽¹⁾

$1.47 - $1.56

Cash Flows from Operating Activities

$81 - $85

Free Cash Flow ⁽¹⁾

$50 - $60

Capital Expenditures

$20 - $25

(1)

Adjusted EBITDA, adjusted earnings per diluted share, and free cash flow are non-GAAP financial measures. See pages 10-14 for a reconciliation of non-GAAP financial measures.  

December 31,

2020

December 31,

2019

Current assets:

Cash and cash equivalents

$

100,385

$

2,486

Accounts receivable, net

25,981

84,194

Prepaid expenses

5,556

7,740

Income taxes receivable

10,996

4,978

Other current assets

11,336

7,155

Current assets of discontinued operation

—

60,162

Total current assets

154,254

166,715

Property and equipment, net of accumulated depreciation of

   $38,188 and $32,532 respectively

20,959

23,576

Right-of-use assets

18,139

25,575

Long-term deferred tax asset

3,601

—

Intangible assets, net

29,049

29,049

Goodwill, net

334,680

334,680

Other assets

18,301

22,992

Long-term assets of discontinued operation

—

1,028,296

Total assets

$

578,983

$

1,630,883

Current liabilities:

Accounts payable

$

19,741

$

28,099

Accrued salaries and benefits

8,949

6,886

Accrued liabilities

18,424

37,640

Deferred revenue

1,250

1,126

Current portion of long-term debt

7,456

—

Current portion of lease liabilities

8,052

7,898

Current portion of other long-term liabilities

14,753

4,947

Current liabilities of discontinued operation

—

64,740

Total current liabilities

78,625

151,336

Long-term debt

459,250

1,048,127

Long-term lease liabilities

11,494

19,585

Long-term deferred tax liability

—

4,222

Other long-term liabilities

22,748

11,292

Long-term liabilities of discontinued operation

—

169,411

Commitments and contingent liabilities

Stockholders' equity:

Preferred stock $.001 par value, 5,000,000 shares authorized, none

   outstanding

—

—

Common Stock $.001 par value, 120,000,000 shares authorized,

   48,983,735 and 48,156,786 shares outstanding, respectively

49

48

Additional paid-in capital

513,263

504,419

Accumulated deficit

(460,875

)

(237,284

)

Treasury stock, at cost, 2,254,953 shares in treasury

(28,182

)

(28,182

)

Accumulated other comprehensive loss

(17,389

)

(12,091

)

Total stockholders' equity

6,866

226,910

Total liabilities and stockholders' equity

$

578,983

$

1,630,883

Three Months Ended

December 31,

Year Ended

December 31,

2020

2019

2020

2019

Revenues

$

100,617

$

159,080

$

437,714

$

633,066

Cost of revenue (exclusive of depreciation of

   $2,633, $2,574, $9,209, and $5,920,   respectively, included below)

53,816

109,235

250,362

445,817

Marketing expense

3,198

2,287

12,197

17,720

Selling, general and administrative expenses

12,344

10,248

42,991

53,198

Depreciation expense

2,829

2,139

9,930

7,137

Restructuring and related charges

1,942

69

4,358

1,881

Operating income

$

26,488

$

35,102

$

117,876

$

107,313

Interest expense

10,695

11,685

43,477

41,803

Income before income taxes

$

15,793

$

23,417

$

74,399

$

65,510

Income tax expense

1,151

5,564

17,530

20,293

Income from continuing operations

$

14,642

$

17,853

$

56,869

$

45,217

Loss from discontinued operations, net of income tax benefit of ($23,676), $(63,308), ($46,851), and ($59,881), respectively

(26,260

)

(340,943

)

(280,500

)

(332,038

)

Net loss

$

(11,618

)

$

(323,090

)

$

(223,631

)

$

(286,821

)

Earnings (loss) per share - basic:

     Continuing operations

$

0.30

$

0.37

$

1.17

$

0.97

     Discontinued operations

$

(0.54

)

$

(7.06

)

$

(5.75

)

$

(7.14

)

     Net loss ⁽¹⁾

$

(0.24

)

$

(6.69

)

$

(4.59

)

$

(6.17

)

Earnings (loss) per share - diluted:

     Continuing operations

$

0.29

$

0.37

$

1.16

$

0.96

     Discontinued operations

$

(0.53

)

$

(6.97

)

$

(5.70

)

$

(7.05

)

     Net loss ⁽¹⁾

$

(0.23

)

$

(6.61

)

$

(4.54

)

$

(6.09

)

Comprehensive income (loss)

$

1,211

$

(319,108

)

$

(228,929

)

$

(298,912

)

Weighted average common shares and equivalents:

Basic

48,933

48,297

48,746

46,509

Diluted ⁽¹⁾

49,871

48,905

49,217

47,103

(1)

Figures may not add due to rounding.

