Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2020 | Aug. 04, 2020 | |
Cover [Abstract] | ||
Entity Registrant Name | TIVITY HEALTH, INC. | |
Entity Central Index Key | 0000704415 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Current Reporting Status | Yes | |
Entity Shell Company | false | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q2 | |
Trading Symbol | TVTY | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2020 | |
Entity Common Stock, Shares Outstanding | 48,560,369 | |
Entity File Number | 000-19364 | |
Entity Tax Identification Number | 62-1117144 | |
Entity Address, Address Line One | 701 Cool Springs Boulevard | |
Entity Address, City or Town | Franklin | |
Entity Address, State or Province | TN | |
Entity Address, Postal Zip Code | 37067 | |
City Area Code | 800 | |
Local Phone Number | 869-5311 | |
Entity Interactive Data Current | Yes | |
Title of 12(b) Security | Common Stock - $.001 par value | |
Security Exchange Name | NASDAQ | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity Incorporation, State or Country Code | DE |
CONSOLIDATED BALANCE SHEETS (Un
CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 60,274 | $ 2,486 |
Accounts receivable, net | 36,339 | 97,596 |
Inventories | 22,088 | 36,407 |
Prepaid expenses | 15,058 | 18,255 |
Other current assets | 8,110 | 6,993 |
Total current assets | 141,869 | 161,737 |
Property and equipment, net of accumulated depreciation of $53,525 and $42,510 respectively | 52,436 | 52,909 |
Right-of-use assets, operating leases | 35,300 | 41,518 |
Right-of-use assets, finance leases | 1,356 | 1,680 |
Intangible assets, net | 593,520 | 689,686 |
Goodwill, net | 535,135 | 654,635 |
Other assets | 21,554 | 23,740 |
Total assets | 1,381,170 | 1,625,905 |
Current liabilities: | ||
Accounts payable | 35,492 | 46,480 |
Accrued salaries and benefits | 10,539 | 13,071 |
Accrued liabilities | 42,020 | 55,663 |
Deferred revenue | 12,440 | 12,037 |
Income taxes payable | 7,835 | 405 |
Current portion of operating lease liabilities | 13,157 | 13,131 |
Current portion of finance lease liabilities | 644 | 624 |
Current portion of long-term debt | 9,775 | |
Current portion of other long-term liabilities | 15,664 | 4,947 |
Total current liabilities | 147,566 | 146,358 |
Long-term debt | 1,002,547 | 1,048,127 |
Long-term operating lease liabilities | 23,515 | 30,321 |
Long-term finance lease liabilities | 753 | 1,080 |
Long-term deferred tax liability | 137,205 | 160,846 |
Other long-term liabilities | 31,863 | 12,263 |
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, 48,548,741 and 48,156,786 shares outstanding, respectively | 48 | 48 |
Additional paid-in capital | 505,760 | 504,419 |
Accumulated deficit | (406,840) | (237,284) |
Treasury stock, at cost, 2,254,953 shares in treasury | (28,182) | (28,182) |
Accumulated other comprehensive loss | (33,065) | (12,091) |
Total stockholders' equity | 37,721 | 226,910 |
Total liabilities and stockholders' equity | $ 1,381,170 | $ 1,625,905 |
CONSOLIDATED BALANCE SHEETS (_2
CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Statement Of Financial Position [Abstract] | ||
Accumulated depreciation | $ 53,525 | $ 42,510 |
Stockholders' equity: | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized (in shares) | 5,000,000 | 5,000,000 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 120,000,000 | 120,000,000 |
Common stock, shares outstanding (in shares) | 48,548,741 | 48,156,786 |
Treasury stock (in shares) | 2,254,953 | 2,254,953 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | ||
Revenues: | |||||
Total revenues | [1] | $ 262,598 | $ 340,377 | $ 600,253 | $ 554,471 |
Cost of revenue: | |||||
Total cost of revenue | 118,241 | 194,758 | 317,397 | 335,097 | |
Marketing expenses | 51,105 | 54,603 | 138,177 | 78,751 | |
Selling, general and administrative expenses | 23,471 | 29,667 | 51,480 | 56,852 | |
Depreciation and amortization | 12,919 | 9,084 | 27,682 | 12,666 | |
Impairment loss | 199,500 | ||||
Restructuring and related charges | 1,009 | 2,352 | 1,752 | 3,943 | |
Operating income (loss) | 55,853 | 49,913 | (135,735) | 67,162 | |
Interest expense | 21,235 | 23,661 | 42,898 | 31,328 | |
Income (loss) before income taxes | 34,618 | 26,252 | (178,633) | 35,834 | |
Income tax expense (benefit) | 6,107 | 8,115 | (9,038) | 13,483 | |
Net income (loss) | $ 28,511 | $ 18,137 | $ (169,595) | $ 22,351 | |
Earnings (loss) per share: | |||||
Basic | $ 0.59 | $ 0.38 | $ (3.49) | $ 0.49 | |
Diluted | [2] | $ 0.58 | $ 0.37 | $ (3.49) | $ 0.49 |
Comprehensive income (loss) | $ 27,366 | $ 5,901 | $ (190,569) | $ 10,115 | |
Weighted average common shares and equivalents: | |||||
Basic | 48,711 | 47,790 | 48,662 | 45,165 | |
Diluted | [2] | 48,794 | 48,461 | 48,662 | 45,719 |
Services | |||||
Revenues: | |||||
Total revenues | $ 79,856 | $ 157,481 | $ 239,548 | $ 314,008 | |
Cost of revenue: | |||||
Total cost of revenue | 31,886 | 111,073 | 147,034 | 224,916 | |
Products | |||||
Revenues: | |||||
Total revenues | 182,742 | 182,896 | 360,705 | 240,463 | |
Cost of revenue: | |||||
Total cost of revenue | $ 86,355 | $ 83,685 | $ 170,363 | $ 110,181 | |
[1] | The figure for total segments equals the consolidated figure for such item. | ||||
[2] | The impact of potentially dilutive securities for the six months ended June 30, 2020 was not considered because the impact would be anti-dilutive. |
CONSOLIDATED STATEMENTS OF OP_2
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Services | ||||
Depreciation | $ 2,240 | $ 1,503 | $ 4,071 | $ 2,859 |
Products | ||||
Depreciation and amortization | $ 8,587 | $ 5,861 | $ 19,280 | $ 7,488 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Statement Of Income And Comprehensive Income [Abstract] | ||||
Net income (loss) | $ 28,511 | $ 18,137 | $ (169,595) | $ 22,351 |
Net change in fair value of interest rate swaps, net of income tax benefit of $393, $4,068, $7,195, and $4,068, respectively | (1,145) | (12,236) | (20,974) | (12,236) |
Comprehensive income (loss) | $ 27,366 | $ 5,901 | $ (190,569) | $ 10,115 |
CONSOLIDATED STATEMENTS OF CO_2
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Unaudited) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Statement Of Income And Comprehensive Income [Abstract] | ||||
Net change in fair value of interest rate swaps, income tax benefit | $ 393 | $ 4,068 | $ 7,195 | $ 4,068 |
CONSOLIDATED STATEMENT OF CHANG
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (Unaudited) - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Retained Earnings (Accumulated Deficit) | Treasury Stock | Accumulated Other Comprehensive Loss |
Balance at Dec. 31, 2018 | $ 369,001 | $ 41 | $ 347,487 | $ 49,655 | $ (28,182) | |
Comprehensive income (loss) | 10,115 | 22,351 | $ (12,236) | |||
Issuance of Common Stock in connection with Merger | 132,838 | 6 | 132,832 | |||
Share-based compensation replacement awards related to Merger and attributable to pre-combination services | 9,107 | 9,107 | ||||
Exercise of stock options | 370 | 370 | ||||
Tax withholding for share-based compensation | (1,135) | (1,135) | ||||
Share-based employee compensation expense | 9,257 | 9,257 | ||||
Other | (247) | (129) | (118) | |||
Balance at Jun. 30, 2019 | 529,306 | 47 | 497,789 | 71,888 | (28,182) | (12,236) |
Balance at Mar. 31, 2019 | 517,164 | 47 | 491,548 | 53,751 | (28,182) | |
Comprehensive income (loss) | 5,901 | 18,137 | (12,236) | |||
Exercise of stock options | 137 | 137 | ||||
Tax withholding for share-based compensation | (794) | (794) | ||||
Share-based employee compensation expense | 6,898 | 6,898 | ||||
Balance at Jun. 30, 2019 | 529,306 | 47 | 497,789 | 71,888 | (28,182) | (12,236) |
Balance at Dec. 31, 2019 | 226,910 | 48 | 504,419 | (237,284) | (28,182) | (12,091) |
Comprehensive income (loss) | (190,569) | (169,595) | (20,974) | |||
Exercise of stock options | 601 | 601 | ||||
Tax withholding for share-based compensation | (2,949) | (2,949) | ||||
Share-based employee compensation expense | 3,689 | 3,689 | ||||
Other | 39 | 39 | ||||
Balance at Jun. 30, 2020 | 37,721 | 48 | 505,760 | (406,840) | (28,182) | (33,065) |
Balance at Mar. 31, 2020 | 7,624 | 48 | 503,049 | (435,371) | (28,182) | (31,920) |
Comprehensive income (loss) | 27,366 | 28,511 | (1,145) | |||
Tax withholding for share-based compensation | (154) | (154) | ||||
Share-based employee compensation expense | 2,865 | 2,865 | ||||
Other | 20 | 20 | ||||
Balance at Jun. 30, 2020 | $ 37,721 | $ 48 | $ 505,760 | $ (406,840) | $ (28,182) | $ (33,065) |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Cash flows from operating activities: | ||
Net income (loss) | $ (169,595) | $ 22,351 |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
Depreciation and amortization | 27,682 | 12,666 |
Amortization and write-off of deferred loan costs | 2,315 | 3,073 |
Amortization of debt discount | 2,049 | 389 |
Share-based employee compensation expense | 3,689 | 9,257 |
Impairment of goodwill and intangible assets | 199,500 | |
Deferred income taxes | (16,447) | 10,789 |
Decrease (increase) in accounts receivable, net | 61,257 | (3,754) |
Decrease in inventory | 14,319 | 8,719 |
Decrease in other current assets | 1,363 | 1,057 |
Increase (decrease) in accounts payable | 9,411 | (5,872) |
(Decrease) increase in accrued salaries and benefits | (2,532) | 570 |
Decrease in other current liabilities | (5,925) | (8,266) |
Increase (decrease) in deferred revenue | 403 | (2,725) |
Other | 3,454 | 1,345 |
Net cash flows provided by operating activities | 130,943 | 49,599 |
Cash flows from investing activities: | ||
Acquisition of property and equipment | (10,362) | (8,918) |
Business acquisitions, net of cash acquired | (1,062,818) | |
Net cash flows used in investing activities | (10,362) | (1,071,736) |
Cash flows from financing activities: | ||
Proceeds from issuance of long-term debt | 196,525 | 1,399,945 |
Payments of long-term debt | (236,375) | (347,879) |
Payments related to tax withholding for share-based compensation | (2,949) | (1,135) |
Exercise of stock options | 601 | 370 |
Deferred loan costs | (30,189) | |
Principal payments related to financing leases | (306) | (22) |
Change in cash overdraft and other | (20,289) | 3,530 |
Net cash flows (used in) provided by financing activities | (62,793) | 1,024,620 |
Effect of exchange rate changes on cash | (12) | |
Net increase in cash and cash equivalents | 57,788 | 2,471 |
Cash and cash equivalents, beginning of period | 2,486 | 1,933 |
Cash and cash equivalents, end of period | $ 60,274 | $ 4,404 |
Basis of Presentation and Recen
Basis of Presentation and Recent Developments | 6 Months Ended |
Jun. 30, 2020 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Basis of Presentation and Recent Developments | 1. Basis of Presentation and Recent Developments Our financial statements and accompanying notes are prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”). In our opinion, the accompanying consolidated financial statements of Tivity Health ® ® By their nature, estimates are subject to an inherent degree of uncertainty. Due We have reclassified certain items in prior periods to conform to current classifications. Following the acquisition of Nutrisystem (the “Merger”), we organize and manage our operations within two reportable segments, based on the types of products and services they offer: Healthcare and Nutrition. The Healthcare segment is comprised our legacy business and includes SilverSneakers ® senior fitness, Prime ® Fitness, WholeHealth Living ® and Wisely Well TM ® and the South Beach Diet ® programs. We have omitted certain financial information that is normally included in financial statements prepared in accordance with U.S. GAAP but that is not required for interim reporting purposes. You should read the accompanying consolidated financial statements in conjunction with the financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2019. Recent Developments In January 2020, the Secretary of the U.S. Department of Health and Human Services (“HHS”) declared a national public health emergency due to a novel strain of coronavirus, which causes the disease known as “COVID-19”. In March 2020, the World Health Organization characterized the outbreak of COVID-19 as a global pandemic, and COVID-19 continues to spread throughout the United States and other countries. Many state and local governments, together with public health officials, have recommended and mandated precautions to mitigate the spread of COVID-19, including ordering closure of certain businesses and imposing stay-at-home orders and social distancing guidelines for individuals. Such measures have resulted in significantly reduced demand for many businesses that have continued in operation. By March 31, 2020, substantially all of the fitness centers in our national network were temporarily closed, which had an adverse impact on the results of operations in our Healthcare segment for the first quarter of 2020 because a significant member visits to a fitness partner location. A substantial number of o ur fitness partner locations remained closed through April, with some locations reopening in May and additional locations reopening in June. For the month of June 2020, approximately 66% of our fitness partner locations reported at least one visit from our SilverSneakers program. For the second quarter of 2020, the average monthly total participation levels of our SilverSneakers members were significantly below historical levels, and we also experienced a decline in paid subscribers for Prime Fitness, each of which adversely impacted revenues in our Healthcare segment. We do not believe that COVID-19-related developments had a material impact on the results of operations or cash flows of our Nutrition segment for the first or second quarters of 2020. While overall we did not experience any significant disruptions, interruptions, or increased costs related to our supply chain, inventory, or distribution channels as a result of COVID-19, we experienced delays in fulfilling orders for our Nutrition segment’s products at certain of our warehouses due to some employees of our fulfillment provider testing positive for COVID-19 overtime for employees of our fulfillment provider as well as additional shipping and related charges as we transferred the fulfillment of certain orders to other warehouses that were farther from the customer’s delivery destination . We have taken a number of actions in response to the pandemic, including the following: • Given the continued uncertainty surrounding COVID-19, in March 2020, we borrowed $75 million under our Revolving Credit Facility as a precautionary measure to increase our cash position and maintain financial flexibility. We repaid such $75 million in full in June 2020. As of June 30, 2020, outstanding debt under our credit agreement was $1,012.3 million, and we had $60.3 million of cash and cash equivalents. In July 2020, we repaid $24.8 million of principal on the term loans under our credit agreement, resulting in our next required quarterly installment being due in December 2021. As of June 30, 2020, we had a working capital deficit of $5.7 million. While the COVID-19 pandemic has created significant uncertainty as to general economic and market conditions for the remainder of 2020 and beyond, as of the date of this report, we believe our cash on hand, expected cash flows from operations, and anticipated available credit under the Credit Agreement (as defined below) will be sufficient to fund our operations, principal and interest payments, and capital expenditures for the next 12 months • We are taking a variety of measures to ensure the availability and functioning of our critical infrastructure, to promote the safety and security of our employees and to support the communities in which we operate. These measures include implementing remote working arrangements for employees where practicable. We are following public and private sector policies and initiatives to reduce the transmission of COVID-19, such as the imposition of travel restrictions, the promotion of social distancing, and the adoption of work-from-home arrangements. • We are focused on preserving our liquidity and managing our cash flow, including, but not limited to, managing our working capital, optimizing tax savings under the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) and other COVID-19-related legislation, curtailing capital expenditures, reducing discretionary spending, and reducing compensation costs. o In April 2020, we furloughed 13% of our approximately 1,000 employees. In June 2020, some of these furloughed employees’ positions were eliminated (in addition to other position eliminations, resulting in approximately 8% of our employees being terminated), and we extended the furlough for substantially all of the remaining furloughed employees through the end of 2020. Also in June 2020, we placed an additional 2% of our total employees on furlough through the end of 2020. o Also in April 2020, the Compensation Committee of the Company’s Board of Directors (the “Board”) approved a 25% reduction in base salary for the Company’s executive officers and certain other employees for the period from April 20, 2020 through August 23, 2020. In June 2020, the Compensation Committee determined to extend such reductions in base salary through December 31, 2020 . Additionally, the Board approved a 100% reduction in the annual cash retainer and annual committee retainers payable to non-management members of the Board who stood for reelection at the 2020 Annual Meeting of Stockholders (except for Daniel G. Tully who does not receive compensation for his service on the Board) for a period of four months, beginning May 1, 2020 or as soon thereafter as reasonably practicable. In June 2020, the Board determined to extend such reduction in cash compensation to the Board through December 31, 2020. o Effective at the end of July 2020, the Compensation Committee suspended the Company matching contribution to the Company’s 401(k) plan. As a result of the COVID-19 pandemic, in March 2020, we experienced a significant decline in the Company’s market capitalization and in the actual and forecasted operating results of our Healthcare segment, in addition to the unfavorable change in market conditions which consist of the Nutrisystem tradename and the SilverSneakers tradename) Nutrition business unit as well as the fair value of the Nutrisystem tradename were below their carrying amounts, and we recorded an impairment loss of $ 199.5 million, including $ 80.0 million related to the Nutrisystem tradename and $ 119.5 million related to goodwill allocated to the Nutrition segment. There were no impairment trigger s during the second quarter of 2020 related to our goodwill or indefinite-lived intangible assets. |
