NASHVILLE, Tenn. and
FORT WASHINGTON, Pa., Dec. 10, 2018 /PRNewswire/ -- Tivity Health,
Inc. (Nasdaq: TVTY), a leading provider of fitness and health
improvement programs, and Nutrisystem, Inc. (Nasdaq: NTRI), a
leading provider of weight management products and services, today
announced that they have entered into a definitive agreement under
which Tivity Health will acquire all of the outstanding shares of
Nutrisystem for a combination of cash and stock. Under the terms of
the agreement, which has been unanimously approved by the Boards of
Directors of both companies, Nutrisystem shareholders will receive
$38.75 per share in cash and 0.2141
Tivity Health shares for each share of Nutrisystem common stock.
The transaction values Nutrisystem at an enterprise value of
$1.3 billion and an equity value of
$1.4 billion, or approximately
$47.00 per share. The implied stock
consideration of $8.25 per
Nutrisystem share is based on the volume-weighted average price of
Tivity Health's stock for the 10 days ended December 3, 2018. The implied transaction
consideration of $47.00 per share
represents a 30% premium based on the volume-weighted average price
for Nutrisystem over the last five trading days.
The combined company will be unique in offering, at scale, an
integrated portfolio of fitness, nutrition and social engagement
solutions to support overall health and wellness. Through this
expanded portfolio, Tivity Health will be better positioned to
address weight management – a major factor contributing to many
chronic diseases. The diversification of Tivity Health's portfolio
and increased scale will benefit all the company's stakeholders –
including health plans, fitness partners, members and consumers –
as these offerings support healthier lifestyles and can lower
medical costs. Tens of millions of Americans are currently eligible
for Tivity Health's SilverSneakers®, Prime®
Fitness, WholeHealth Living™and flip50™
programs, and millions of people have lost weight with
Nutrisystem's products, including Nutrisystem®, South
Beach Diet® and DNA BodyBlueprint™.
This transaction will also create meaningful value for Tivity
Health's shareholders through the addition of a new independent
revenue stream, cost and revenue synergies, and significant
potential growth opportunities. The combination of Tivity Health's
and Nutrisystem's highly trusted brands and strong marketing and
data analytics expertise will allow the combined company to
increase awareness and member enrollment and engagement across all
consumer audiences. The acquisition of Nutrisystem will further
elevate Tivity Health as a leading health and wellness company
offering comprehensive fitness, nutrition and social engagement
solutions. Based on the financial results for both companies for
the 12 months ended September 30,
2018, pro forma revenue would have been approximately
$1.3 billion, net income would have
been approximately $135 million and
adjusted EBITDA would have been approximately $223 million. See the table appended to this
release for a reconciliation of non-GAAP financial measures.
"The acquisition of Nutrisystem is an exciting and
transformational event for Tivity Health as we expand our portfolio
of healthy lifestyle brands," said Donato
Tramuto, Tivity Health's Chief Executive Officer. "Tivity
Health and Nutrisystem share the same mission-driven culture and
have highly talented, motivated colleagues. Tivity Health has the
opportunity to accelerate its already impressive growth with the
addition of Nutrisystem. Our combined platform has the potential to
attract new users, increase enrollment, and enhance engagement
among the loyal customers and members of both companies. Many of
the most common chronic conditions afflicting Americans today are
associated with weight management, nutrition and physical fitness,
and addressing both calories in and calories out is
an important part of alleviating those conditions. Today, Tivity
Health manages calories out with our
SilverSneakers®, Prime® Fitness and
flip50™ programs; and Nutrisystem manages
calories in with its weight loss solutions. We
believe combining our two companies will create entirely new value
propositions for our health plans, fitness partners, members and
consumers."
"Today marks an important milestone in Nutrisystem's 45-year
history, as through this transaction, we will become part of a
leading health and wellness company that will offer a broad range
of nutrition, fitness and social engagement solutions to our
customers. This transaction will provide our shareholders with
significant value and the opportunity to participate in the upside
potential of the combined company through ownership of Tivity
Health stock," said Dawn Zier,
President and Chief Executive Officer of Nutrisystem. "Tivity
Health and Nutrisystem share a common strategic vision, mission and
culture, and we look forward to working with the Tivity Health team
to take the combined organization to the next level."