Year Ended December 31,

2020

2019

Cash flows from operating activities:

Income from continuing operations

$

56,869

$

45,217

Loss from discontinued operations

(280,500

)

(332,038

)

Adjustments to reconcile net income (loss) to net cash

   provided by operating activities:

Depreciation and amortization

45,887

50,775

Amortization and write-off of deferred loan costs

9,190

4,487

Amortization and write-off of debt discount

8,604

3,711

Share-based employee compensation expense

14,077

18,832

Loss on derivatives

14,544

—

Impairment of goodwill and intangible assets of discontinued operation

199,500

377,100

Loss on sale of business

90,163

—

Deferred income taxes

(38,438

)

(52,076

)

Decrease (increase) in accounts receivable, net

63,239

(8,283

)

Decrease in other current assets

1,129

1,661

Decrease in accounts payable

(3,182

)

(10,052

)

Increase in accrued salaries and benefits

128

3,608

Decrease in other current liabilities

(19,152

)

(21,495

)

Increase (decrease) in deferred revenue

686

(1,198

)

Other

6,703

2,056

Net cash flows provided by operating activities

$

169,447

$

82,305

Cash flows from investing activities:

Acquisition of property and equipment

$

(15,525

)

$

(24,713

)

Proceeds from sale of business, net of cash transferred

558,067

—

Settlement on derivatives not designated as hedges

(1,499

)

—

Business acquisitions, net of cash acquired

—

(1,062,818

)

Net cash flows provided by (used in) investing activities

$

541,043

$

(1,087,531

)

Cash flows from financing activities:

Proceeds from issuance of long-term debt

$

196,525

$

1,611,970

Payments of long-term debt

(795,100

)

(574,329

)

Payments related to tax withholding for share-based compensation

(6,257

)

(4,733

)

Exercise of stock options

1,025

989

Deferred loan costs

—

(30,189

)

Change in cash overdraft and other

(8,784

)

2,083

Net cash flows provided by (used in) financing activities

$

(612,591

)

$

1,005,791

Effect of exchange rate changes on cash

$

—

$

(12

)

Net increase in cash and cash equivalents

$

97,899

$

553

Cash and cash equivalents, beginning of period

2,486

1,933

Cash and cash equivalents, end of period

$

100,385

$

2,486

Three Months

Ended

December 31,

2020

% of Revenue

Three Months Ended

December 31,

2019

% of Revenue

Adjusted EBITDA from continuing operations, non-GAAP basis ⁽¹⁾

 $

35,181

35.0%

 $

41,574

26.1%

   Acquisition, integration, project and CEO transition costs ⁽²⁾

(3,922

)

(4,264

)

   Restructuring charges ⁽³⁾

(1,942

)

(69

)

EBITDA from continuing operations, non-GAAP basis ⁽⁴⁾

 $

29,317

 $

37,241

   Depreciation expense

(2,829

)

(2,139

)

   Interest expense

(10,695

)

(11,685

)

   Income tax expense

(1,151

)

(5,564

)

Income from continuing operations, GAAP basis

$

14,642

14.6%

$

17,853

11.2%

Year Ended

December 31,

2020

% of Revenue

Year Ended

December 31,

2019

% of Revenue

Adjusted EBITDA from continuing operations, non-GAAP basis ⁽¹⁾

 $

147,855

33.8%

 $

142,561

22.5%

   Acquisition, integration, project and CEO transition costs ⁽²⁾

(15,691

)

(26,230

)

   Restructuring charges ⁽³⁾

(4,358

)

(1,881

)

EBITDA from continuing operations, non-GAAP basis ⁽⁴⁾

 $

127,806

 $

114,450

   Depreciation expense

(9,930

)

(7,137

)