Recent Relevant Accounting Stan
Recent Relevant Accounting Standards | 6 Months Ended |
Jun. 30, 2020 | |
New Accounting Pronouncements And Changes In Accounting Principles [Abstract] | |
Recent Relevant Accounting Standards | 2 . Re c o a d In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-04, “ Reference Rate Reform (“ASC 848”): Facilitation of the Effects of Reference Rate Reform on Financial Reporting”. ASC 848 contains temporary optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform, such as a transition away from the use of LIBOR. ASC 848 was effective for the Company as of January 1, 2020. The provisions of ASC 848 are available through December 31, 2022, at which time the reference rate replacement activity is expected to have been completed. The provisions of ASC 848 must be applied at a Topic, Subtopic or Industry Subtopic level for all transactions other than derivatives, which may be applied at a hedging relationship level. The accounting relief provided by ASC 848 is applicable only to legacy contracts if the amendments made to the agreements are solely for reference rate reform activities. Modifications that are unrelated to reference rate reform will scope out a given contract. ASC 848 allows for different elections to be made at different points in time, and the timing of those elections will be documented as applicable. For the avoidance of doubt, we intend to reassess the elections of optional expedients and exceptions included within ASC 848 related to our hedging activities and will document the election of these items on a quarterly basis. In March 2020, we elected the expedient that allows us to assume that our hedged interest payments are probable of occurring regardless of any expected modification in their terms related to reference rate reform. In addition, we have the option to change the method of assessing effectiveness upon a change in the critical terms of the derivative or the hedged transactions and upon the end of relief under ASC 848. In June 2020, we elected to (i) continue the method of assessing effectiveness as documented in the original hedge documentation and (ii) apply the expedient wherein the reference rate on the hypothetical derivative matches the reference rate on the hedging instrument. We will also apply the aforementioned elections to any future designated cash flow hedging relationship. In October 2018, the FASB issued ASU 2018-16, "Derivatives and Hedging (Topic 815): Inclusion of the Secured Overnight Financing Rate (“SOFR”) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes" (“ASU 2018-16”), which adds the OIS rate based on SOFR as a U.S. benchmark interest rate to facilitate the LIBOR to SOFR transition and provide lead time for entities to prepare for changes to interest rate risk hedging strategies. ASU 2018-16 is effective for fiscal years beginning after December 15, 2018, and interim periods within those years, with early adoption permitted. As of March 31, 2020, the benchmark interest rate in our existing interest rate swap agreements is LIBOR. The adoption of this standard did not have an impact on our financial position, results of operations, or cash flows . In January 2017, the FASB issued ASU No. 2017-04, “Intangibles - Goodwill and Other” (“ASU 2017-04”), which simplifies the subsequent measurement of goodwill by eliminating step two from the goodwill impairment test. ASU 2017-04 is effective for annual and interim impairment tests in fiscal years beginning after December 15, 2019 and is required to be applied prospectively. Early adoption is allowed for annual goodwill impairment tests performed on testing dates after January 1, 2017. We adopted ASU 2017-04 on October 1, 2019. As further discussed in Note 12, we recorded impairment losses related to goodwill during the fourth quarter of 2019 and the first quarter of 2020 In August 2018, the FASB issued ASU No. 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement” (“ASU 2018-13”), which changes the fair value measurement disclosure requirements of ASC 820. ASU 2018-13 is effective for fiscal years beginning on or after December 15, 2019, including interim periods therein, and is generally required to be applied retrospectively, except for certain components that are to be applied prospectively. The adoption of this standard did not have a material impact on our consolidated financial statements and related disclosures In August 2018, the FASB issued ASU No. 2018-15, “Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract,” which requires implementation costs incurred by customers in cloud computing arrangements to be deferred and recognized over the term of the arrangement, if those costs would be capitalized by the customer in a software licensing arrangement. This standard is effective for annual periods beginning after December 15, 2019, and interim periods within those fiscal years. The adoption of this standard did not have a material impact on our consolidated financial statements and related disclosures . In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”), which requires companies to measure credit losses for financial assets held at the reporting date utilizing a methodology that reflects current expected credit losses over the lifetime of such assets. ASU 2016-13 was effective for the Company on January 1, 2020 and is generally required to be applied using the modified retrospective approach, with limited exceptions for specific instruments. The adoption of this standard did not have a material impact on our consolidated financial statements and related disclosures. |
Revenue Recognition
Revenue Recognition | 6 Months Ended |
Jun. 30, 2020 | |
Revenue From Contract With Customer [Abstract] | |
Revenue Recognition | 3 . Revenue Recognition We account for revenue from contracts with customers in accordance with Accounting Standards Codification (“ASC”) Topic 606. The unit of account in ASC Topic 606 is a performance obligation, which is a promise in a contract to transfer to a customer either a distinct good or service (or bundle of goods or services) or a series of distinct goods or services provided over a period of time. ASC Topic 606 requires that a contract's transaction price, which is the amount of consideration to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer, is to be allocated to each performance obligation in the contract based on relative standalone selling prices and recognized as revenue when or as the performance obligation is satisfied. Healthcare Segment Our Healthcare segment earns revenue from three programs, SilverSneakers senior fitness, Prime Fitness and WholeHealth Living. We provide the SilverSneakers senior fitness program to members of Medicare Advantage and Medicare Supplement plans through our contracts with such plans. We offer Prime Fitness, a fitness facility access program, through contracts with commercial health plans, employers, and other sponsoring organizations that allow their members to individually purchase the program. We sell our WholeHealth Living program primarily to health plans. Except for Prime Fitness, our Healthcare segment’s customer contracts generally have initial terms of approximately three years. Some contracts allow the customer to terminate early and/or determine on an annual basis to which of their members they will offer our programs. For Prime Fitness, our contracts with commercial health plans, employers, and other sponsoring organizations generally have initial terms of approximately three years, while i . The significant majority of Healthcare segment’s customer contracts contain one performance obligation - to stand ready to provide access to our network of fitness locations and fitness programming - which is satisfied over time as services are rendered each month over the contract term. There are generally no performance obligations that are unsatisfied at the end of a particular month. There was no material revenue recognized during the three and six months ended June 30, 2020 from performance obligations satisfied in a prior period. Our fees within the Our Healthcare segment’s customer contracts include variable consideration, which is allocated to each distinct month over the contract term based on eligible members and/or member visits each month. The allocated consideration corresponds directly with the value to our customers of our services completed for the month. Under the majority of Healthcare segment’s contracts, we recognize revenue each month using the practical expedient available under ASC 606-10-55-18, which provides that revenue is recognized in the amount for which we have the right to invoice. Although we evaluate our financial performance and make resource allocation decisions based upon the results of our two reportable segments, we believe the following information depicts how our Healthcare segment revenues and cash flows are affected by economic factors. The following table sets forth Healthcare revenue disaggregated by program. Revenue from our SilverSneakers program is predominantly contracted with Medicare Advantage and Medicare Supplement plans. (In thousands) Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 SilverSneakers $ 49,157 $ 122,899 $ 170,764 $ 245,922 Prime Fitness 19,047 29,751 51,858 58,494 WholeHealth Living 4,747 4,467 9,796 9,041 Other (1) 8,972 364 9,197 551 $ 81,923 $ 157,481 $ 241,615 $ 314,008 (1) For the three and six months ended June 30, 2020, other revenue in the table above includes $6.8 million from a well-being program with a large employer as well as $2.1 million of Wisely Well revenue. Sales and usage-based taxes are excluded from revenues. Nutrition Segment Our Nutrition segment earns revenue from four sources: direct to consumer, retail, QVC and other. Revenue is measured based on the consideration specified in a contract with a customer and excludes any sales incentives and amounts collected on behalf of third parties. As explained in more detail below, revenue is recognized upon satisfaction of the performance obligation by transferring control over a product to a Nutrition segment customer. Direct-mail advertising costs are expensed as incurred. We recognize an asset for the carrying amount of product to be returned and for costs to obtain a contract if the amortization is more than one year in duration. We expense costs to obtain a contract as incurred if the amortization period is less than one year. We sell pre-packaged foods directly to weight loss program participants primarily through the Internet and telephone (referred to as the direct to consumer channel), through QVC (a television shopping network), and select retailers. Pre-packaged foods include both frozen and non-frozen (ready-to-go), shelf-stable products. Products sold through the direct to consumer channel, both frozen and non-frozen, may be sold separately (a la carte) or as part of a packaged monthly meal plan for which customers pay at the point of sale. Products sold through QVC are payable by QVC upon our shipment of the product to the end consumer. For both the direct to consumer channel and QVC, we recognize revenue at a point in time, i.e., at the shipping point. Direct to consumer customers may return unopened ready-to-go Nutrisystem products within 30 days after purchase in order to receive a refund or credit. Frozen Nutrisystem products are refundable only if the order is canceled within 14 days after delivery. South Beach Diet products are not refundable. Products sold to retailers include both frozen and non-frozen products and are payable by the retailer upon receipt. We recognize revenue at a point in time, i.e., when the retailers take possession of the product. Certain retailers have the right to return unsold products. We account for the shipment of frozen and non-frozen, ready-to-go products as separate performance obligations. The consideration, including variable consideration for product returns, is allocated between frozen and non-frozen products based on their standalone selling prices. The amount of revenue recognized is adjusted for expected returns, which are estimated based on historical data. In addition to our pre-packaged foods, we sell prepaid gift cards through a wholesaler that are redeemable through the Internet or telephone. Prepaid gift cards represent grants of rights to goods to be provided in the future to gift card buyers. The wholesaler has the right to return all unsold prepaid gift cards. The wholesaler’s retail selling price of the gift cards is deferred in the balance sheet and recognized as revenue when we have satisfied our performance obligation, i.e., when a gift card holder redeems the gift card with us. We recognize breakage amounts (the estimated amount of unused gift cards) as revenue, in proportion to the actual gift card redemptions exercised by gift card holders in relation to the total expected redemptions of gift cards. We utilize historical experience in estimating the total expected breakage and period over which the gift cards will be redeemed. Sales and other taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction and collected by the Company from a Nutrition segment customer are excluded from revenue and presented on a net basis. After control over a product has transferred to a Nutrition segment customer, shipping and handling costs associated with outbound freight are accounted for as a fulfillment cost and are included in revenue and cost of revenue in the accompanying consolidated statements of operations. Revenue from shipping and handling charges was $6.5 million and $13.0 million for the three and six months ended June 30, 2020, respectively, and $6.3 million and $8.1 million for the three and six months ended June 30, 2019 (from March 8, 2019 forward), respectively. The following table sets forth Nutrition segment revenue, from March 8, 2019 forward, disaggregated by the source of revenue: (In thousands) Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 Nutrisystem direct to consumer $ 165,118 $ 155,976 $ 320,509 $ 203,977 South Beach Diet direct to consumer 8,650 14,464 $ 21,414 19,118 Retail 3,902 8,728 9,350 13,032 QVC 2,901 3,522 7,088 4,044 Other 104 206 277 292 $ 180,675 $ 182,896 $ 358,638 $ 240,463 The following table provides information about receivables, contract assets and contract liabilities from contracts with customers: (In thousands) June 30, 2020 December 31, 2019 Contract assets $ 243 $ 95 Contract liabilities $ 10,937 $ 10,911 The contract assets primarily relate to unbilled accounts receivable and are included as other current assets in the accompanying consolidated balance sheet. The contract liabilities (deferred revenue) primarily relate to sale of prepaid gift cards and unshipped foods, which are deferred until such time as the Company has satisfied its performance obligations. Significant changes in the contract liabilities (deferred revenue) balance during the period are as follows: Three Months Ended June 30, Six Months Ended June 30, (In thousands) 2020 2020 Revenue recognized that was included in the contract liability (deferred revenue) balance on January 1, 2020 $ (2,395 ) $ (8,112 ) Increases due to cash received for prepaid gift cards sold or unshipped food, excluding amounts recognized as revenue, and (decreases) due to returns $ (71 ) $ 8,138 The following table includes estimated revenue from the prepaid gift cards expected to be recognized in the future related to performance obligations that are unsatisfied (or partially satisfied) at the end of the reporting period: (In thousands) Remaining 2020 $ 1,789 2021 1,901 2022 1,192 2023 468 2024 297 2025 220 $ 5,867 We apply the practical expedient in subtopic ASC 606-10-50-14 and do not disclose information about remaining performance obligations that have original expected durations of one year or less. We review the reserves for our customer returns at each reporting period and adjust them to reflect data available at that time. To estimate reserves for returns, we consider actual return rates in preceding periods and changes in product offerings or marketing methods that might impact returns going forward. To the extent the estimate of returns changes, we will adjust the reserve, which will impact the amount of revenue recognized in the period of the adjustment. The provision for estimated returns for the three and six months ended June 30, 2020 was $4.1 million and $9.3 million, respectively, and for the three and six months ended June 30, 2019 ( he reserve for estimated returns incurred but not received and processed was |
