Tivity Health (TVTY) to Report Q3 Earnings: What's in Store?

Zacks Equity Research
·5-min read

Tivity Health, Inc. TVTY is slated to report third-quarter 2020 results on Nov 5, after the closing bell.

In the last-reported quarter, the company’s earnings of 79 cents outpaced the Zacks Consensus Estimate by a stupendous 216%. Its earnings surpassed the consensus estimate in two of the last four quarters but missed the mark in the other two. The company delivered an earnings surprise of 50.07% in the last four quarters, on average.

Let's see how things are shaping up prior to the announcement.

Factors at Play

Healthcare

Tivity Health, per its last update in August, had confirmed that the company has been successfully expanding its digital brand in SilverSneakers senior fitness program and Prime Fitness (which is a fitness facility access program). The digital adoption was significantly boosted over the past few months due to the COVID-19-related gym closures. The SilverSneakers business, too, is expected to register an uptick in in-person member visits on the gradual lifting of the widespread stay-at-home orders. The overall SilverSneakers business is expected to have done well during the third quarter. Within SilverSneakers business, the rate of revenue growth from the digital channel during this pandemic period is expected to have been significantly higher than the in-person member visits’ growth rate.

Per the company, its Prime Fitness program had been severely impacted over the past few months due to the members' partner locations being closed as a result of the pandemic. However, the situation gradually improved with the addition of new subscribers in the last-reported quarter. The company has extended its digital solution to this business segment as well. These developments are expected to have contributed to the third-quarter revenues.

Notably, Tivity Health had launched a new Prime solution with one of its large health plan partners in the second quarter. As part of this launch on its enhanced fitness platform, the company also introduced new mobile capabilities via its Prime app, including the ability to book studio classes on the go and complete mobile gym check-ins. This is likely to have witnessed a robust adoption during the third quarter, thus driving the top line.

Nutrition

Tivity Health’s Nutrition business has been performing impressively over the past few months. Per the last update in August, its Nutrisystem brand DTC has experienced addition of new customers. The strength in demand for DTC is likely to have continued through the third quarter, thus driving the top line.

In September, Tivity Health launched the Body Select program in Walmart stores and on Walmart.com. In the same month, the company launched its new Nutrisystem Partner Plan, which is a program designed to enable two people living in the same home to experience the benefits of losing weight together. These launches are also expected to have driven the third-quarter revenues.

However, for investors’ note, Tivity Health entered into a definitive agreement with Kainos Capital (a renowned food and consumer-focused private equity firm) in October. Per the agreement terms, Kainos Capital will acquire Tivity Health's Nutrition Business. The transaction is expected to close in the fourth quarter of this year, subject to the receipt of regulatory approval and other customary closing conditions.

Over the past six months, the stock has rallied 52% compared with the industry’s 34.3% growth and the S&P 500's 16.7% rise despite the challenges posed by the pandemic.

Q3 Estimates

The Zacks Consensus Estimate for third-quarter 2020 revenues is pegged at $246.9 million, suggesting an 18.7% decline from the year-ago figure.

The Zacks Consensus Estimate for the company’s earnings of 32 cents suggests a 30.4% fall from the year-ago figure.

What Our Model Suggests

Per our proven model, a stock with a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) along with a positive Earnings ESP has good chances of beating estimates. However, this is not the case here as you can see:

Earnings ESP: Tivity Health has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company currently carries a Zacks Rank #3.

Stocks Worth a Look

Here are a few medical stocks worth considering, as these have the right combination of elements to beat on earnings this reporting cycle.

LHC Group, Inc. LHCG has an Earnings ESP of +1.85% and it currently carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Owens & Minor, Inc. OMI has an Earnings ESP of +0.24% and is a Zacks #1 Ranked stock.

SeaSpine Holdings Corporation SPNE has an Earnings ESP of +6.67% and it carries a Zacks Rank of 2 at present.

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