   Interest expense

(43,477

)

(41,803

)

   Income tax expense

(17,530

)

(20,293

)

Income from continuing operations, GAAP basis

$

56,869

13.0%

$

45,217

7.1%

(1)

Adjusted EBITDA from continuing operations is a non-GAAP financial measure.  The Company excludes acquisition, integration, project costs, CEO transition costs, and restructuring charges from this measure because of its comparability to the Company's historical operating results.  The Company believes it is useful to investors to provide disclosures of its operating results on the same basis as that used by management.  You should not consider Adjusted EBITDA from continuing operations in isolation or as a substitute for income from continuing operations determined in accordance with U.S. GAAP.  Additionally, because Adjusted EBITDA from continuing operations may be defined differently by other companies in the Company’s industry, the non-GAAP financial measure presented here may not be comparable to similarly titled measures of other companies.

(2)

Acquisition, integration, project and CEO transition costs consist of pre-tax charges of $3,922 and $4,264 for the three months ended December 31, 2020 and 2019, respectively, and $15,691 and $26,230 for the fiscal years ended December 31, 2020 and 2019, respectively, incurred in connection with the acquisition and integration of Nutrisystem and other strategic projects and with the termination of our former CEO in February 2020 and the hiring of our new CEO in June 2020.

(3)

Restructuring charges consist of pre-tax charges of (i) $1,942 for the three months ended December 31, 2020 related to optimizing our business for growth and executing on our new strategy; (ii) $4,358 for the year ended December 31, 2020, respectively, primarily related to eliminating certain compensation costs in response to the COVID-19 pandemic

and optimizing our business for growth and executing on our new strategy; and (iii) $69 and $1,881 for the three and twelve months ended December 31, 2019, respectively, primarily related to a restructuring of corporate support infrastructure and of executive leadership.

(4)

EBITDA from continuing operations is a non-GAAP financial measure.  The Company believes it is useful to investors to provide disclosures of its operating results and guidance on the same basis as that used by management.  You should not consider EBITDA from continuing operations in isolation or as a substitute for income from continuing operations determined in accordance with U.S. GAAP.

Year

Ending

December 31,

2021

Adjusted EBITDA from continuing operations guidance, non-GAAP basis ⁽⁵⁾

$150 - $155

   Restructuring, project and CEO transition costs ⁽⁶⁾

(5

)

EBITDA from continuing operations, non-GAAP basis ⁽⁷⁾

$145  - $150

   Depreciation expense

(14

)

   Interest expense

(37

)

   Income tax expense

(23.5 – 24.8

)

Income from continuing operations guidance, GAAP basis ⁽⁸⁾

$70.5 - $74.3

(5)

Adjusted EBITDA from continuing operations guidance is a non-GAAP financial measure.  The Company excludes restructuring, project costs, and CEO transition costs from this measure because of its comparability to the Company's historical operating results.  The Company believes it is useful to investors to provide disclosures of its operating results and guidance on the same basis as that used by management.  You should not consider Adjusted EBITDA from continuing operations guidance in isolation or as a substitute for income from continuing operations guidance determined in accordance with U.S. GAAP.  Additionally, because Adjusted EBITDA from continuing operations guidance may be defined differently by other companies in the Company’s industry, the non-GAAP financial measure presented here may not be comparable to similarly titled measures of other companies.

(6)

Restructuring, project, and CEO transition costs primarily relate to strategic projects, the Company’s transition to a new CEO during 2020, and restructuring activities.

(7)

EBITDA from continuing operations guidance is a non-GAAP financial measure.  The Company believes it is useful to investors to provide disclosures of its operating results and guidance on the same basis as that used by management.  You should not consider EBITDA from continuing operations guidance in isolation or as a substitute for income from continuing operations determined in accordance with U.S. GAAP.

(8)

Figures may not add due to rounding.