Inventories
Inventories | 6 Months Ended |
Jun. 30, 2020 | |
Inventory Disclosure [Abstract] | |
Inventories | 4 . Inventories Inventories consist principally of packaged food held in external fulfillment locations. We value inventories at the of cost or net realizable value, with cost determined using the first-in, first-out method. We continually assess quantities of inventory on hand to identify excess or obsolete inventory and record a provision for any estimated loss. We estimate the reserve for excess and obsolete inventory primarily on forecasted demand and/or our ability to sell the products, our ability to introduce new products, future production requirements, and changes in consumer behavior. The reserve for excess and obsolete inventory was $2.0 million and $1.8 million at June 30, 2020 and December 31, 2019, respectively. |
Intangible Assets and Goodwill
Intangible Assets and Goodwill | 6 Months Ended |
Jun. 30, 2020 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Intangible Assets and Goodwill | 5 . Intangible Assets and Goodwill The COVID-19 pandemic has had and is having an adverse impact on the overall economy, resulting in rapidly changing market and economic conditions that have impacted the Company. In March 2020, we experienced a significant decline in the Company’s market capitalization and in the actual and forecasted operating results of our Healthcare segment, in addition to the unfavorable change in market conditions. As a result, management concluded that there were triggering events during the first quarter of 2020 necessitating an impairment evaluation of our goodwill and indefinite-lived intangible assets . Through this evaluation, management concluded that the fair value of goodwill allocated to the Nutrition business unit as well as the fair value of the Nutrisystem tradename were below their carrying amounts, and i 119.5 Nutrisystem . A reconciliation of our goodwill balance is as follows: (In thousands) Healthcare Nutrition Consolidated Balance, January 1, 2020 $ 334,680 $ 319,955 $ 654,635 Impairment loss — (119,500 ) $ (119,500 ) Balance, June 30, 2020 $ 334,680 $ 200,455 $ 535,135 At June 30, 2020 and December 31, 2019, intangible assets not subject to amortization consist of tradenames of $509.0 million and $ 589.0 |
Marketing Expenses
Marketing Expenses | 6 Months Ended |
Jun. 30, 2020 | |
Marketing And Advertising Expense [Abstract] | |
Marketing Expenses | 6 . Marketing Expenses Marketing expense includes media, advertising production, marketing and promotional expenses and payroll-related expenses, including share-based payment arrangements, for personnel engaged in these activities. Media expense was $45.1 million and $122.4 million for the three and six months ended June 30, 2020, respectively, and $47.3 million and $67.5 million for the three and six months ended June 30, 2019 ( from March 8, 2019 forward) June 30, 2020 and December 31, 2019 |
Share-Based Compensation
Share-Based Compensation | 6 Months Ended |
Jun. 30, 2020 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Share-Based Compensation | 7 . Share-Based Compensation We currently have h e a e d a d oc n e performance-based stock units, and market stock units h ba a a d a e o l e e o o c l We recognize share-based compensation expense for the market stock units if the requisite service period is rendered, even if the market condition is never satisfied. For the three and six months ended June 30, 2020, we recognized total share-based compensation costs of $2.9 million and $3.7 million, respectively. For the three and six months ended June 30, 2019, we recognized total share-based compensation costs of $6.9 million and $9.3 million, respectively, including $0.5 million and $0.6 million, respectively, recorded to restructuring and related charges. We account for forfeitures as they occur. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 8 . Incom Taxes For the three months ended June 30, 2020 and 2019, we had an effective income tax rate of 17.6% and 30.9%, respectively. During the second quarter of 2020, our effective income tax rate was lower than our statutory rate, primarily due to a change in the estimated annual effective income tax rate. During the second quarter of 2019, we had nondeductible expenses related to the acquisition of Nutrisystem that caused an increase in our effective income tax rate. For the six months ended June 30, 2020 and 2019, we had an effective tax benefit rate of 5.1% and an effective income tax rate of 37.6%, respectively. For the six months ended June 30, 2020, our effective tax benefit rate was lower than our statutory benefit rate primarily due to the nondeductible goodwill impairment loss of $119.5 million recorded during the first quarter. For the six months ended June 30, 2019, our effective income tax rate increased due to nondeductible expenses related to the acquisition of Nutrisystem as well as two adjustments related to the acquisition that collectively increased our income tax expense for such period by approximately $2.7 million: (i) We file income tax returns in the U.S. Federal jurisdiction and in various state and foreign |
Leases
Leases | 6 Months Ended |
Jun. 30, 2020 | |
Leases [Abstract] | |
Leases | 9 . Leases We maintain lease agreements principally for our office spaces and certain equipment. In addition, certain of our contracts, such as those with our fulfillment vendor related to our warehouse space or contracts with certain equipment vendors, contain embedded leases. We maintain three sublease agreements with respect to two of our office locations, each of which continues through the initial term of our master lease agreement. Such sublease income and payments, while they reduce our rent expense, are not considered in the value of the right-of-use asset or lease liability. With the exception of two finance leases related to a network server and office equipment, all of our leases are classified as operating leases The following table shows the components of lease expense for the three and six months ended June 30, 2020 and 2019: Three Months Ended June 30, Six Months Ended June 30, (In thousands) 2020 2019 2020 2019 Finance lease cost: Amortization of leased assets $ 162 $ 12 $ 324 $ 24 Interest of lease liabilities 22 2 47 4 Operating lease cost 3,675 3,804 7,350 6,520 Short-term lease cost 137 116 266 149 Total lease cost before subleases $ 3,996 $ 3,934 $ 7,987 $ 6,697 Sublease income (1,363 ) (1,356 ) (2,764 ) (2,700 ) Total lease cost, net $ 2,633 $ 2,578 $ 5,223 $ 3,997 Supplemental cash flow information related to leases is as follows: Three Months Ended June 30, Six Months Ended June 30, (In thousands) 2020 2019 2020 2019 Cash paid for amounts included in the measurement of lease liabilities Operating cash flow attributable to operating leases $ (2,545 ) $ (3,561 ) $ (5,611 ) $ (5,108 ) Operating cash flow attributable to finance leases (22 ) (2 ) (47 ) (4 ) Financing cash flow attributable to finance leases (155 ) (11 ) (306 ) (22 ) Supplemental noncash information: Right-of-use assets obtained in exchange for operating lease liabilities (1) — — — 48,972 Right-of-use assets obtained in exchange for finance lease liabilities (1) — — — 181 (1) No new leases were entered into during the six months ended June 30 |
Debt
Debt | 6 Months Ended |
Jun. 30, 2020 | |
Debt Disclosure [Abstract] | |
Debt | 1 0 . De b The C o an o i n (In thousands) June 30, 2020 December 31, 2019 Term Loan A $ 280,000 $ 288,750 Term Loan B 775,000 786,250 Revolving Credit Facility — 19,850 1,055,000 1,094,850 Less: deferred loan costs and original issue discount (42,678 ) (46,723 ) Total debt 1,012,322 1,048,127 Less: current portion (9,775 ) — Total non-current portion of debt $ 1,002,547 $ 1,048,127 Credit Facility In connection with the consummation of the Merger, on March 8, 2019, we entered into a new Credit and Guaranty Agreement (the “Credit Agreement”) with a group of lenders, Credit Suisse AG, Cayman Islands Branch, as general administrative agent, term facility agent and collateral agent, and SunTrust Bank, as revolving facility agent and swingline lender. The Credit Agreement provides us with (i) a $350.0 million term loan A facility (“Term Loan A”), (ii) an $830.0 million term loan B facility (“Term Loan B” and, together with Term Loan A, the “Term Loans”), (iii) a $125.0 million revolving credit facility that includes a $35.0 million sublimit for swingline loans and a $50.0 million sublimit for letters of credit (the “Revolving Credit Facility”; Term Loan A, Term Loan B and the Revolving Credit Facility are sometimes herein referred to collectively as the “Credit Facilities”), and (iv) uncommitted incremental accordion facilities in an aggregate amount at any date equal to the greater of $125.0 million or 50% of our consolidated EBITDA for the then-preceding four fiscal quarters, plus additional amounts based on, among other things, satisfaction of certain financial ratio requirements. As of June 30, 2020, outstanding debt under the Credit Agreement was $1,012 million, and availability under the Revolving Credit Facility totaled $124.5 million as calculated under the most restrictive covenant. We are required to repay Term Loan A loans in consecutive quarterly installments, each in the amount of 2.50% of the aggregate initial amount of such loans, payable beginning on June 30, 2019 and on the last day of each succeeding quarter thereafter until maturity on March 8, 2024, at which time the entire outstanding principal balance of such loans is due and payable in full. We are required to repay Term Loan B loans in consecutive quarterly installments, each in the amount of 0.75% of the aggregate initial amount of such loans, payable beginning on June 30, 2019 and on the last day of each succeeding quarter thereafter until maturity on March 8, 2026, at which time the entire outstanding principal balance of such loans is due and payable in full. We are permitted to make voluntary prepayments of borrowings under the Term Loans at any time without penalty. From March 8, 2019 through June 30 , 2020 The Credit Agreement contains a financial covenant that requires us to maintain maximum ratios or levels of consolidated total net debt to consolidated adjusted EBITDA, calculated as provided in the Credit Agreement (the “Net Leverage Ratio”), of 5.75 :1.00 for all test dates occurring on or after December 31, 2019 but prior to December 31, 2020, 5.25 :1.00 for all test dates occurring on or after December 31, 2020 but prior to December 31, 2021, and 4.75 :1.00 for all test dates occurring on or after December 31, 2021. As of June 30 , 2020, we were in compliance with all of the covenant requirements of the Credit Agreement, and our Net Leverage Ratio was equal to . Based on our current assumptions with respect to the COVID-19 pandemic, including, among other things, the duration of the temporary closures of our fitness partner locations and the average monthly total participation levels of our members after such locations reopen, we currently believe we will be in compliance with the Net Leverage Ratio covenant over the next 12 months; however, given the significant uncertainty relating to the potential impacts of the COVID-19 pandemic on our business going forward, there are potential scenarios under which we could fail to comply with the Net Leverage Ratio covenant. Our failure to comply with the Net Leverage Ratio covenant would result in an event of default that, if not waived, could have a material adverse effect on our financial condition, results of operations or debt service capability. We will continue to monitor our projected ability to comply with all covenants under the Credit Agreement, including the Net Leverage Ratio, which could include seeking an amendment to or waiver of the Net Leverage Ratio covenant if necessary. Borrowings under the Credit Agreement bear interest at variable rates based on a margin or spread in excess of either (1) one-month, two-month, three-month or six-month LIBOR (or, with the approval of all lenders holding the particular class of loans, 12-month LIBOR), which may not be less than zero, or (2) the greatest of (a) the prime lending rate of the agent bank for the particular facility, (b) the federal funds rate plus 0.50%, and (c) one-month LIBOR plus 1.00% (the “Base Rate”), as selected by the Company. The LIBOR margin for Term Loan A loans is 4.25%, the LIBOR margin for Term Loan B loans is 5.25% and the LIBOR margin for revolving loans varies between 3.75% and 4.25%, depending on our total Net Leverage Ratio. The Base Rate margin for Term Loan A loans is 3.25%, the Base Rate margin for Term Loan B loans is 4.25% and the Base Rate margin for revolving loans varies between 2.75% and 3.25%, depending on our total Net Leverage Ratio. In May 2019, we entered into eight amortizing interest rate swap agreements, each of which matures in May 2024. Under these agreements, we receive a variable rate of interest based on LIBOR, and we pay a fixed rate of interest equal to approximately 2.2% plus a spread, as described in the preceding sentences. As of June 30, 2020, these interest rate swap agreements had current notional amounts totaling $800.0 million. The Credit Agreement also provides for annual commitment fees ranging between 0.250% and 0.500% of the unused commitments under the Revolving Credit Facility, depending on our total Net Leverage Ratio, and annual letter of credit fees on the daily outstanding availability under outstanding letters of credit at the applicable LIBOR margin for the Revolving Credit Facility, depending on our total Net Leverage Ratio. Extensions of credit under the Credit Agreement are secured by guarantees from substantially all of the Company’s active material domestic subsidiaries and by security interests in substantially all of Company’s and such subsidiaries’ assets. The Credit Agreement contains a financial covenant that requires us to maintain specified maximum ratios or levels of consolidated total net debt to EBITDA, calculated as provided in the Credit Agreement. The Credit Agreement also contains various other affirmative and negative covenants customary for financings of this type that, subject to certain exceptions, impose restrictions and limitations on the Company and certain of the Company’s subsidiaries with respect to, among other things, indebtedness; liens; negative pledges; restricted payments (including dividends, distributions, buybacks, redemptions, repurchases with respect to equity interests, and payments, redemptions, retirements, purchases, acquisitions, defeasance, exchange, conversion, cancellation or termination with respect to junior lien, subordinated or unsecured debt); restrictions on subsidiary distributions; loans, advances, guarantees, acquisitions and other investments; mergers and other fundamental changes; sales and other dispositions of assets (including equity interests in subsidiaries); sale/leaseback transactions; transactions with affiliates; conduct of business; amendments and waivers of organizational documents and material junior debt agreements; and changes to fiscal year. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2020 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 1 1 . Commitment an Contingencies Shareholder Lawsuits: Weiner Lawsuit, Consolidated Derivative Lawsuit, and Witmer Lawsuit On November 6, 2017, United Healthcare issued a press release announcing expansion of its fitness benefits (“United Press Release”), and the market price of the Company's shares of common stock, par value $.001 per share (“ Common Stock ”) dropped on that same day. In connection with the United Press Release, four lawsuits were filed against the Company . A s further described below , three of the four lawsuits have been dismissed . We are currently not able to predict the probable outcome of the remaining matter or to reasonably estimate a range of potential loss, if any. We intend to vigorously defend ourselves against the remaining complaint. On November 20, 2017, Eric Weiner, claiming to be a stockholder of the Company, filed a complaint on behalf of stockholders who purchased Common Stock between February 24, 2017 and November 3, 2017 (“Weiner Lawsuit”). The Weiner Lawsuit was filed as a class action in the U.S. District Court for the Middle District of Tennessee, naming as defendants the Company, the Company's chief executive officer, chief financial officer and a former executive who served as both chief accounting officer and interim chief financial officer. The complaint alleges that the defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and Rule 10b-5 promulgated under the Exchange Act in making false and misleading statements and omissions related to the United Press Release. The complaint seeks monetary damages on behalf of the purported class. On April 3, 2018, the Court entered an order appointing the Oklahoma Firefighters Pension and Retirement System as lead plaintiff, designated counsel for the lead plaintiff, and established certain deadlines for the case. On June 4, 2018, plaintiff filed a first amended complaint. . On January 26, 2018 and August 24, 2018, individuals claiming to be stockholders of the Company filed shareholder derivative actions, on behalf of the Company, in the U.S. District Court for the Middle District of Tennessee, naming the Company as a nominal defendant and certain current and former executives and directors as defendants. On October 15, 2018, the two complaints were consolidated (the “Consolidated Derivative Lawsuit”). On May 15, 2019, a consolidated amended complaint was filed. The consolidated amended complaint asserts claims for violation of Section 10(b), 14(a), and 29(b) of the Exchange Act, breach of fiduciary duty, waste of corporate assets, and unjust enrichment. Plaintiffs seek to recover damages on behalf of the Company, certain corporate governance and internal procedural reforms, and other equitable relief. . Shareholder Lawsuits: Strougo, Cobb, and Delaware Lawsuits On February 25, 2020, Robert Strougo, claiming to be a stockholder of the Company, filed a complaint on behalf of stockholders who purchased Common Stock between March 8, 2019 and February 19, 2020 (the "Strougo Lawsuit"). The Strougo Lawsuit was filed as a class action in the U.S. District Court for the Middle District of Tennessee, naming the Company, the Company's chief financial officer and former chief executive officer as defendants. The complaint alleges that the defendants violated Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 promulgated under the Exchange Act in making false and misleading statements and omissions related to the performance of the Nutrisystem business that the Company acquired on March 8, 2019. The complaint seeks monetary damages on behalf of the purported class. Three parties have filed a motion seeking to be appointed lead plaintiff and counsel, but the Court has not ruled on those motions. Given the uncertainty of litigation and the preliminary stage of the case, we are currently not able to predict the probable outcome of the matter or to reasonably estimate a range of potential loss, if any. On April 9, 2020, John Cobb, claiming to be a stockholder of the Company, filed a derivative complaint in the United States District Court for the Middle District of Tennessee naming the Company as a nominal defendant and certain directors and the Company’s former chief executive officer and current chief financial officer as defendants (the “Cobb Lawsuit”) . The complaint asserted claims for breach of Section 14(a) of the Exchange Act, breach of fiduciary duty , waste of corporate assets, failure of internal controls, and unjust enrichment, largely tracking the factual allegations in the Strougo L awsuit. The plaintiff seeks monetary damages on behalf of the Company, restitution, and certain corporate governance and internal procedural ref orms. On June 9, 2020, the United States Magistrate Judge approved the parties’ stipulation to a stay the case pending the resolution of defendants’ anticipated motion to dismiss in the Strougo case. Given the uncertainty of litigation and the preliminary stage of the case, we are currently not able to predict the probable outcome of the matter or to reasonably estimate a range of potential loss, if any. In July 2020, three putative derivative complaints were filed in the United States District Court for the District of Delaware by the following individuals claiming to be stockholders of the Company: Patrick Yerby, Thomas R. Conte, Melvyn Klein, and Mark Ridendour (the “Delaware Derivative Lawsuits”). The complaints largely track the allegations, named defendants, asserted claims, and requested relief of the Cobb Lawsuit. Once the Delaware Derivative Lawsuits are consolidated by the District Court, the Company intends to seek a stay similar to that entered in the Cobb Lawsuit. Given the uncertainty of litigation and the preliminary stage of the case, we are not currently able to predict the probable outcome of the matter or to reasonably estimate a range of potential loss, if any. We intend to vigorously defend ourselves against the Strougo Lawsuit, Cobb Lawsuit, and Delaware Derivative Lawsuit. Trademark Lawsuit: Pacific Packaging Lawsuit On May 31, 2019, Pacific Packaging Concepts, Inc. (“Pacific Packaging”) filed a complaint in the U.S. District Court for the Central District of California, Western Division, naming as defendants two subsidiaries of the Company; Nutrisystem, Inc. and Nutri/System IPHC, Inc. In its complaint, Pacific Packaging alleged that the defendants’ use of Pacific Packaging’s federally registered trademark, Fresh Start, in advertisements for its weight management program and shakes constitutes federal trademark infringement, counterfeit trademark infringement, false designation of origin, federal trademark dilution, unfair competition, false advertising, common law unfair competition, and common law trademark infringement. The complaint seeks injunctive relief and monetary damages in an unspecified amount. On August 29, 2019, the defendants filed their Answer to Complaint. Given the uncertainty of litigation and the preliminary stage of the case, we are currently not able to predict the probable outcome of the matter or to reasonably estimate a range of potential loss, if any. We intend to vigorously defend ourselves against this complaint. Other Additionally, from time to time, we are subject to contractual disputes, claims and legal proceedings that arise in the ordinary course of our business. Some of the legal proceedings pending against us as of the date of this report are expected to be covered by insurance policies. As these matters are subject to inherent uncertainties, our view of these matters may change in the future. We expense legal costs as incurred |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jun. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | 1 2 . Fai Valu Measu r ments We account for certain assets and liabilities at fair value. Fair value is defined as the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date, assuming the transaction occurs in the principal or most advantageous market for that asset or liability. Fair Value Hierarchy The hierarchy below lists three levels of fair value based on the extent to which inputs used in measuring fair value are observable in the market. We categorize each of our fair value measurements in one of these three levels based on the lowest level input that is significant to the fair value measurement in its entirety. These levels are: Level 1: Quoted prices in active markets for identical assets or liabilities; Level 2: Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-based valuation techniques in which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and Level 3: Unobservable inputs that are supported by little or no market activity and typically reflect management's estimates of assumptions that market participants would use in pricing the asset or liability. Asse t i e i e n i T he following table presents our assets and liabilities measured at fair value on a recurring basis at June 30, 2020 and December 31, 2019. Level 2 (In thousands) June 30, 2020 December 31, 2019 Liabilities: Interest rate swap agreements $ 44,407 $ 16,238 The fair values of interest rate swap agreements are primarily determined based on the present value of future cash flows using internal models and third-party pricing services with observable inputs, including interest rates, yield curves and applicable credit spreads. Asse t i e i Non- e n i We measure certain assets at fair value on a nonrecurring basis in the fourth quarter of each year, including the following: • reporting units measured at fair value as part of a goodwill impairment test; and • indefinite-lived intangible assets measured at fair value for impairment assessment. Each of these assets above is classified as Level 3 within the fair value hierarchy. The COVID-19 pandemic has had and is having an adverse impact on the overall economy, resulting in rapidly changing market and economic conditions that have impacted the Company. In March 2020, we experienced a significant decline in the Company’s market capitalization and in the actual and forecasted operating results of our Healthcare segment, in addition to the unfavorable change in market conditions. As a result, management concluded that there were triggering events during the first quarter of 2020 necessitating an impairment evaluation of our goodwill (for each of our reporting units) and indefinite-lived intangible assets (which consist of the Nutrisystem tradename and the SilverSneakers tradename). We estimated the fair value of each reporting unit using a combination of a discounted cash flow model and a market-based approach, and we reconciled the aggregate fair value of our reporting units to our consolidated market capitalization. Estimating fair value requires significant judgments, including management’s estimate of future cash flows of each reporting unit (which is dependent on internal forecasts of projected income), estimation of the long-term growth rates of future revenues for our reporting units, the terminal growth rate of revenue, the tax rate, and determination of the weighted average cost of capital, as well as relevant comparable company revenue and earnings multiples and market participant acquisition premium for the market-based approaches. Changes in these estimates and assumptions could materially affect the estimate of fair value and goodwill impairment for each reporting unit. There is significant uncertainty relating to the potential future impacts of the COVID-19 pandemic on our business and the overall market. Certain significant inputs used in the estimation of fair value were adversely impacted by the changing market and economic conditions discussed above, most notably the weighted average cost of capital, resulting in a lower estimated fair value for each of our reporting units. Before we performed the impairment analysis during the first quarter, the estimated fair value of the Nutrition reporting unit was equal to its carrying value due to an impairment loss we recorded in the fourth quarter of 2019. Because there was no excess of estimated fair value over carrying value (“headroom”) for the Nutrition reporting unit at the beginning of 2020, the decrease in the estimated fair value of the Nutrition reporting unit during the first quarter of 2020 resulted in an impairment of the carrying value of goodwill for the Nutrition reporting unit, and we recorded a $ 119.5 million goodwill impairment loss. None of the impaired goodwill is deductible for tax purposes, and there is no cash tax benefit related to the impairment. For the Healthcare reporting unit, t he fair value of the reporting unit exceeded its carrying amount, and we determined that the carrying value of goodwill was not impaired. Also during the first quarter of 2020, we estimated the fair value of indefinite-lived intangible assets, which consisted of two tradenames (the Nutrisystem tradename and the SilverSneakers tradename), using the relief-from-royalty method, which required significant assumptions such as the long-term growth rate of future revenues, the royalty rate for such revenue, and a discount rate. Changes in these estimates and assumptions could materially affect the estimate of fair value for the tradenames. Similar to the goodwill impairment analysis described above, the discount rate used in the estimation of fair value of the tradenames was adversely impacted by the changing market and economic conditions discussed above, resulting in a lower estimated fair value for each tradename. D ue to an impairment loss recorded in the fourth quarter of 2019 related to the Nutrisystem tradename and goodwill, the estimated fair value of the Nutrisystem tradename was equal to its carrying value at the beginning of 2020. The decrease in the estimated fair value of the Nutrisystem tradename during the first quarter of 2020 resulted in an impairment of tradename, and we recorded an $80.0 million impairment loss related to the Nutrisystem tradename. None of this impairment loss is deductible for tax purposes, and there is no cash tax benefit related to the impairment. Based on our impairment assessment of the SilverSneakers tradename, we determined that the carrying value of the tradename was not impaired as of the measurement date. There were no impairment triggers during the second quarter of 2020 related to our goodwill or indefinite-lived intangible assets. Fair Value of Other Financial Instruments The e a n n m a o C a a e y r e o n um e s a o D e i a a b o i u e h A e m u e e e is det e m ine b a s e o th fai val u hierarch a disc u sse a bove T he Term Loans are e o l i a e quotes as of June 30, 2020 from dealers who stand ready and willing to transact at those prices Th e volvin redi acilit The estimated fair value and carrying amount of outstanding borrowings under the Term Loans at June 30, 2020 were $921.2 million and $1,012.3 million, respectively. There were no outstanding borrowings under the Revolving Credit Facility at June 30, 2020. |
Derivative Instruments and Hedg
Derivative Instruments and Hedging Activities | 6 Months Ended |
Jun. 30, 2020 | |
Derivative Instruments And Hedging Activities Disclosure [Abstract] | |
Derivative Instruments and Hedging Activities | 1 3 . Derivative Instruments and Hedging Activities We use derivative instruments to manage differences in the amount, timing, and duration of our known or expected cash payments related to our outstanding debt (i.e., interest rate risk) erivatives are designated and qualify as a hedge of the exposure to variability in expected future cash flows and are therefore considered cash flow hedges. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether we have elected to designate a derivative in a hedging relationship and apply hedge accounting, and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. We do not use derivatives for trading or speculative purposes and currently do not have any derivatives that are not designated as hedges. Cash Flow Hedges of Interest Rate Risk Our objectives in using interest rate derivatives are to add stability to interest expense and to manage our exposure to interest rate movements. To accomplish this objective, we primarily use interest rate swaps as part of our interest rate risk management strategy. The counterparties to the interest rate swap agreements expose us to credit risk in the event of nonperformance by such counterparties. However, at June 30, 2020 Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for our making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. In May 2019, we entered into eight amortizing interest rate swap agreements, each of which matures in May 2024. Under these agreements, we receive a variable rate of interest based on LIBOR, and we pay a fixed rate of interest equal to approximately 2.2% plus a spread (see Note 10). As of June 30, 2020, these interest rate swap agreements had current notional amounts totaling $800.0 million. We record derivatives that are designated and qualify as cash flow hedges at estimated fair value in the consolidated balance sheet, with the related gains and losses recorded in accumulated other comprehensive income or loss ("accumulated OCI") and subsequently reclassified into interest expense in the same period(s) during which the hedged transaction affects earnings Amounts reported in accumulated OCI related to derivatives will be reclassified to interest expense as we make interest payments on our variable-rate debt. The estimated gross fair values of derivative instruments and their classification on the consolidated balance sheet at June 30, 2020 and December 31, 2019 were as follows: (In thousands) June 30, 2020 December 31, 2019 Liabilities: Derivatives designated as hedging instruments: Current portion of long-term liabilities $ 15,664 $ 4,947 Other long-term liabilities 28,743 11,291 $ 44,407 $ 16,238 The following table presents the effect of cash flow hedge accounting on accumulated OCI as of June 30 (In thousands) For the Three Months Ended For the Six Months Ended Derivatives in Cash Flow Hedging Relationships June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019 Loss related to effective portion of derivatives recognized in accumulated OCI, gross of tax effect $ 5,020 $ 16,144 $ 32,772 $ 16,144 Gain (loss) related to effective portion of derivatives reclassified from accumulated OCI to interest expense, gross of tax effect $ (3,482 ) $ 160 $ (4,603 ) $ 160 |