Upon closing of the acquisition, Tivity Health expects to
maintain all existing Nutrisystem brands, as well as Nutrisystem's
Fort Washington, PA location.
Additionally, Dawn Zier will become
President and Chief Operating Officer of Tivity Health reporting to
Tivity Health CEO Donato Tramuto.
She will be responsible for Tivity Health's nutrition and fitness
divisions and will join the company's Board of Directors.
Transaction Details
Under the terms of the merger agreement, each outstanding share
of Nutrisystem stock will be exchanged for $38.75 in cash and 0.2141 shares of Tivity Health
common stock. Upon closing, Tivity Health shareholders are expected
to own approximately 87% of the pro forma company on a fully
diluted basis.
Tivity Health will finance the cash portion of the acquisition
with fully committed term loan financing from Credit Suisse and
existing cash on hand. At the closing of the transaction, Tivity
Health's pro forma net leverage is expected to be approximately
4.4x, including the benefit of identified cost synergies. Tivity
Health expects to reduce net leverage to less than 3.5x by the end
of 2020, and less than 2.5x by the end of 2021.
The transaction is expected to close in the first quarter of
2019, subject to the approval of Nutrisystem shareholders, the
receipt of regulatory approval and other customary closing
conditions.
Advisors
Credit Suisse acted as exclusive financial advisor to Tivity
Health and Bass, Berry & Sims PLC served as legal counsel.
Evercore acted as exclusive financial advisor to Nutrisystem and
Davis Polk & Wardwell LLP served
as legal counsel.
Conference Call and Webcast
Tivity Health will hold a webcast and conference call at
8:00 AM Eastern Time (7:00 AM Central Time) today to discuss this
transaction. Investors will have the opportunity to listen to the
conference call live by dialing (866) 393-4306 or (734) 385-2616
for international callers and referencing code 6128979. The live
audio webcast and presentation slides can be accessed online by
going to www.tivityhealth.com and clicking "Investors" at least 15
minutes early to register, download, and install any necessary
audio software. For those who cannot listen to the live broadcast,
a telephonic replay will be available for one week at (855)
859-2056 or (404) 537-3406 for international callers, code 6128979,
and the replay will also be available on Tivity Health's website
for the next 12 months.
About Tivity Health, Inc.
Tivity Health, Inc. is a leading provider of fitness and health
improvement programs, with strong capabilities in developing and
managing network solutions. Through its existing three networks,
SilverSneakers® - the nation's leading community fitness
program for older adults, Prime® Fitness, and
WholeHealth Living™, Tivity Health is focused on
targeted population health for those 50 and over. With more than
15.6 million Americans eligible for SilverSneakers, over 10,000
fitness centers in the Prime Fitness Network, and more than 25
years of clinical and operational expertise in managing specialty
health benefits and networks, including chiropractic services,
physical therapy, occupational therapy, speech therapy,
acupuncture, massage and complementary and alternative medicine
(CAM) services, the company touches millions of consumers across
the country and works directly with hundreds of healthcare
practitioners and many of the nation's largest payers and
employers. Learn more at www.tivityhealth.com.
About Nutrisystem, Inc.
Nutrisystem, Inc. (Nasdaq: NTRI) is a leading provider of health
and wellness and weight management products and services including
Nutrisystem® and South Beach Diet® brands and
has helped millions of people lose weight over the course of more
than 45 years. The company's multi-brand approach to weight loss
includes multiple plans for 2018. Nutrisystem plans are clinically
tested, structured food delivery programs that come with the
digital platform NuMi® by Nutrisystem. Additionally, the
company offers multi-day kits and individual products available at
select retail outlets. The company's current product line offers
customers the most meal choices, including more than 150 foods with
no artificial flavors or sweeteners. Nutrisystem provides customers
the flexibility to align their diet with the US Healthy Eating Meal
Pattern, as recommended by the USDA Dietary Guidelines. Plans
include comprehensive counseling options from trained weight loss
coaches, registered dietitians and certified diabetes educators and
can be customized to specific dietary needs and preferences
including the Nutrisystem® D® program for
people with Type 2 diabetes or pre-diabetes. For more information,
go to NutrisystemNews.com and Newsroom.SouthBeachDiet.com.