Three Months

Ended

December 31,

2020

Three Months

Ended

December 31,

2019

Year

Ended

December 31, 2020

Year

Ended

December 31, 2019

Free cash flow, non-GAAP basis ⁽⁹⁾

 $

736

 $

(11,877

) 

 $

152,423

 $

57,592

Acquisition of property and equipment

2,260

9,359

15,525

24,713

Settlement on derivatives not designated as hedges

1,499

—

1,499

—

Net cash flows provided by operations, GAAP basis

$

4,495

$

(2,518

)

$

169,447

$

82,305

(9)

Free cash flow is a non-GAAP financial measure and is defined by the Company as net cash flows provided by operating activities less acquisition of property and equipment and settlement on derivatives not designated as hedges.  The Company has updated its definition of free cash flow to exclude settlement on derivatives not designated as hedges incurred during the fourth quarter of 2020. The Company considers these costs to be a reduction of cash available for other uses and believes that presenting free cash flow excluding settlement on derivatives provides increased transparency. The Company did not revise the prior periods’ free cash flow because there were no costs similar in nature to this item. The Company believes free cash flow is a useful measure of performance and an indication of the strength of the Company and its ability to generate cash.  The Company believes it is useful to investors to provide disclosures of its results on the same basis as that used by management.  You should not consider free cash flow in isolation or as a substitute for net cash flows provided by operating activities determined in accordance with U.S. GAAP. Additionally, because free cash flow may be defined differently by other companies in the Company’s industry, the non-GAAP financial measure presented here may not be comparable to similarly titled measures of other companies.

Three Months

Ended

December 31,

2020

Three Months

Ended

December 31,

2019

Year

Ended

December 31, 2020

Year

Ended

December 31, 2019

Free cash flow from former Healthcare segment, non-GAAP basis ⁽¹⁰⁾

 $

5,771

 $

(5,518

) 

 $

83,170

 $

(625

)

Acquisition of property and equipment

1,083

4,995

8,731

14,545

Settlement on derivatives not designated as hedges

1,499

—

1,499

—

Net cash flows provided by operations from former Healthcare segment, GAAP basis

$

8,353

$

(523

)

$

93,400

$

13,920

(10)

Free cash flow from former Healthcare segment is a non-GAAP financial measure and relates to the Company’s former Healthcare segment prior to the Company’s disposition of Nutrisytem, Inc. (and its Nutrition segment) in December 2020. It is defined by the Company as net cash flows provided by operating activities less acquisition of property and equipment and settlement on derivatives not designated as hedges.  The Company has updated its definition of free cash flow to exclude settlement on derivatives not designated as hedges incurred during the fourth quarter of 2020. The Company considers these costs to be a reduction of cash available for other uses and believes that presenting free cash flow excluding settlement on derivatives provides increased transparency. The Company did not revise the prior periods’ free cash flow because there were no costs similar in nature to this item. The Company believes free cash flow is a useful measure of performance and an indication of the strength of the Company and its ability to generate cash.  The Company believes it is useful to investors to provide disclosures of its results on the same basis as that used by management.  You should not consider free cash flow from former Healthcare segment in isolation or as a substitute for net cash flows provided by operating activities determined in accordance with U.S. GAAP. Additionally, because free cash flow may be defined differently by other companies in the Company’s industry, the non-GAAP financial measure presented here may not be comparable to similarly titled measures of other companies.

Year Ending

December 31,

2021

Net cash flows provided by operations guidance, GAAP basis

 $

81 - 85

Acquisition of property and equipment guidance

(25 - 20

)

Settlement on derivatives not designated as hedges guidance

(6 - 5

)

Free cash flow guidance, non-GAAP basis ⁽¹¹⁾

$

50 - 60

(11)

Free cash flow guidance is a non-GAAP financial measure and is defined by the Company as net cash flows provided by operating activities less acquisition of property and equipment and settlement on derivatives not designated as hedges.  The Company believes free cash flow is a useful measure of performance and an indication of the strength of the Company and its ability to generate cash.  The Company believes it is useful to investors to provide disclosures of its results and guidance on the same basis as that used by management.  You should not consider free cash flow guidance in isolation or as a substitute for net cash flows provided by operating activities guidance determined in accordance with U.S. GAAP. Additionally, because free cash flow may be defined differently by other companies in the Company’s industry, the non-GAAP financial measure presented here may not be comparable to similarly titled measures of other companies.