Earnings (Loss) Per Share
Earnings (Loss) Per Share | 6 Months Ended |
Jun. 30, 2020 | |
Earnings Per Share [Abstract] | |
Earnings (Loss) Per Share | 14. Earning (Loss) Pe Sha r We use the two-class method to calculate earnings per share as the unvested restricted stock awards outstanding under our equity incentive plan are participating shares with nonforfeitable rights to dividends. Under the two-class method, we compute earnings per share of Common Stock by dividing the sum of distributed earnings to common stockholders (currently not applicable as we do not pay dividends) and undistributed earnings allocated to common stockholders by the weighted average number of outstanding shares of Common Stock for the period. In applying the two-class method, we allocate undistributed earnings to both shares of Common Stock and participating securities based on the number of weighted average shares outstanding during the period. Any undistributed losses are not allocated to unvested restricted stock as the restricted stockholders are not obligated to share in the losses. Following is a r e c o ncili a tion of the n u merat o r a n d denom i nat o r of bas i c and d iluted earnin g s (loss) p e r share f o r the three and six months ended June 30, 2020 a n d 2019: (In thousands except per share data) Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 Numerator: Net income (loss) $ 28,511 $ 18,137 $ (169,595 ) $ 22,351 Net income allocated to unvested restricted stock (20 ) (93 ) — (77 ) Net income (loss) allocated to shares of Common Stock $ 28,491 $ 18,044 $ (169,595 ) $ 22,274 Denominator: Shares used for basic income (loss) per share 48,711 47,790 48,662 45,165 Effect of dilutive stock options and restricted stock units outstanding: Non-qualified stock options 8 93 — 110 Restricted stock units 75 578 — 444 Shares used for diluted income (loss) per share (1) 48,794 48,461 48,662 45,719 Earnings (loss) per share: Basic $ 0.59 $ 0.38 $ (3.49 ) $ 0.49 Diluted (1) $ 0.58 $ 0.37 $ (3.49 ) $ 0.49 Dilutive securities outstanding not included in the computation of earnings per share because their effect is anti-dilutive: Non-qualified stock options 235 71 202 76 Restricted stock units 750 288 544 172 Restricted stock awards 32 128 35 64 Performance-based stock units 95 — 64 — Market-based stock units 49 — 25 — (1) The impact of potentially dilutive securities for the six months ended June 30, 2020 was not considered because the impact would be anti-dilutive. Market stock units and performance stock units outstanding are considered contingently issuable shares, and certain of these stock units were excluded from the calculations of diluted earnings per share for all periods presented as the performance criteria had not been met as of the end of the reporting periods. |
Accumulated OCI
Accumulated OCI | 6 Months Ended |
Jun. 30, 2020 | |
Accumulated Other Comprehensive Income Loss Net Of Tax [Abstract] | |
Accumulated OCI | 15. Accumulated OCI The following tables summarize the changes in accumulated OCI, net of tax, for the six months ended June 30, 2020: (In thousands) Net Change in Fair Value of Interest Rate Swaps Accumulated OCI, net of tax, as of January 1, 2020 $ (12,091 ) Other comprehensive income (loss) before reclassifications, net of tax of $8,370 (24,402 ) Amounts reclassified from accumulated OCI, net of tax of $1,175 3,428 Accumulated OCI, net of tax, as of June 30, 2020 $ (33,065 ) The following table presents details about reclassifications out of accumulated OCI for the six months ended June 30, 2020: (In thousands) Six Months Ended June, 2020 Statement of Operations Classification Interest rate swaps $ 4,603 Interest expense (1,175 ) Income tax expense $ 3,428 Net of tax See Note 13 for a further discussion of our interest rate swaps. |
Segment Disclosures and Concent
Segment Disclosures and Concentrations of Risk | 6 Months Ended |
Jun. 30, 2020 | |
Segment Reporting [Abstract] | |
Segment Disclosures and Concentrations of Risk | 16. Segment Disclosures and Concentrations of Risk Background and Basis of Organization Following the acquisition of Nutrisystem in March 2019, we organize and manage our operations within two reportable segments, based on the types of products and services they offer: Healthcare and Nutrition. The Healthcare segment derives its revenues from one Segment Revenues, Profit or Loss, and Assets Our chief operating decision maker evaluates performance and allocates resources based on each segment’s EBITDA excluding acquisition and integration costs, impairment loss, restructuring and related charges, CEO transition costs, and direct, incremental costs related to COVID-19. The accounting : (In thousands) Three Months Ended June 30, 2020 2019 Healthcare Nutrition Total Segments Healthcare Nutrition Total Segments Revenues $ 81,923 $ 180,675 $ 262,598 $ 157,481 $ 182,896 $ 340,377 (1) Consolidated income before income taxes $ 34,618 $ 26,252 Acquisition and integration costs 2,049 8,999 Impairment loss — — CEO transition costs 1,745 — COVID-19 costs 1,260 — Restructuring and related charges 1,009 2,352 Interest expense 21,235 23,661 Depreciation and amortization 12,919 9,084 Adjusted EBITDA $ 41,472 $ 33,363 $ 74,835 $ 35,681 $ 34,667 $ 70,348 (In thousands) Six Months Ended June 30, 2020 2019 Healthcare Nutrition Total Segments Healthcare Nutrition Total Segments Revenues $ 241,615 $ 358,638 $ 600,253 $ 314,008 $ 240,463 $ 554,471 (1) Consolidated income (loss) before income taxes $ (178,633 ) $ 35,834 Acquisition and integration costs 4,844 26,049 Impairment loss 199,500 — CEO transition costs 4,332 — COVID-19 costs 1,260 — Restructuring and related charges 1,752 3,943 Interest expense 42,898 31,328 Depreciation and amortization 27,682 12,666 Adjusted EBITDA $ 71,719 $ 31,916 $ 103,635 $ 61,810 $ 48,010 $ 109,820 (1) The figure for total segments equals the consolidated figure for such item. Our total assets by segment were as follows: (In thousands) June 30, 2020 December 31, 2019 Healthcare $ 527,353 $ 526,013 Nutrition 853,817 1,099,892 Total assets $ 1,381,170 $ 1,625,905 Concentrations of Risk As of June 30, 2020, we were subject to concentration of revenue risk related to the services that we provide. For the three and six months ended June 30, 2020, a significant portion (19% and 28%, respectively) of our consolidated revenues was derived from our SilverSneakers he average monthly total participation levels of our SilverSneakers members were significantly below historical levels, and we also experienced a decline in paid subscribers for Prime Fitness, each of which adversely impacted revenues in our Healthcare segment. |
Basis of Presentation and Rec_2
Basis of Presentation and Recent Developments (Policies) | 6 Months Ended |
Jun. 30, 2020 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Basis of Presentation and Recent Developments | Our financial statements and accompanying notes are prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”). In our opinion, the accompanying consolidated financial statements of Tivity Health ® ® By their nature, estimates are subject to an inherent degree of uncertainty. Due We have reclassified certain items in prior periods to conform to current classifications. Following the acquisition of Nutrisystem (the “Merger”), we organize and manage our operations within two reportable segments, based on the types of products and services they offer: Healthcare and Nutrition. The Healthcare segment is comprised our legacy business and includes SilverSneakers ® senior fitness, Prime ® Fitness, WholeHealth Living ® and Wisely Well TM ® and the South Beach Diet ® programs. We have omitted certain financial information that is normally included in financial statements prepared in accordance with U.S. GAAP but that is not required for interim reporting purposes. You should read the accompanying consolidated financial statements in conjunction with the financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2019. Recent Developments In January 2020, the Secretary of the U.S. Department of Health and Human Services (“HHS”) declared a national public health emergency due to a novel strain of coronavirus, which causes the disease known as “COVID-19”. In March 2020, the World Health Organization characterized the outbreak of COVID-19 as a global pandemic, and COVID-19 continues to spread throughout the United States and other countries. Many state and local governments, together with public health officials, have recommended and mandated precautions to mitigate the spread of COVID-19, including ordering closure of certain businesses and imposing stay-at-home orders and social distancing guidelines for individuals. Such measures have resulted in significantly reduced demand for many businesses that have continued in operation. By March 31, 2020, substantially all of the fitness centers in our national network were temporarily closed, which had an adverse impact on the results of operations in our Healthcare segment for the first quarter of 2020 because a significant member visits to a fitness partner location. A substantial number of o ur fitness partner locations remained closed through April, with some locations reopening in May and additional locations reopening in June. For the month of June 2020, approximately 66% of our fitness partner locations reported at least one visit from our SilverSneakers program. For the second quarter of 2020, the average monthly total participation levels of our SilverSneakers members were significantly below historical levels, and we also experienced a decline in paid subscribers for Prime Fitness, each of which adversely impacted revenues in our Healthcare segment. We do not believe that COVID-19-related developments had a material impact on the results of operations or cash flows of our Nutrition segment for the first or second quarters of 2020. While overall we did not experience any significant disruptions, interruptions, or increased costs related to our supply chain, inventory, or distribution channels as a result of COVID-19, we experienced delays in fulfilling orders for our Nutrition segment’s products at certain of our warehouses due to some employees of our fulfillment provider testing positive for COVID-19 overtime for employees of our fulfillment provider as well as additional shipping and related charges as we transferred the fulfillment of certain orders to other warehouses that were farther from the customer’s delivery destination . We have taken a number of actions in response to the pandemic, including the following: • Given the continued uncertainty surrounding COVID-19, in March 2020, we borrowed $75 million under our Revolving Credit Facility as a precautionary measure to increase our cash position and maintain financial flexibility. We repaid such $75 million in full in June 2020. As of June 30, 2020, outstanding debt under our credit agreement was $1,012.3 million, and we had $60.3 million of cash and cash equivalents. In July 2020, we repaid $24.8 million of principal on the term loans under our credit agreement, resulting in our next required quarterly installment being due in December 2021. As of June 30, 2020, we had a working capital deficit of $5.7 million. While the COVID-19 pandemic has created significant uncertainty as to general economic and market conditions for the remainder of 2020 and beyond, as of the date of this report, we believe our cash on hand, expected cash flows from operations, and anticipated available credit under the Credit Agreement (as defined below) will be sufficient to fund our operations, principal and interest payments, and capital expenditures for the next 12 months • We are taking a variety of measures to ensure the availability and functioning of our critical infrastructure, to promote the safety and security of our employees and to support the communities in which we operate. These measures include implementing remote working arrangements for employees where practicable. We are following public and private sector policies and initiatives to reduce the transmission of COVID-19, such as the imposition of travel restrictions, the promotion of social distancing, and the adoption of work-from-home arrangements. • We are focused on preserving our liquidity and managing our cash flow, including, but not limited to, managing our working capital, optimizing tax savings under the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) and other COVID-19-related legislation, curtailing capital expenditures, reducing discretionary spending, and reducing compensation costs. o In April 2020, we furloughed 13% of our approximately 1,000 employees. In June 2020, some of these furloughed employees’ positions were eliminated (in addition to other position eliminations, resulting in approximately 8% of our employees being terminated), and we extended the furlough for substantially all of the remaining furloughed employees through the end of 2020. Also in June 2020, we placed an additional 2% of our total employees on furlough through the end of 2020. o Also in April 2020, the Compensation Committee of the Company’s Board of Directors (the “Board”) approved a 25% reduction in base salary for the Company’s executive officers and certain other employees for the period from April 20, 2020 through August 23, 2020. In June 2020, the Compensation Committee determined to extend such reductions in base salary through December 31, 2020 . Additionally, the Board approved a 100% reduction in the annual cash retainer and annual committee retainers payable to non-management members of the Board who stood for reelection at the 2020 Annual Meeting of Stockholders (except for Daniel G. Tully who does not receive compensation for his service on the Board) for a period of four months, beginning May 1, 2020 or as soon thereafter as reasonably practicable. In June 2020, the Board determined to extend such reduction in cash compensation to the Board through December 31, 2020. o Effective at the end of July 2020, the Compensation Committee suspended the Company matching contribution to the Company’s 401(k) plan. As a result of the COVID-19 pandemic, in March 2020, we experienced a significant decline in the Company’s market capitalization and in the actual and forecasted operating results of our Healthcare segment, in addition to the unfavorable change in market conditions which consist of the Nutrisystem tradename and the SilverSneakers tradename) Nutrition business unit as well as the fair value of the Nutrisystem tradename were below their carrying amounts, and we recorded an impairment loss of $ 199.5 million, including $ 80.0 million related to the Nutrisystem tradename and $ 119.5 million related to goodwill allocated to the Nutrition segment. There were no impairment trigger s during the second quarter of 2020 related to our goodwill or indefinite-lived intangible assets. |