Note on Forward-Looking Statements
This communication contains certain statements that are
"forward-looking" statements within the meaning of the federal
securities laws, including Section 27A of the Securities Act of
1933, as amended, and Section 21E of the Securities Exchange Act of
1934, as amended. These forward-looking statements are based
upon current expectations and include all statements that are not
historical statements of fact and those regarding the intent,
belief or expectations, including, without limitation, statements
that are accompanied by words such as "will," "expect," "outlook,"
"anticipate," "intend," "plan," "believe," "seek," "see," "will,"
"would," "target," or other similar words, phrases or expressions
and variations or negatives of these words. These
forward-looking statements include, but are not limited to,
statements regarding the proposed merger, integration and
transition plans, synergies, opportunities and anticipated future
performance. Readers of this communication should understand
that these statements are not guarantees of performance or
results. Many risks and uncertainties could affect actual
results and cause them to vary materially from the expectations
contained in the forward-looking statements.
These risks and uncertainties include, among other things: the
timing and likelihood of, and any conditions or requirements
imposed in connection with, obtaining required stockholder or
regulatory approval of the proposed transaction; the possibility
that the closing conditions to the proposed transaction may not be
satisfied or waived; delay in closing the proposed transaction or
the possibility of non-consummation of the proposed transaction;
the risk that expected benefits, synergies and growth opportunities
of the proposed transaction may not be achieved in a timely manner
or at all, including that the proposed transaction may not be
accretive within the expected timeframe or to the extent
anticipated; the occurrence of any event that could give rise to
termination of the merger agreement; the risk that stockholder
litigation in connection with the proposed transaction may affect
the timing or occurrence of the proposed transaction or result in
significant costs of defense, indemnification and liability; the
risk that Tivity Health and Nutrisystem will be unable to retain or
hire key personnel; the ability to successfully integrate
Nutrisystem's business with Tivity Health following the closing;
the risk that the significant indebtedness incurred to fund the
purchase price may limit Tivity Health's ability to adapt to
changes in the economy or market conditions, expose the company to
interest rate risk for the variable rate indebtedness and require a
substantial portion of cash flows from operations to be dedicated
to the payment of indebtedness; and the risk that disruption from
the proposed transaction may adversely affect Tivity Health's and
Nutrisystem's business and their respective relationships with
customers, vendors or employees. For additional information
about factors that could cause actual results to differ materially
from those described in the forward-looking statements, please
refer to both Tivity Health's and Nutrisystem's filings with the
Securities and Exchange Commission ("SEC"). Except as
required by law, neither Tivity Health nor Nutrisystem undertakes
any obligation to update forward-looking statements made by it to
reflect new information, subsequent events or circumstances.
Important Additional Information and Where to Find It
In connection with the proposed transaction, Tivity Health
expects to file with the SEC a registration statement of Tivity
Health on Form S-4 (the "registration statement") that will
include a proxy statement of Nutrisystem and that will also
constitute a prospectus of Tivity Health (the "proxy
statement/prospectus"). Nutrisystem expects to mail the
proxy statement/prospectus to its stockholders in connection with
the proposed transaction. INVESTORS AND SECURITY HOLDERS ARE
URGED TO CAREFULLY READ THE ENTIRE REGISTRATION STATEMENT, PROXY
STATEMENT/PROSPECTUS AND OTHER RELEVANT INFORMATION FILED WITH THE
SEC WHEN THEY BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION ABOUT TIVITY HEALTH, NUTRISYSTEM AND THE PROPOSED
TRANSACTION. The registration statement and other documents
filed by Tivity Health with the SEC may be obtained free of charge
at Tivity Health's website at http://www.tivityhealth.com or at the
SEC's website at http://www.sec.gov. These documents may also
be obtained free of charge from Tivity Health by requesting them by
mail at Tivity Health, Inc., 701 Cool Springs Boulevard,
Franklin, Tennessee 37067,
Attention: Investor Relations, or by telephone at (615)
614-4576. The proxy statement/prospectus and other documents
filed by Nutrisystem with the SEC may be obtained free of charge at
Nutrisystem's website at http://www.nutrisystem.com or at the SEC's
website at http://www.sec.gov. These documents may also be
obtained free of charge from Nutrisystem by requesting them by mail
at Nutrisystem, Inc., 600 Office Center Drive, Fort Washington, PA 19034, Attention:
Investor Relations, or by telephone at (215) 346-8136.