Three Months

Ended

December 31,

2020

Three Months

Ended

December 31,

2019

Year

Ended

December 31, 2020

Year

Ended

December 31, 2019

Adjusted EPS from continuing operations, non-GAAP basis ⁽¹²⁾

 $

0.38

 $

0.43

 $

1.46

 $

1.51

   Net loss attributable to acquisition, integration, proiect, CEO transition, and restructuring costs ⁽¹³⁾

(0.09

)

(0.07

)

(0.31

)

(0.45

)

   Loss attributable to tax adjustments ⁽¹⁴⁾

—

—

—

(0.10

)

EPS from continuing operations, GAAP basis ⁽¹⁵⁾

$

0.29

$

0.37

$

1.16

$

0.96

(12)

Adjusted EPS from continuing operations is a non-GAAP financial measure.  The Company excludes net loss attributable to acquisition, integration, project, CEO transition, restructuring costs, and tax adjustments from this measure because of its comparability to the Company's historical operating results.  The Company believes it is useful to investors to provide disclosures of its operating results on the same basis as that used by management.  You should not consider adjusted EPS from continuing operations in isolation or as a substitute for EPS from continuing operations determined in accordance with U.S. GAAP.  Additionally, because adjusted EPS from continuing operations may be defined differently by other companies in the Company’s industry, the non-GAAP financial measures presented here may not be comparable to similarly titled measures of other companies.

(13)

Net loss attributable to acquisition, integration, project, CEO transition, and restructuring costs consists of pre-tax charges of $5,864 and $4,333 for the three months ended December 31, 2020 and 2019, respectively, and $20,049 and $28,111 for the years ended December 31, 2020 and 2019, respectively.  These costs primarily related to the acquisition and integration of Nutrisystem and other strategic projects, the termination of our former CEO in February 2020 and hiring of our new CEO in June 2020, and restructuring activities as described in Note 3 above.  The tax rate applied to these charges was 25%, which represented the combined estimated U.S. federal and state statutory tax rate.

(14)

Loss attributable to tax adjustments represents the estimated impact on the Company’s effective tax rate for the year ended December 31, 2019 arising from both the revaluation of deferred tax assets and the impact of certain nondeductible expenses related to the acquisition of Nutrisystem.

(15)

Figures may not add due to rounding.

Year

Ending

December 31, 2021

Adjusted EPS from continuing operations guidance, non-GAAP basis ⁽¹⁶⁾

$1.47 - $1.56

   Net loss attributable to restructuring, project, and CEO transition costs guidance ⁽¹⁷⁾

(0.07

)

EPS from continuing operations guidance, GAAP basis

$

$1.40 – 1.49

(16)

Adjusted EPS from continuing operations guidance is a non-GAAP financial measure.  The Company excludes net loss attributable to restructuring, project, and CEO transition costs from this measure because of its comparability to the Company's historical operating results.  The Company believes it is useful to investors to provide disclosures of its operating results and guidance on the same basis as that used by management.  You should not consider adjusted EPS from continuing operations guidance in isolation or as a substitute for EPS from continuing operations guidance determined in accordance with U.S. GAAP.  Additionally, because adjusted EPS from continuing operations guidance may be defined differently by other companies in the Company’s industry, the non-GAAP financial measures presented here may not be comparable to similarly titled measures of other companies.

(17)

Net loss attributable to restructuring, project, and CEO transition costs guidance consists of pre-tax charges of $5,000 for the year ending December 31, 2021.  These costs primarily relate to strategic projects, the Company’s transition to a new CEO during 2020, and restructuring activities.  The tax rate applied to these charges was 25%, which represents the combined estimated U.S. federal and state statutory tax rate.

December 31,

2020

September 30,

2020

Change

December 31,

2019

Net debt, non-GAAP basis ⁽¹⁸⁾

 $

366,321

 $

918,318

$

551,997

 $

1,045,641

Cash and cash equivalents

100,385

56,440

2,486

Total debt, GAAP basis

$

466,706

$

974,758

$

1,048,127

(18)

Net debt is a non-GAAP financial measure.  The Company excludes cash and cash equivalents from this measure and discloses net debt because it is consistent with the calculation of the Company’s net leverage ratio covenant under its credit agreement.  The Company believes it is useful to investors to provide disclosures of its financial position on the same basis as that used by management.  You should not consider net debt in isolation or as a substitute for total debt determined in accordance with U.S. GAAP.  Additionally, because net debt may be defined differently by other companies in the Company’s industry, the non-GAAP financial measures presented here may not be comparable to similarly titled measures of other companies.