Recent Relevant Accounting Standards | In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-04, “ Reference Rate Reform (“ASC 848”): Facilitation of the Effects of Reference Rate Reform on Financial Reporting”. ASC 848 contains temporary optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform, such as a transition away from the use of LIBOR. ASC 848 was effective for the Company as of January 1, 2020. The provisions of ASC 848 are available through December 31, 2022, at which time the reference rate replacement activity is expected to have been completed. The provisions of ASC 848 must be applied at a Topic, Subtopic or Industry Subtopic level for all transactions other than derivatives, which may be applied at a hedging relationship level. The accounting relief provided by ASC 848 is applicable only to legacy contracts if the amendments made to the agreements are solely for reference rate reform activities. Modifications that are unrelated to reference rate reform will scope out a given contract. ASC 848 allows for different elections to be made at different points in time, and the timing of those elections will be documented as applicable. For the avoidance of doubt, we intend to reassess the elections of optional expedients and exceptions included within ASC 848 related to our hedging activities and will document the election of these items on a quarterly basis. In March 2020, we elected the expedient that allows us to assume that our hedged interest payments are probable of occurring regardless of any expected modification in their terms related to reference rate reform. In addition, we have the option to change the method of assessing effectiveness upon a change in the critical terms of the derivative or the hedged transactions and upon the end of relief under ASC 848. In June 2020, we elected to (i) continue the method of assessing effectiveness as documented in the original hedge documentation and (ii) apply the expedient wherein the reference rate on the hypothetical derivative matches the reference rate on the hedging instrument. We will also apply the aforementioned elections to any future designated cash flow hedging relationship. In October 2018, the FASB issued ASU 2018-16, "Derivatives and Hedging (Topic 815): Inclusion of the Secured Overnight Financing Rate (“SOFR”) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes" (“ASU 2018-16”), which adds the OIS rate based on SOFR as a U.S. benchmark interest rate to facilitate the LIBOR to SOFR transition and provide lead time for entities to prepare for changes to interest rate risk hedging strategies. ASU 2018-16 is effective for fiscal years beginning after December 15, 2018, and interim periods within those years, with early adoption permitted. As of March 31, 2020, the benchmark interest rate in our existing interest rate swap agreements is LIBOR. The adoption of this standard did not have an impact on our financial position, results of operations, or cash flows . In January 2017, the FASB issued ASU No. 2017-04, “Intangibles - Goodwill and Other” (“ASU 2017-04”), which simplifies the subsequent measurement of goodwill by eliminating step two from the goodwill impairment test. ASU 2017-04 is effective for annual and interim impairment tests in fiscal years beginning after December 15, 2019 and is required to be applied prospectively. Early adoption is allowed for annual goodwill impairment tests performed on testing dates after January 1, 2017. We adopted ASU 2017-04 on October 1, 2019. As further discussed in Note 12, we recorded impairment losses related to goodwill during the fourth quarter of 2019 and the first quarter of 2020 In August 2018, the FASB issued ASU No. 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement” (“ASU 2018-13”), which changes the fair value measurement disclosure requirements of ASC 820. ASU 2018-13 is effective for fiscal years beginning on or after December 15, 2019, including interim periods therein, and is generally required to be applied retrospectively, except for certain components that are to be applied prospectively. The adoption of this standard did not have a material impact on our consolidated financial statements and related disclosures In August 2018, the FASB issued ASU No. 2018-15, “Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract,” which requires implementation costs incurred by customers in cloud computing arrangements to be deferred and recognized over the term of the arrangement, if those costs would be capitalized by the customer in a software licensing arrangement. This standard is effective for annual periods beginning after December 15, 2019, and interim periods within those fiscal years. The adoption of this standard did not have a material impact on our consolidated financial statements and related disclosures . In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”), which requires companies to measure credit losses for financial assets held at the reporting date utilizing a methodology that reflects current expected credit losses over the lifetime of such assets. ASU 2016-13 was effective for the Company on January 1, 2020 and is generally required to be applied using the modified retrospective approach, with limited exceptions for specific instruments. The adoption of this standard did not have a material impact on our consolidated financial statements and related disclosures. |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Summary of Information about Contract Assets and Contract Liabilities from Contracts with Customers | The following table provides information about receivables, contract assets and contract liabilities from contracts with customers: (In thousands) June 30, 2020 December 31, 2019 Contract assets $ 243 $ 95 Contract liabilities $ 10,937 $ 10,911 Significant changes in the contract liabilities (deferred revenue) balance during the period are as follows: Three Months Ended June 30, Six Months Ended June 30, (In thousands) 2020 2020 Revenue recognized that was included in the contract liability (deferred revenue) balance on January 1, 2020 $ (2,395 ) $ (8,112 ) Increases due to cash received for prepaid gift cards sold or unshipped food, excluding amounts recognized as revenue, and (decreases) due to returns $ (71 ) $ 8,138 |
Summary of Revenue from Prepaid Gift Cards Expected to be Recognized in Future Related to Performance Obligation Unsatisfied or Partially Satisfied | The following table includes estimated revenue from the prepaid gift cards expected to be recognized in the future related to performance obligations that are unsatisfied (or partially satisfied) at the end of the reporting period: (In thousands) Remaining 2020 $ 1,789 2021 1,901 2022 1,192 2023 468 2024 297 2025 220 $ 5,867 |
Healthcare | |
Summary of Revenue Disaggregated | The following table sets forth Healthcare revenue disaggregated by program. Revenue from our SilverSneakers program is predominantly contracted with Medicare Advantage and Medicare Supplement plans. (In thousands) Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 SilverSneakers $ 49,157 $ 122,899 $ 170,764 $ 245,922 Prime Fitness 19,047 29,751 51,858 58,494 WholeHealth Living 4,747 4,467 9,796 9,041 Other (1) 8,972 364 9,197 551 $ 81,923 $ 157,481 $ 241,615 $ 314,008 (1) For the three and six months ended June 30, 2020, other revenue in the table above includes $6.8 million from a well-being program with a large employer as well as $2.1 million of Wisely Well revenue. |
Nutrition | |
Summary of Revenue Disaggregated | The following table sets forth Nutrition segment revenue, from March 8, 2019 forward, disaggregated by the source of revenue: (In thousands) Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 Nutrisystem direct to consumer $ 165,118 $ 155,976 $ 320,509 $ 203,977 South Beach Diet direct to consumer 8,650 14,464 $ 21,414 19,118 Retail 3,902 8,728 9,350 13,032 QVC 2,901 3,522 7,088 4,044 Other 104 206 277 292 $ 180,675 $ 182,896 $ 358,638 $ 240,463 |
Intangible Assets and Goodwill
Intangible Assets and Goodwill (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Schedule of Reconciliation of Our Goodwill | A reconciliation of our goodwill balance is as follows: (In thousands) Healthcare Nutrition Consolidated Balance, January 1, 2020 $ 334,680 $ 319,955 $ 654,635 Impairment loss — (119,500 ) $ (119,500 ) Balance, June 30, 2020 $ 334,680 $ 200,455 $ 535,135 At June 30, 2020 and December 31, 2019, intangible assets not subject to amortization consist of tradenames of $509.0 million and $ 589.0 |
Leases (Tables)
Leases (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Leases [Abstract] | |
Schedule of Components of Lease Expense | The following table shows the components of lease expense for the three and six months ended June 30, 2020 and 2019: Three Months Ended June 30, Six Months Ended June 30, (In thousands) 2020 2019 2020 2019 Finance lease cost: Amortization of leased assets $ 162 $ 12 $ 324 $ 24 Interest of lease liabilities 22 2 47 4 Operating lease cost 3,675 3,804 7,350 6,520 Short-term lease cost 137 116 266 149 Total lease cost before subleases $ 3,996 $ 3,934 $ 7,987 $ 6,697 Sublease income (1,363 ) (1,356 ) (2,764 ) (2,700 ) Total lease cost, net $ 2,633 $ 2,578 $ 5,223 $ 3,997 |
Schedule of Supplemental Cash Flow Information Related to Leases | Supplemental cash flow information related to leases is as follows: Three Months Ended June 30, Six Months Ended June 30, (In thousands) 2020 2019 2020 2019 Cash paid for amounts included in the measurement of lease liabilities Operating cash flow attributable to operating leases $ (2,545 ) $ (3,561 ) $ (5,611 ) $ (5,108 ) Operating cash flow attributable to finance leases (22 ) (2 ) (47 ) (4 ) Financing cash flow attributable to finance leases (155 ) (11 ) (306 ) (22 ) Supplemental noncash information: Right-of-use assets obtained in exchange for operating lease liabilities (1) — — — 48,972 Right-of-use assets obtained in exchange for finance lease liabilities (1) — — — 181 (1) No new leases were entered into during the six months ended June 30 |
Debt (Tables)
Debt (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Debt Disclosure [Abstract] | |
Summary of Debt, Net of Unamortized Deferred Loan Costs And Original Issue Discount | The C o an o i n (In thousands) June 30, 2020 December 31, 2019 Term Loan A $ 280,000 $ 288,750 Term Loan B 775,000 786,250 Revolving Credit Facility — 19,850 1,055,000 1,094,850 Less: deferred loan costs and original issue discount (42,678 ) (46,723 ) Total debt 1,012,322 1,048,127 Less: current portion (9,775 ) — Total non-current portion of debt $ 1,002,547 $ 1,048,127 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Schedule of Assets and Liabilities Measured at Fair Value on a Recurring Basis | T he following table presents our assets and liabilities measured at fair value on a recurring basis at June 30, 2020 and December 31, 2019. Level 2 (In thousands) June 30, 2020 December 31, 2019 Liabilities: Interest rate swap agreements $ 44,407 $ 16,238 |
Derivative Instruments and He_2
Derivative Instruments and Hedging Activities (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Derivative Instruments And Hedging Activities Disclosure [Abstract] | |
Schedule of Estimated Gross Fair Values of Derivative Instruments and Their Classification on Consolidated Balance Sheet | The estimated gross fair values of derivative instruments and their classification on the consolidated balance sheet at June 30, 2020 and December 31, 2019 were as follows: (In thousands) June 30, 2020 December 31, 2019 Liabilities: Derivatives designated as hedging instruments: Current portion of long-term liabilities $ 15,664 $ 4,947 Other long-term liabilities 28,743 11,291 $ 44,407 $ 16,238 |
Schedule of Effect of Cash Flow Hedge Accounting on Accumulated OCI | The following table presents the effect of cash flow hedge accounting on accumulated OCI as of June 30 (In thousands) For the Three Months Ended For the Six Months Ended Derivatives in Cash Flow Hedging Relationships June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019 Loss related to effective portion of derivatives recognized in accumulated OCI, gross of tax effect $ 5,020 $ 16,144 $ 32,772 $ 16,144 Gain (loss) related to effective portion of derivatives reclassified from accumulated OCI to interest expense, gross of tax effect $ (3,482 ) $ 160 $ (4,603 ) $ 160 |
Earnings (Loss) Per Share (Tabl
Earnings (Loss) Per Share (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Earnings Per Share [Abstract] | |
Reconciliation of the Numerator and Denominator of Basic and Diluted Earnings (Loss) Per Share | Following is a r e c o ncili a tion of the n u merat o r a n d denom i nat o r of bas i c and d iluted earnin g s (loss) p e r share f o r the three and six months ended June 30, 2020 a n d 2019: (In thousands except per share data) Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 Numerator: Net income (loss) $ 28,511 $ 18,137 $ (169,595 ) $ 22,351 Net income allocated to unvested restricted stock (20 ) (93 ) — (77 ) Net income (loss) allocated to shares of Common Stock $ 28,491 $ 18,044 $ (169,595 ) $ 22,274 Denominator: Shares used for basic income (loss) per share 48,711 47,790 48,662 45,165 Effect of dilutive stock options and restricted stock units outstanding: Non-qualified stock options 8 93 — 110 Restricted stock units 75 578 — 444 Shares used for diluted income (loss) per share (1) 48,794 48,461 48,662 45,719 Earnings (loss) per share: Basic $ 0.59 $ 0.38 $ (3.49 ) $ 0.49 Diluted (1) $ 0.58 $ 0.37 $ (3.49 ) $ 0.49 Dilutive securities outstanding not included in the computation of earnings per share because their effect is anti-dilutive: Non-qualified stock options 235 71 202 76 Restricted stock units 750 288 544 172 Restricted stock awards 32 128 35 64 Performance-based stock units 95 — 64 — Market-based stock units 49 — 25 — (1) The impact of potentially dilutive securities for the six months ended June 30, 2020 was not considered because the impact would be anti-dilutive. |
Accumulated OCI (Tables)
Accumulated OCI (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Accumulated Other Comprehensive Income Loss Net Of Tax [Abstract] | |
Changes in Accumulated OCI | The following tables summarize the changes in accumulated OCI, net of tax, for the six months ended June 30, 2020: (In thousands) Net Change in Fair Value of Interest Rate Swaps Accumulated OCI, net of tax, as of January 1, 2020 $ (12,091 ) Other comprehensive income (loss) before reclassifications, net of tax of $8,370 (24,402 ) Amounts reclassified from accumulated OCI, net of tax of $1,175 3,428 Accumulated OCI, net of tax, as of June 30, 2020 $ (33,065 ) |
Schedule of Reclassifications Out of Accumulated OCI | The following table presents details about reclassifications out of accumulated OCI for the six months ended June 30, 2020: (In thousands) Six Months Ended June, 2020 Statement of Operations Classification Interest rate swaps $ 4,603 Interest expense (1,175 ) Income tax expense $ 3,428 Net of tax |
Segment Disclosures and Conce_2
Segment Disclosures and Concentrations of Risk (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Segment Reporting [Abstract] | |
Schedule of Reported Segment Revenues and Profit or Loss, Net of Intersegment Eliminations, and Reconciliation | The following tables present information about reported segment revenues and profit or loss, net of intersegment eliminations, as well as reconciliations of each such amount to consolidated totals : (In thousands) Three Months Ended June 30, 2020 2019 Healthcare Nutrition Total Segments Healthcare Nutrition Total Segments Revenues $ 81,923 $ 180,675 $ 262,598 $ 157,481 $ 182,896 $ 340,377 (1) Consolidated income before income taxes $ 34,618 $ 26,252 Acquisition and integration costs 2,049 8,999 Impairment loss — — CEO transition costs 1,745 — COVID-19 costs 1,260 — Restructuring and related charges 1,009 2,352 Interest expense 21,235 23,661 Depreciation and amortization 12,919 9,084 Adjusted EBITDA $ 41,472 $ 33,363 $ 74,835 $ 35,681 $ 34,667 $ 70,348 (In thousands) Six Months Ended June 30, 2020 2019 Healthcare Nutrition Total Segments Healthcare Nutrition Total Segments Revenues $ 241,615 $ 358,638 $ 600,253 $ 314,008 $ 240,463 $ 554,471 (1) Consolidated income (loss) before income taxes $ (178,633 ) $ 35,834 Acquisition and integration costs 4,844 26,049 Impairment loss 199,500 — CEO transition costs 4,332 — COVID-19 costs 1,260 — Restructuring and related charges 1,752 3,943 Interest expense 42,898 31,328 Depreciation and amortization 27,682 12,666 Adjusted EBITDA $ 71,719 $ 31,916 $ 103,635 $ 61,810 $ 48,010 $ 109,820 (1) The figure for total segments equals the consolidated figure for such item. |
Schedule of Total Assets by Segment | Our total assets by segment were as follows: (In thousands) June 30, 2020 December 31, 2019 Healthcare $ 527,353 $ 526,013 Nutrition 853,817 1,099,892 Total assets $ 1,381,170 $ 1,625,905 |
Basis of Presentation and Rec_3
Basis of Presentation and Recent Developments - Additional Information (Details) | Mar. 07, 2019Segment | Jul. 31, 2020USD ($) | Jun. 30, 2020USD ($) | Apr. 30, 2020Employee | Jun. 30, 2020USD ($) | Mar. 31, 2020USD ($) | Jun. 30, 2020USD ($)Segment | Dec. 31, 2019USD ($) | Jun. 30, 2019USD ($) | Dec. 31, 2018USD ($) |
Basis Of Presentation And Recent Developments [Line Items] | ||||||||||
Number of reportable segments | Segment | 1 | 2 | ||||||||
Outstanding debt | $ 1,012,322,000 | $ 1,012,322,000 | $ 1,012,322,000 | $ 1,048,127,000 | ||||||
Cash and cash equivalents | 60,274,000 | 60,274,000 | 60,274,000 | $ 2,486,000 | $ 4,404,000 | $ 1,933,000 | ||||
Working capital deficit | 5,700,000 | 5,700,000 | $ 5,700,000 | |||||||
Percentage of employees furloughed | 13.00% | |||||||||
Number of employees | Employee | 1,000 | |||||||||
Percentage of employees terminated | 8.00% | |||||||||
Percentage of additional employees furloughed | 2.00% | |||||||||
Impairment of goodwill and intangible assets | $ 199,500,000 | |||||||||
Impairment loss of intangibles | 0 | |||||||||
Impairment loss of goodwill | 0 | $ 119,500,000 | 119,500,000 | |||||||
Nutrisystem | ||||||||||
Basis Of Presentation And Recent Developments [Line Items] | ||||||||||
Impairment loss of goodwill | 119,500,000 | |||||||||
Nutrisystem | Tradename | ||||||||||
Basis Of Presentation And Recent Developments [Line Items] | ||||||||||