Participants in Solicitation
Tivity Health and Nutrisystem and their respective directors and
executive officers and other members of management and employees
may be deemed to be participants in the solicitation of proxies in
respect of the proposed transaction. Information about Tivity
Health's directors and executive officers is available in Tivity
Health's proxy statement for Tivity Health's 2018 annual meeting of
stockholders filed with the SEC on April 13,
2018 on Schedule 14A. Information about Nutrisystem's
directors and executive officers is available in Nutrisystem's
proxy statement for Nutrisystem's 2018 annual meeting of
stockholders filed with the SEC on March 26,
2018 on Schedule 14A. Other information regarding the
participants in the proxy solicitation and a description of their
direct and indirect interests, by security holdings or otherwise,
will be contained in the proxy statement/prospectus and other
relevant materials to be filed with the SEC regarding the
transaction when they become available. Investors should read
the proxy statement/prospectus carefully when it becomes available
before making any voting or investment decisions. You may
obtain free copies of these documents from Tivity Health or
Nutrisystem as indicated above.
No Offer or Solicitation
This communication shall not constitute an offer to sell or the
solicitation of an offer to buy any securities, nor shall there be
any sale of securities in any jurisdiction in which such offer,
solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such
jurisdiction. No offering of securities shall be made except
by means of a prospectus meeting the requirements of Section 10 of
the Securities Act of 1933, as amended.
Reconciliation of
Adjusted EBITDA, Non-GAAP Basis to Net Income, GAAP
Basis (in thousands)
|
|
|
|
Twelve Months
Ended September 30, 2018
|
|
Tivity
Health(1)
|
Nutrisystem(2)
|
Pro Forma
Combined
|
Net income, GAAP
basis
|
78,759
|
55,859
|
134,618
|
Adjustments:
|
|
|
|
Depreciation and
amortization
|
4,392
|
15,292
|
19,684
|
Restructuring
expense(3)
|
2,554
|
—
|
2,554
|
Interest expense
(income)
|
11,394
|
(557)
|
10,837
|
Income tax
expense
|
38,075
|
17,758
|
55,833
|
(Income) from
discontinued operations
|
(761)
|
—
|
(761)
|
Adjusted EBITDA,
non-GAAP basis(4) (5)
|
134,413
|
88,352
|
222,765
|
|
|
(1)
|
GAAP measures are
derived from Tivity Health's Quarterly Report on Form 10-Q for the
nine months ended September 30, 2018, Annual Report on Form 10-K
for the fiscal year ended December 31, 2017, and Quarterly Report
on Form 10-Q for the nine months ended September 30,
2017.
|
|
|
(2)
|
GAAP measures are
derived from Nutrisystem's Quarterly Report on Form 10-Q for the
nine months ended September 30, 2018, Annual Report on Form 10-K
for the fiscal year ended December 31, 2017, and Quarterly Report
on Form 10-Q for the nine months ended September 30,
2017.
|
|
|
(3)
|
Tivity Health added
back Restructuring expense with respect to the fourth quarter of
2017 due to a one-time restructuring event. Restructuring expense
in other quarters during the twelve month period ended September
30, 2018 is considered a part of normal operation of the business,
and has not been added back.
|
|
|
(4)
|
Adjusted EBITDA
includes stock-based compensation expense for the twelve month
period ended September 30, 2018 of $6,552 for Tivity Health and
$10,779 for Nutrisystem.
|
|
|
(5)
|
Adjusted EBITDA is a
non-GAAP financial measure. Tivity Health believes that the
presentation of this non-GAAP financial measure reflects operating
results that are more indicative of the combined companies' ongoing
operating performance while improving comparability to prior
periods and, as such, may be useful to investors' understanding and
assessment of the combined companies' financial performance and
prospects for the future when viewed in conjunction with GAAP
financial results. You should not consider Adjusted EBITDA in
isolation or as a substitute for net income determined in
accordance with U.S. GAAP. Additionally, because Adjusted
EBITDA may be defined differently by other companies in Tivity
Health's or Nutrisystem's respective industries, the definition
presented here may not be comparable to similarly titled measures
of other companies.
|
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SOURCE Tivity Health, Inc.