Tivity Health, Inc.

Ladies and gentlemen, hello and welcome to the Tivity Health fourth quarter and full year 2021 earnings conference call. My name is Maxine and I'll be coordinating the call today. If you would like to ask a question, you may do so by pressing star followed by one on your telephone keypad. I will now hand over to your host, Matt Milanovic, Vice President of Investor Relations to begin. Matt, please go ahead when you're ready.

Good afternoon and welcome to the Tivity Health fourth quarter and full-year 2021 financial results conference call. Before we begin, if you do not already have a copy, the earnings release, supplemental information, and related 8K filed with the SEC are available on our website at tivityhealth.com. I would also like to highlight that our financial presentation within today's press release and supplemental materials are reflective of the divestiture of the nutrition segment. Therefore, all results of operations related to that business are now reported within discontinued operations. To the extent any non-GAAP financial measure is discussed in today's call, you will also find a reconciliation of that measure to the most directly comparable financial measure calculated in accordance with GAAP in today's news release, which is also posted on the company's website. This conference call may contain forward-looking statements. within the meaning of the Private Securities Litigation Reform Act of 1995, including statements among others regarding activity health expected quarterly and annual operating and financial performance for 2022 and beyond. For this purpose, any statements made during this call that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, the words believes, anticipates, plans, expects, and similar expressions are intended to identify forward-looking statements. You are hereby cautioned that these statements may be affected by the important factors, among others, set forth in activity health filings with the SEC and in today's news release. And consequently, actual operations and results may differ materially from the results discussed in the forward-looking statements. The company undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events, or otherwise. And now I'll turn the call over to the company's president and CEO, Richard Ashworth. Good afternoon.

Thanks, Matt. Thank you for joining the call today to discuss Tiviti Health's fourth quarter and full year 2021 earnings results. Joining me are Adam Holland, our CFO, Tommy Lewis, our COO, and Matt Milanovich, our VP of IR. I want to start by thanking all of our Tiviti Health colleagues for their perseverance, discipline, and focus that delivered excellent results during another difficult year. Our business has continuously adapted to the changing needs of our members and clients through expanded in-person and virtual offerings. SilverSneakers members love our platform, and now they will be able to engage with us in new ways with the recent launch of our mental enrichment and social connection solutions. Now on to 2021's results. As you saw in today's press release, our performance in 2021 was characterized by strong results with revenue and adjusted EBITDA exceeding our expectations as we raised financial guidance multiple times throughout the year. We reported full-year revenues of $481.3 million and adjusted EBITDA from continuing operations of $158.1 million. Additionally, SilverSneakers finished 2021 with a record-high 17.9 million eligible lives. We are very pleased with our 2021 financial and operational results and even more excited about what is coming in 2022. Total silver sneakers visits were 61.9 million in 2021, an increase of 30% from 2020. While we experienced some headwinds from the Omicron variant during the fourth quarter, our recent trends have strengthened through early February as the effects of Omicron are subsiding. And we continue to expect that in-person visits will increase in 2022. Further solidifying our confidence in 2022, adults over 65 continue to have the highest immunization rates in the nation, with almost 89% being fully vaccinated, and our SilverSneakers pulse surveys indicate that a significant percentage of members have returned or intend to return to the gym. SilverSneakers virtual visits grew to nearly 3.5 million in 2021, approximately doubling from 2020, driven by the outstanding experience of our proprietary programming designed by 13 national trainers. During the year, nearly half of the participants in our Live with Instructor virtual classes had never participated in SilverSneakers before, demonstrating that our proprietary virtual channel continues to be an efficient activation one. The combination of physical and digital fitness remains core to our strategy because it allows our members to use the benefit where they want, in the gym, at home, or in the community. Looking ahead to 2022, we expect growth in virtual engagement to be accelerated by the addition of social engagement and mental enrichment solutions, in addition to our virtual fitness programming. Our fitness network remains healthy and growing as we ended the fourth quarter of 2021 with approximately 16,000 SilverSneakers locations. Beginning in 2022, we significantly increased the size of our SilverSneakers network by adding new customizable fitness brands for our clients, bringing our total size to approximately 23,000 locations, making today's network the largest in company history. That is more than a 40% increase since the end of 2021. We're encouraged by the continued interest from gyms to be partners in the SilverSneakers network. On average, our national network offers members an access to a location within 3.6 miles of their home and 1.6 miles in urban and suburban markets. Network renewal rates remain high and consistent with our historical trends, and we continue to move some partners to longer-term contracts, providing both visibility and stability for the future. Moving on to Prime, we ended the fourth quarter with approximately 12,500 partner locations, similar to where we began the year, and 223,000 active Prime subscribers. The pandemic continues to have an impact on our business since COVID restrictions are a key driver of membership cancellations. However, new member acquisition is delivering as expected. We anticipate getting back to modest growth as the pandemic subsides and employee health becomes top of mind for employers who offer the Prime benefits. Next, I want to provide an update on our SilverSneakers health plan relationships. We closed the 2021 renewal year strong with a high 90s retention rate, and we retained our fair share of switching that occurred among our client base. We also had a strong selling season for 2022, bringing our new plans consistent with prior years. We began 2022 with more eligible lives than we ended in 21. We expect age ends and the addition of a large group plan by one of our clients this spring will continue to add growth in eligible lives. We played an important role with our clients during the Medicare annual enrollment period. Our teams facilitated nearly 400 events and trained close to 12,000 brokers across the United States. Our clients love the SilverSneakers brand for both its ability to improve the health of members, as well as to be a tool for recruiting, retention, and engagement. As a testament to the value we deliver to our clients, healthcare costs are 16% lower for our enrolled members And we have the highest NPS score in company history at 83. We have a 96% number of satisfaction score in addition. SilverSneakers is a supremely attractive recruitment, retention, and engagement tool for our clients. Now moving on to strategy, we continue our evolution to offer more virtual solutions for seniors to connect and improve their health while providing a more seamless and personalized SilverSneakers experience. Last month, we launched our mental enrichment and social connection programs designed specifically for older adults. Research supports that in addition to physical activity, social connection and improved brain health make seniors healthier and happier. Our members and clients give us permission to offer more solutions to address the social determinants of health. Additionally, in 2021, we launched a new data platform architecture, which we expect will enable us to better understand where our members are in their fitness and health journey and offer recommendations for the next best action, whether that be in-person or virtual. As the year progresses, I look forward to updating you on our progress. We are a market leader with a core business that is strong and growing. The tailwinds of Medicare Advantage and the aging population support strong growth through 2030. We have long-term contracts with our health plans and consistently strong renewal rates. Our members tell us they want more digital in addition to our in-person offerings, which we now deliver through our mental enrichment and social connection solutions. Our balance sheet and cash flow are strong and stable. Our business model is asset light. We delivered on our 2021 strategic plan by building an engagement platform and expanding our digital first offerings. Our financial guidance for 2022 calls for growth in revenue, adjusted EBITDA, and free cash flow. We are incredibly excited for what lies ahead in 2022. I'll now turn the call over to Adam.