Impairment loss of intangibles | 80,000,000 | $ 80,000,000 | ||||||||
Executive Officers and Other Employees | ||||||||||
Basis Of Presentation And Recent Developments [Line Items] | ||||||||||
Percentage of reduction in base salary | 25.00% | |||||||||
Non-management Members of Board | ||||||||||
Basis Of Presentation And Recent Developments [Line Items] | ||||||||||
Percentage of reduction in annual cash retainer and annual committee retainers payable | 100.00% | |||||||||
Reduction period of annual cash retainer and annual committee retainers payable | 4 months | |||||||||
Revolving Credit Facility | ||||||||||
Basis Of Presentation And Recent Developments [Line Items] | ||||||||||
Borrowed under revolving credit facility used to increase cash position | 0 | 0 | $ 0 | |||||||
Credit Agreement | ||||||||||
Basis Of Presentation And Recent Developments [Line Items] | ||||||||||
Outstanding debt | $ 1,012,300,000 | 1,012,300,000 | 1,012,300,000 | |||||||
Credit Agreement | Subsequent Event | ||||||||||
Basis Of Presentation And Recent Developments [Line Items] | ||||||||||
Repayment of principal on the term loan | $ 24,800,000 | |||||||||
COVID-19 | ||||||||||
Basis Of Presentation And Recent Developments [Line Items] | ||||||||||
Incremental expense incurred due to shortage of workers | $ 1,300,000 | |||||||||
COVID-19 | Credit Agreement | Revolving Credit Facility | ||||||||||
Basis Of Presentation And Recent Developments [Line Items] | ||||||||||
Borrowed under revolving credit facility used to increase cash position | $ 75,000,000 | |||||||||
Repayment of revolving credit facility | $ 75,000,000 | |||||||||
SilverSneakers | ||||||||||
Basis Of Presentation And Recent Developments [Line Items] | ||||||||||
Percentage of fitness partner locations having at least one visit | 66.00% |
Revenue Recognition - Additiona
Revenue Recognition - Additional Information (Details) | Mar. 07, 2019Segment | Jun. 30, 2020USD ($) | Jun. 30, 2019USD ($) | Jun. 30, 2019USD ($) | Jun. 30, 2020USD ($)SegmentProgramObligationSource | Jun. 30, 2019USD ($) | Dec. 31, 2019USD ($) | |
Disaggregation Of Revenue [Line Items] | ||||||||
Number of reportable segments | Segment | 1 | 2 | ||||||
Revenue, Practical Expedient, Initial Application and Transition, Qualitative Assessment | true | |||||||
Revenue | [1] | $ 262,598,000 | $ 340,377,000 | $ 600,253,000 | $ 554,471,000 | |||
Healthcare | ||||||||
Disaggregation Of Revenue [Line Items] | ||||||||
Number of programs | Program | 3 | |||||||
Number of performance obligations | Obligation | 1 | |||||||
Number of performance obligation unsatisfied | Obligation | 0 | |||||||
Revenue recognized from performance obligations satisfied in prior period | 0 | $ 0 | ||||||
Period of billing in arrears once timing of services to customers is known | 1 month | |||||||
Number of days for customer to make payment after being invoiced | 30 days | |||||||
Capitalized costs | 700,000 | $ 700,000 | $ 500,000 | |||||
Number of reportable segments | Segment | 2 | |||||||
Revenue | 81,923,000 | 157,481,000 | $ 241,615,000 | 314,008,000 | ||||
Nutrition | ||||||||
Disaggregation Of Revenue [Line Items] | ||||||||
Number of sources for revenue recognition | Source | 4 | |||||||
Description of return of obligation | Direct to consumer customers may return unopened ready-to-go Nutrisystem products within 30 days after purchase in order to receive a refund or credit. | |||||||
Return of purchase order to refund or credit, period | 30 days | |||||||
Purchase order canceled of delivery, period | 14 days | |||||||
Revenue | 180,675,000 | 182,896,000 | $ 358,638,000 | $ 240,463,000 | ||||
Provision for estimated returns | 4,100,000 | 5,600,000 | $ 7,000,000 | 9,300,000 | ||||
Nutrition | Accrued Liabilities | ||||||||
Disaggregation Of Revenue [Line Items] | ||||||||
Reserve for estimated returns | 1,400,000 | 1,400,000 | $ 800,000 | |||||
Nutrition | Shipping and Handling Charges | ||||||||
Disaggregation Of Revenue [Line Items] | ||||||||
Revenue | $ 6,500,000 | $ 6,300,000 | $ 8,100,000 | $ 13,000,000 | ||||
[1] | The figure for total segments equals the consolidated figure for such item. |
Revenue Recognition - Summary o
Revenue Recognition - Summary of Revenue Disaggregated by Program (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | ||
Disaggregation Of Revenue [Line Items] | |||||
Revenue | [1] | $ 262,598 | $ 340,377 | $ 600,253 | $ 554,471 |
Other | |||||
Disaggregation Of Revenue [Line Items] | |||||
Revenue | 6,800 | 6,800 | |||
Healthcare | |||||
Disaggregation Of Revenue [Line Items] | |||||
Revenue | 81,923 | 157,481 | 241,615 | 314,008 | |
Healthcare | SilverSneakers | |||||
Disaggregation Of Revenue [Line Items] | |||||
Revenue | 49,157 | 122,899 | 170,764 | 245,922 | |
Healthcare | Prime Fitness | |||||
Disaggregation Of Revenue [Line Items] | |||||
Revenue | 19,047 | 29,751 | 51,858 | 58,494 | |
Healthcare | WholeHealth Living | |||||
Disaggregation Of Revenue [Line Items] | |||||
Revenue | 4,747 | 4,467 | 9,796 | 9,041 | |
Healthcare | Other | |||||
Disaggregation Of Revenue [Line Items] | |||||
Revenue | [2] | $ 8,972 | $ 364 | $ 9,197 | $ 551 |
[1] | The figure for total segments equals the consolidated figure for such item. | ||||
[2] | For the three and six months ended June 30, 2020, other revenue in the table above includes $6.8 million from a well-being program with a large employer as well as $2.1 million of Wisely Well revenue. |
Revenue Recognition - Summary_2
Revenue Recognition - Summary of Revenue Disaggregated by Program (Parenthetical) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | ||
Disaggregation Of Revenue [Line Items] | |||||
Revenue | [1] | $ 262,598 | $ 340,377 | $ 600,253 | $ 554,471 |
Other | |||||
Disaggregation Of Revenue [Line Items] | |||||
Revenue | 6,800 | 6,800 | |||
Well-Being Program | |||||
Disaggregation Of Revenue [Line Items] | |||||
Revenue | $ 2,100 | $ 2,100 | |||
[1] | The figure for total segments equals the consolidated figure for such item. |
Revenue Recognition - Summary_3
Revenue Recognition - Summary of Revenue Disaggregated by Source (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | ||
Disaggregation Of Revenue [Line Items] | |||||
Revenue | [1] | $ 262,598 | $ 340,377 | $ 600,253 | $ 554,471 |
Other | |||||
Disaggregation Of Revenue [Line Items] | |||||
Revenue | 6,800 | 6,800 | |||
Nutrition | |||||
Disaggregation Of Revenue [Line Items] | |||||
Revenue | 180,675 | 182,896 | 358,638 | 240,463 | |
Nutrition | Nutrisystem Direct to Consumer | |||||
Disaggregation Of Revenue [Line Items] | |||||
Revenue | 165,118 | 155,976 | 320,509 | 203,977 | |
Nutrition | South Beach Diet Direct to Consumer | |||||
Disaggregation Of Revenue [Line Items] | |||||
Revenue | 8,650 | 14,464 | 21,414 | 19,118 | |
Nutrition | Retail | |||||
Disaggregation Of Revenue [Line Items] | |||||
Revenue | 3,902 | 8,728 | 9,350 | 13,032 | |
Nutrition | QVC | |||||
Disaggregation Of Revenue [Line Items] | |||||
Revenue | 2,901 | 3,522 | 7,088 | 4,044 | |
Nutrition | Other | |||||
Disaggregation Of Revenue [Line Items] | |||||
Revenue | $ 104 | $ 206 | $ 277 | $ 292 | |
[1] | The figure for total segments equals the consolidated figure for such item. |
Revenue Recognition - Summary_4
Revenue Recognition - Summary of Information about Receivables, Contract Assets and Contract Liabilities from Contracts with Customers (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Revenue From Contract With Customer [Abstract] | ||
Contract assets | $ 243 | $ 95 |
Contract liabilities | $ 10,937 | $ 10,911 |
Revenue Recognition - Summary_5
Revenue Recognition - Summary of Significant Changes in Contract Liabilities (Deferred Revenue) Balance (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended |
Jun. 30, 2020 | Jun. 30, 2020 | |
Revenue From Contract With Customer [Abstract] | ||
Revenue recognized that was included in the contract liability (deferred revenue) balance on January 1, 2020 | $ (2,395) | $ (8,112) |
Increases due to cash received for prepaid gift cards sold or unshipped food, excluding amounts recognized as revenue, and (decreases) due to returns | $ (71) | $ 8,138 |
Revenue Recognition - Summary_6
Revenue Recognition - Summary of Revenue from Prepaid Gift Cards Expected to be Recognized in Future Related to Performance Obligation Unsatisfied or Partially Satisfied (Details) $ in Thousands | Jun. 30, 2020USD ($) |
Disaggregation Of Revenue [Line Items] | |
Revenue, remaining performance obligation, amount | $ 5,867 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2020-07-01 | |
Disaggregation Of Revenue [Line Items] | |
Revenue, remaining performance obligation, amount | $ 1,789 |
Revenue, remaining performance obligation, expected timing of satisfaction, period | 6 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2021-01-01 | |
Disaggregation Of Revenue [Line Items] | |
Revenue, remaining performance obligation, amount | $ 1,901 |
Revenue, remaining performance obligation, expected timing of satisfaction, period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2022-01-01 | |
Disaggregation Of Revenue [Line Items] | |
Revenue, remaining performance obligation, amount | $ 1,192 |
Revenue, remaining performance obligation, expected timing of satisfaction, period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2023-01-01 | |
Disaggregation Of Revenue [Line Items] | |
Revenue, remaining performance obligation, amount | $ 468 |
Revenue, remaining performance obligation, expected timing of satisfaction, period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2024-01-01 | |
Disaggregation Of Revenue [Line Items] | |
Revenue, remaining performance obligation, amount | $ 297 |
Revenue, remaining performance obligation, expected timing of satisfaction, period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2025-01-01 | |
Disaggregation Of Revenue [Line Items] | |
Revenue, remaining performance obligation, amount | $ 220 |
Revenue, remaining performance obligation, expected timing of satisfaction, period | 1 year |
Revenue Recognition - Summary_7
Revenue Recognition - Summary of Revenue from Prepaid Gift Cards Expected to be Recognized in Future Related to Performance Obligation Unsatisfied or Partially Satisfied (Details 1) $ in Thousands | Jun. 30, 2020USD ($) |
Revenue From Contract With Customer [Abstract] | |
Revenue, remaining performance obligation, amount | $ 5,867 |
Revenue Recognition - Additio_2
Revenue Recognition - Additional Information (Details 1) | 6 Months Ended |
Jun. 30, 2020 | |
Revenue From Contract With Customer [Abstract] | |
Revenue, practical expedient, financing component [true false] | true |
Inventories - Additional Inform
Inventories - Additional Information (Details) - USD ($) $ in Millions | Jun. 30, 2020 | Dec. 31, 2019 |
Inventory Disclosure [Abstract] | ||
Reserve for excess and obsolete inventory | $ 2 | $ 1.8 |
Intangible Assets and Goodwil_2
Intangible Assets and Goodwill - Additional Information (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Mar. 31, 2020 | Jun. 30, 2020 | Dec. 31, 2019 | |
Schedule Of Finite And Indefinite Lived Intangible Assets [Line Items] | ||||
Impairment loss of intangibles | $ 0 | |||
Impairment loss of goodwill | 0 | $ 119,500,000 | $ 119,500,000 | |
Tradename | ||||
Schedule Of Finite And Indefinite Lived Intangible Assets [Line Items] | ||||
Intangible assets not subject to amortization | $ 509,000,000 | $ 509,000,000 | $ 589,000,000 | |
Nutrisystem | ||||
Schedule Of Finite And Indefinite Lived Intangible Assets [Line Items] | ||||
Impairment loss of goodwill | 119,500,000 | |||
Nutrisystem | Tradename | ||||
Schedule Of Finite And Indefinite Lived Intangible Assets [Line Items] | ||||
Impairment loss of intangibles | $ 80,000,000 |
Intangible Assets and Goodwil_3
Intangible Assets and Goodwill - Reconciliation of Goodwill Balance (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2020 | Mar. 31, 2020 | Jun. 30, 2020 | |
Goodwill [Line Items] | |||
Beginning balance | $ 654,635,000 | $ 654,635,000 | |
Impairment loss | $ 0 | (119,500,000) | (119,500,000) |
Ending balance | 535,135,000 | 535,135,000 | |
Healthcare | |||
Goodwill [Line Items] | |||
Beginning balance | 334,680,000 | 334,680,000 | |
Ending balance | 334,680,000 | 334,680,000 | |
Nutrition | |||
Goodwill [Line Items] | |||
Beginning balance | 319,955,000 | 319,955,000 | |
Impairment loss | $ (119,500,000) | (119,500,000) | |
Ending balance | $ 200,455,000 | $ 200,455,000 |
Marketing Expenses - Additional
Marketing Expenses - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | 4 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2020 | Dec. 31, 2019 | |
Marketing And Advertising Expense [Abstract] | |||||
Media expense | $ 45.1 | $ 47.3 | $ 67.5 | $ 122.4 | |
Prepaid for future advertisements and promotions | $ 0.3 | $ 0.3 | $ 0.3 | $ 5 |
Share-Based Compensation - Addi
Share-Based Compensation - Additional Information (Details) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020USD ($) | Jun. 30, 2019USD ($) | Jun. 30, 2020USD ($)Type | Jun. 30, 2019USD ($) | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Types of share based awards | Type | 5 | |||
Share based awards, description | We currently have five types of share-based awards outstanding to our employees and directors: stock options, restricted stock awards, restricted stock units, performance-based stock units, and market stock units. | |||
Share-based compensation costs | $ 2.9 | $ 6.9 | $ 3.7 | $ 9.3 |
Restructuring and Related Charges | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation costs | $ 0.5 | $ 0.6 | ||
Minimum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Each of share based awards, vesting period | 1 year | |||
Maximum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Each of share based awards, vesting period | 4 years |
Income Taxes- Additional Inform
Income Taxes- Additional Information (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020 | Mar. 31, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Operating Loss Carryforwards [Line Items] | |||||
Effective tax rate | 17.60% | 30.90% | 5.10% | 37.60% | |
Increase in income tax expense | $ 2,700,000 | ||||
Impairment loss of goodwill | $ 0 | $ 119,500,000 | $ 119,500,000 | ||
Earliest Tax Year | |||||
Operating Loss Carryforwards [Line Items] | |||||
Open tax year | 2016 | ||||
State | |||||
Operating Loss Carryforwards [Line Items] | |||||
Increase in valuation allowance on deferred tax assets related to net operating loss carryforwards | $ 1,800,000 | ||||
Reduction in deferred tax asset related to income tax credits | $ (900,000) |
Leases - Additional Information
Leases - Additional Information (Details) | 6 Months Ended |
Jun. 30, 2020Agreement | |
Lessee Lease Description [Line Items] | |
Number of sublease agreements | 3 |
Minimum | |
Lessee Lease Description [Line Items] | |
Remaining lease terms | 1 year |
Maximum | |
Lessee Lease Description [Line Items] | |
Remaining lease terms | 5 years |
Leases - Schedule of Components
Leases - Schedule of Components of Lease Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Leases [Abstract] | ||||
Amortization of leased assets | $ 162 | $ 12 | $ 324 | $ 24 |
Interest of lease liabilities | 22 | 2 | 47 | 4 |
Operating lease cost | 3,675 | 3,804 | 7,350 | 6,520 |
Short-term lease cost | 137 | 116 | 266 | 149 |
Total lease cost before subleases | 3,996 | 3,934 | 7,987 | 6,697 |
Sublease income | (1,363) | (1,356) | (2,764) | (2,700) |
Total lease cost, net | $ 2,633 | $ 2,578 | $ 5,223 | $ 3,997 |
Leases - Schedule of Supplement
Leases - Schedule of Supplemental Cash Flow Information Related to Leases (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | ||
Cash paid for amounts included in the measurement of lease liabilities | |||||
Operating cash flow attributable to operating leases | $ (2,545) | $ (3,561) | $ (5,611) | $ (5,108) | |
Operating cash flow attributable to finance leases | (22) | (2) | (47) | (4) | |
Financing cash flow attributable to finance leases | $ (155) | $ (11) | $ (306) | (22) | |
Supplemental noncash information: | |||||
Right-of-use assets obtained in exchange for operating lease liabilities | [1] | 48,972 | |||
Right-of-use assets obtained in exchange for finance lease liabilities | [1] | $ 181 | |||
[1] | No new leases were entered into during the six months ended June 30 |
Debt - Summary of Debt, Net of
Debt - Summary of Debt, Net of Unamortized Deferred Loan Costs And Original Issue Discount (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Debt Instrument [Line Items] | ||
Debt, net of unamortized original issue discount | $ 1,055,000 | $ 1,094,850 |
Less: deferred loan costs and original issue discount | (42,678) | (46,723) |
Total debt | 1,012,322 | 1,048,127 |
Less: current portion | (9,775) | |
Total non-current portion of debt | 1,002,547 | 1,048,127 |
Term Loan A | ||
Debt Instrument [Line Items] | ||
Debt, net of unamortized original issue discount | 280,000 | 288,750 |
Term Loan B | ||
Debt Instrument [Line Items] | ||
Debt, net of unamortized original issue discount | $ 775,000 | 786,250 |
Revolving Credit Facility | ||
Debt Instrument [Line Items] | ||
Debt, net of unamortized original issue discount | $ 19,850 |
Debt - Credit Facility - Additi
Debt - Credit Facility - Additional Information (Details) | Mar. 08, 2019USD ($) | May 31, 2019Agreement | Jun. 30, 2020USD ($) | Jun. 30, 2020USD ($) | Dec. 31, 2019USD ($) |
Line Of Credit Facility [Line Items] | |||||
Outstanding debt | $ 1,012,322,000 | $ 1,012,322,000 | $ 1,048,127,000 | ||
Interest Rate Swap Agreements | |||||
Line Of Credit Facility [Line Items] | |||||
Number of agreements held for maturity | Agreement | 8 | ||||
Derivative maturity month and year | 2024-05 | ||||
Derivative, notional amount | 800,000,000 | 800,000,000 | |||
Interest Rate Swap Agreements | LIBOR | |||||
Line Of Credit Facility [Line Items] | |||||
Derivative, fixed interest rate | 2.20% | ||||
Revolving Credit Facility | |||||
Line Of Credit Facility [Line Items] | |||||
Available borrowing capacity | $ 124,500,000 | 124,500,000 | |||
Credit Agreement | |||||
Line Of Credit Facility [Line Items] | |||||
Initiation date | Mar. 8, 2019 | ||||
Outstanding debt | $ 1,012,300,000 | 1,012,300,000 | |||
Debt instrument, prepayments description | We are required to make prepayments on the Term Loans equal to our excess cash flow for a given fiscal year multiplied by the following excess cash flow percentages (such resulting payment an “Excess Cash Flow Payment”) based on our Net Leverage Ratio (as defined below) on the last day of such fiscal year: (a) 75% if the Net Leverage Ratio is greater than 3.75:1, (b) 50% if the Net Leverage Ratio is equal to or less than 3.75:1 but greater than 3.25:1 (c) 25% if the Net Leverage Ratio is equal to or less than 3.25:1 but greater than 2.75:1, and (d) 0% if the Net Leverage Ratio is equal to or less than 2.75:1 | ||||
Net leverage ratio for next twelve month | 5.75 | ||||
Net leverage ratio in year two | 5.25 | ||||
Net leverage ratio thereafter | 4.75 | ||||
Net leverage ratio one | 4.08 | ||||
Credit Agreement | Federal Funds Rate | |||||
Line Of Credit Facility [Line Items] | |||||
Basis spread on variable rate | 0.50% | ||||
Credit Agreement | One-Month LIBOR | |||||
Line Of Credit Facility [Line Items] | |||||
Basis spread on variable rate | 1.00% | ||||
Credit Agreement | Net Leverage Ratio Greater Than 3.75:1 | |||||
Line Of Credit Facility [Line Items] | |||||
Excess cash flow percentage | 75.00% | ||||
Net leverage ratio | 375.00% | ||||
Credit Agreement | Net Leverage Ratio Equal To or Less Than 3.75:1 but Greater Than 3.25:1 | |||||
Line Of Credit Facility [Line Items] | |||||
Excess cash flow percentage | 50.00% | ||||
Net leverage ratio | 325.00% | ||||
Credit Agreement | Net Leverage Ratio Equal To or Less Than 3.25:1 but Greater Than 2.75:1 | |||||
Line Of Credit Facility [Line Items] | |||||
Excess cash flow percentage | 25.00% | ||||
Net leverage ratio | 275.00% | ||||
Credit Agreement | Net Leverage Ratio Equal To or Less Than 2.75:1 | |||||
Line Of Credit Facility [Line Items] | |||||
Excess cash flow percentage | 0.00% | ||||
Credit Agreement | Minimum | |||||
Line Of Credit Facility [Line Items] | |||||
Unused commitment fee percentage | 0.25% | ||||
Credit Agreement | Minimum | LIBOR | |||||
Line Of Credit Facility [Line Items] | |||||
Variable rate basis | 0.00% | ||||
Credit Agreement | Maximum | |||||
Line Of Credit Facility [Line Items] | |||||
Unused commitment fee percentage | 0.50% | ||||
Credit Agreement | Revolving Credit Facility | |||||
Line Of Credit Facility [Line Items] | |||||
Maximum borrowing capacity | $ 125,000,000 | ||||
Maturity date | Mar. 8, 2024 | ||||
Credit Agreement | Revolving Credit Facility | Minimum | LIBOR | |||||
Line Of Credit Facility [Line Items] | |||||
Margin rate | 3.75% | ||||
Credit Agreement | Revolving Credit Facility | Minimum | Base Rate | |||||
Line Of Credit Facility [Line Items] | |||||
Margin rate | 2.75% | ||||
Credit Agreement | Revolving Credit Facility | Maximum | LIBOR | |||||
Line Of Credit Facility [Line Items] | |||||
Margin rate | 4.25% | ||||
Credit Agreement | Revolving Credit Facility | Maximum | Base Rate | |||||
Line Of Credit Facility [Line Items] | |||||
Margin rate | 3.25% | ||||
Credit Agreement | Swingline Sub Facility | |||||
Line Of Credit Facility [Line Items] | |||||
Maximum borrowing capacity | $ 35,000,000 | ||||
Maturity date | Mar. 8, 2024 | ||||
Credit Agreement | Letters of Credit Sub Facility | |||||
Line Of Credit Facility [Line Items] | |||||
Maximum borrowing capacity | 50,000,000 | ||||
Credit Agreement | Term Loan Facility A | |||||
Line Of Credit Facility [Line Items] | |||||
Debt instrument, face amount | $ 350,000,000 | ||||
Periodic principal payment as percentage of aggregate principal amount | 2.50% | ||||
Maturity date | Mar. 8, 2024 | ||||
Credit Agreement | Term Loan Facility A | LIBOR | |||||
Line Of Credit Facility [Line Items] | |||||
Margin rate | 4.25% | ||||
Credit Agreement | Term Loan Facility A | Base Rate | |||||
Line Of Credit Facility [Line Items] | |||||
Margin rate | 3.25% | ||||
Credit Agreement | Term Loan Facility B | |||||
Line Of Credit Facility [Line Items] | |||||
Debt instrument, face amount | $ 830,000,000 | ||||
Periodic principal payment as percentage of aggregate principal amount | 0.75% | ||||
Maturity date | Mar. 8, 2026 | ||||
Credit Agreement | Term Loan Facility B | LIBOR | |||||
Line Of Credit Facility [Line Items] | |||||
Margin rate | 5.25% | ||||
Credit Agreement | Term Loan Facility B | Base Rate | |||||
Line Of Credit Facility [Line Items] | |||||
Margin rate | 4.25% | ||||
Credit Agreement | Uncommitted Incremental Accordion Facility | Minimum | |||||
Line Of Credit Facility [Line Items] | |||||
Maximum borrowing capacity | $ 125,000,000 | ||||
Percentage of consolidated EBITDA requirement | 50.00% | ||||
Credit Agreement | Term Loans | |||||
Line Of Credit Facility [Line Items] | |||||
Payments on term loans | $ 125,000,000 | ||||
Maturity date | Mar. 31, 2021 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information - (Details) | Nov. 06, 2017Lawsuit$ / shares | Jun. 30, 2020$ / shares | Dec. 31, 2019$ / shares |
Commitments And Contingencies Disclosure [Abstract] | |||
Common stock, par value (in dollars per share) | $ / shares | $ 0.001 | $ 0.001 | $ 0.001 |
Number of lawsuits filed | 4 | ||
Number of lawsuits dismissed | 3 |
Fair Value Measurements - Sched
Fair Value Measurements - Schedule of Assets and Liabilities Measured at Fair Value on a Recurring Basis (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Interest Rate Swap Agreements | Fair Value, Measurements, Recurring | Level 2 | ||
Liabilities: | ||
Liabilities measured at fair value | $ 44,407 | $ 16,238 |
Fair Value Measurements - Addit
Fair Value Measurements - Additional Information (Details) | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2020USD ($) | Mar. 31, 2020USD ($)Tradename | Jun. 30, 2020USD ($) | |
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | |||
Impairment loss of goodwill | $ 0 | $ 119,500,000 | $ 119,500,000 |
Number of tradenames | Tradename | 2 | ||
Impairment loss of intangibles | 0 | ||
Revolving Credit Facility | |||
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | |||
Line of credit | 0 | 0 | |
Term Loans | |||
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | |||
Debt instrument fair value | 921,200,000 | 921,200,000 | |
Debt instrument carrying amount | 1,012,300,000 | 1,012,300,000 | |
Carrying Value | |||
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | |||
Cash and cash equivalents | $ 60,300,000 | 60,300,000 | |
Nutrition | |||
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | |||
Impairment loss of goodwill | $ 119,500,000 | 119,500,000 | |
Nutrisystem | |||
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | |||
Impairment loss of goodwill | 119,500,000 | ||
Nutrisystem | Tradename | |||
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | |||
Impairment loss of intangibles | $ 80,000,000 | $ 80,000,000 |
Derivative Instruments and He_3
Derivative Instruments and Hedging Activities - Additional Information (Details) - Cash Flow Hedges - Derivatives Designated as Hedging Instruments - Interest Rate Swap Agreements | 1 Months Ended | |
May 31, 2019Agreement | Jun. 30, 2020USD ($) | |
Derivative [Line Items] | ||
Number of amortizing interest rate swap agreements | Agreement | 8 | |
Derivative maturity month and year | 2024-05 | |
Derivative, fixed interest rate | 2.20% | |
Derivative, notional amount | $ 800,000,000 | |
Derivative amount reclassify from accumulated OCI to interest expense within next 12 months | $ 15,800,000 |
Derivative Instruments and He_4
Derivative Instruments and Hedging Activities - Schedule of Estimated Gross Fair Values of Derivative Instruments and Their Classification on Consolidated Balance Sheet (Details) - Cash Flow Hedges - Derivatives Designated as Hedging Instruments - Interest Rate Swap Agreements - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Liabilities: | ||
Derivative liabilities | $ 44,407 | $ 16,238 |
Current Portion of Long-term Liabilities | ||
Liabilities: | ||
Current portion of long-term liabilities | 15,664 | 4,947 |
Other Long-term Liabilities | ||
Liabilities: | ||
Other long-term liabilities | $ 28,743 | $ 11,291 |
Derivative Instruments and He_5
Derivative Instruments and Hedging Activities - Schedule of Effect of Cash Flow Hedge Accounting on Accumulated OCI (Details) - Cash Flow Hedges - Derivatives Designated as Hedging Instruments - Interest Rate Swap Agreements - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Derivative Instruments Gain Loss [Line Items] | ||||
Loss related to effective portion of derivatives recognized in accumulated OCI, gross of tax effect | $ 5,020 | $ 16,144 | $ 32,772 | $ 16,144 |
Interest Expense | ||||
Derivative Instruments Gain Loss [Line Items] | ||||
Gain (loss) related to effective portion of derivatives reclassified from accumulated OCI to interest expense, gross of tax effect | $ (3,482) | $ 160 | $ (4,603) | $ 160 |
Earnings (Loss) Per Share - Rec
Earnings (Loss) Per Share - Reconciliation of the Numerator and Denominator of Basic and Diluted Earnings (Loss) Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | ||
Numerator [Abstract] | |||||
Net income (loss) | $ 28,511 | $ 18,137 | $ (169,595) | $ 22,351 | |
Net income allocated to unvested restricted stock | (20) | (93) | (77) | ||
Net income (loss) allocated to shares of Common Stock | $ 28,491 | $ 18,044 | $ (169,595) | $ 22,274 | |
Denominator [Abstract] | |||||
Shares used for basic income (loss) per share | 48,711 | 47,790 | 48,662 | 45,165 | |
Effect of dilutive stock options and restricted stock units outstanding [Abstract] | |||||
Shares used for diluted income (loss) per share | [1] | 48,794 | 48,461 | 48,662 | 45,719 |
Earnings (loss) per share, Basic | $ 0.59 | $ 0.38 | $ (3.49) | $ 0.49 | |
Earnings (loss) per share, Diluted | [1] | $ 0.58 | $ 0.37 | $ (3.49) | $ 0.49 |
Non-Qualified Stock Options | |||||
Effect of dilutive stock options and restricted stock units outstanding [Abstract] | |||||
Effect of dilutive stock options and restricted stock units outstanding (in shares) | 8 | 93 | 110 | ||
Restricted Stock Units (RSUs) | |||||
Effect of dilutive stock options and restricted stock units outstanding [Abstract] | |||||
Effect of dilutive stock options and restricted stock units outstanding (in shares) | 75 | 578 | 444 | ||
Market-based stock units | |||||
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | |||||
Dilutive securities outstanding not included in the computation of earnings per share because their effect is anti-dilutive (in shares) | 49 | 25 | |||
Non-Qualified Stock Options | |||||
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | |||||
Dilutive securities outstanding not included in the computation of earnings per share because their effect is anti-dilutive (in shares) | 235 | 71 | 202 | 76 | |
Restricted Stock Units (RSUs) | |||||
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | |||||
Dilutive securities outstanding not included in the computation of earnings per share because their effect is anti-dilutive (in shares) | 750 | 288 | 544 | 172 | |
Restricted Stock Awards | |||||
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | |||||
Dilutive securities outstanding not included in the computation of earnings per share because their effect is anti-dilutive (in shares) | 32 | 128 | 35 | 64 | |
Performance-Based Stock Units | |||||
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | |||||
Dilutive securities outstanding not included in the computation of earnings per share because their effect is anti-dilutive (in shares) | 95 | 64 | |||
[1] | The impact of potentially dilutive securities for the six months ended June 30, 2020 was not considered because the impact would be anti-dilutive. |
Accumulated OCI - Changes in Ac
Accumulated OCI - Changes in Accumulated OCI, Net of Tax (Details) - Net Change in Fair Value of Interest Rate Swaps $ in Thousands | 6 Months Ended |
Jun. 30, 2020USD ($) | |
Changes in accumulated OCI, net of tax [Roll Forward] | |
Balance | $ (12,091) |
Other comprehensive income (loss) before reclassifications, net | (24,402) |
Amounts reclassified from accumulated OCI, net of tax | 3,428 |
Balance | $ (33,065) |
Accumulated OCI - Changes in _2
Accumulated OCI - Changes in Accumulated OCI, Net of Tax (Parenthetical) (Details) $ in Thousands | 6 Months Ended |
Jun. 30, 2020USD ($) | |
Accumulated Other Comprehensive Income Loss Net Of Tax [Abstract] | |
Other comprehensive income before reclassifications, tax | $ 8,370 |
Amounts reclassified from accumulated OCI, tax | $ 1,175 |
Accumulated OCI - Schedule of R
Accumulated OCI - Schedule of Reclassifications Out of Accumulated OCI (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Reclassification Adjustment Out Of Accumulated Other Comprehensive Income [Line Items] | ||||
Interest expense | $ 21,235 | $ 23,661 | $ 42,898 | $ 31,328 |
Income tax expense | $ (6,107) | $ (8,115) | 9,038 | $ (13,483) |
Interest Rate Swap Agreements | ||||
Reclassification Adjustment Out Of Accumulated Other Comprehensive Income [Line Items] | ||||
Net of tax | 3,428 | |||
Reclassifications Out of Accumulate OCI | ||||
Reclassification Adjustment Out Of Accumulated Other Comprehensive Income [Line Items] | ||||
Income tax expense | (1,175) | |||
Net of tax | 3,428 | |||
Reclassifications Out of Accumulate OCI | Interest Rate Swap Agreements | ||||
Reclassification Adjustment Out Of Accumulated Other Comprehensive Income [Line Items] | ||||
Interest expense | $ 4,603 |
Segment Disclosures and Conce_3
Segment Disclosures and Concentrations of Risk - Additional Information (Details) $ in Millions | Mar. 07, 2019Segment | Jun. 30, 2020USD ($) | Jun. 30, 2020USD ($)Segment |
Entity Wide Revenue Major Customer [Line Items] | |||
Number of reportable segments | Segment | 1 | 2 | |
Wisely Well | |||
Entity Wide Revenue Major Customer [Line Items] | |||
Intersegment revenues and costs | $ | $ 1.9 | $ 1.9 | |
SilverSneakers Senior Fitness | |||
Entity Wide Revenue Major Customer [Line Items] | |||
Percentage of concentration risk | 19.00% | 28.00% |
Segment Disclosures and Conce_4
Segment Disclosures and Concentrations of Risk - Schedule of Reported Segment Revenues and Profit or Loss, Net of Intersegment Eliminations, and Reconciliation (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | ||
Segment Reporting Information [Line Items] | |||||
Revenue | [1] | $ 262,598 | $ 340,377 | $ 600,253 | $ 554,471 |
Income (loss) before income taxes | 34,618 | 26,252 | (178,633) | 35,834 | |
Acquisition and integration costs | 2,049 | 8,999 | 4,844 | 26,049 | |
Impairment loss | 199,500 | ||||
COVID-19 costs | 1,260 | 1,260 | |||
Restructuring and related charges | 1,009 | 2,352 | 1,752 | 3,943 | |
Interest expense | 21,235 | 23,661 | 42,898 | 31,328 | |
Depreciation and amortization | 12,919 | 9,084 | 27,682 | 12,666 | |
Adjusted EBITDA | 74,835 | 70,348 | 103,635 | 109,820 | |
CEO | |||||
Segment Reporting Information [Line Items] | |||||
CEO transition costs | 1,745 | 4,332 | |||
Healthcare | |||||
Segment Reporting Information [Line Items] | |||||
Revenue | 81,923 | 157,481 | 241,615 | 314,008 | |
Adjusted EBITDA | 41,472 | 35,681 | 71,719 | 61,810 | |
Nutrition | |||||
Segment Reporting Information [Line Items] | |||||
Revenue | 180,675 | 182,896 | 358,638 | 240,463 | |
Adjusted EBITDA | $ 33,363 | $ 34,667 | $ 31,916 | $ 48,010 | |
[1] | The figure for total segments equals the consolidated figure for such item. |
Segment Disclosures and Conce_5
Segment Disclosures and Concentrations of Risk - Schedule of Total Assets by Segment (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Segment Reporting Information [Line Items] | ||
Total assets | $ 1,381,170 | $ 1,625,905 |
Healthcare | ||
Segment Reporting Information [Line Items] | ||
Total assets | 527,353 | 526,013 |
Nutrition | ||
Segment Reporting Information [Line Items] | ||
Total assets | $ 853,817 | $ 1,099,892 |