Deutsche Bank 42 nd Annual Healthcare Conference May 3 rd, 2017
Safe Harbor Provisions These forward-looking statements speak only as of the date hereof and this presentation contains forward-looking statements that are based upon current expectations and involve a number of risks and uncertainties. In order for Tivity Health to utilize the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, investors are hereby cautioned that these statements may be affected by the important factors, among others, included in the discussion in headings such as Risk Factors in Healthways' (now Tivity Health) Annual Report on Form 10-K for the year ended December 31, 2016 and other reports filed with the Securities and Exchange Commission. Consequently, actual operations and results may differ materially from those expressed in these forward-looking statements. Tivity Health undertakes no obligation to update or revise any such forward-looking statements. This presentation contains certain non-gaap measures. The Company s earnings releases for the year ended December 31, 2016 located on the Company s investor relations page at www.tivityhealth.com include a reconciliation of the differences between certain non-gaap financial measures with the most directly comparable financial measures calculated in accordance with GAAP. These non-gaap financial measures should not be considered an alternative to GAAP financial measures
A Compelling Business Model Key Attributes Targeted population health Focused and integrated portfolio Streamlined and simplified operations Predictable revenue, with growth Profitable, capital light service model Significant Cash Generation, Balance Sheet Flexibility Members looking for products Solid Brand Equity 3
We are serving a powerful demographic experiencing unprecedented growth with underserved needs we are uniquely positioned to address 4
Our Mission Why we exist We empower older adults to live their best lives now with vitality, dignity and purpose. We enable healthy aging both in place, and in community. 5
Our Business Strategy We provide solutions that transform the aging experience to improve the physical, emotional and social quality of life, increasing independence, longevity and overall health outcomes informed through over 25 years of working with this population and delivered through unique partner facilities and credentialed professionals. 6
Large & Growing Addressable Population 300,000 PEOPLE TURN 65 EVERY MONTH (1) 111M ADULTS ARE AGE 50+ (1) 58M ARE MEDICARE ELIGIBLE (1) 49M ARE 65+ (1) U.S. Population Over the Age of 65 (Population in MM) (2) 98.2 74.1 82.3 88.0 56.4 16.6 20.1 25.5 31.2 35.0 40.2 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050 2060 (1) Source: US Census Bureau, AARP, Centers for Medicare and Medicaid Services (2) Source: U.S. Census Bureau; Report Release Date: March 2015 7
Increasing MA & MS Opportunity 45 Medicare Advantage continues to experience strong industry tailwinds as more people age into Medicare and elect a Medicare Advantage or Supplement Plan Medicare Advantage and Medicare Supplement Market Enrollment (MM) 90% 40 35 30 25 20 15 10 5 0 39.1 37.0 35.0 22.8 32.9 21.6 20.4 30.7 29.0 19.2 27.4 17.7 25.3 16.7 23.6 15.8 22.2 14.3 21.1 13.1 12.0 11.1 33% 35% 36% 36% 29% 30% 31% 27% 23% 25% 26% 21% 21% 21% 21% 21% 22% 23% 24% 25% 25% 26% 10.0 10.2 10.5 11.0 11.6 12.3 13.0 13.7 14.6 15.4 16.3 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 80% 70% 60% 50% 40% 30% 20% 10% 0% Source: Centers for Medicare and Medicaid Services Medicare Supplement Medicare Advantage MA Penetration MS Penetration 8
Our Business Portfolio Today A suite of products that bring broad access, leading programming, diverse benefit options, including network building expertise and utilization management CURRENT OFFERING ROLE IN THE PORTFOLIO Keeping older Americans active, engaged and connected GOAL: Increase Utilization Building a bridge for those that are aging-in, and serving the needs of those caring for senior adults GOAL: Increase Utilization Providing cost-effective access to alternative care options GOAL: Reduce Utilization 9
SilverSneakers Overview The nation s leading fitness program specifically designed for older adults #1 Market Share (44%) in Senior Fitness Delivered to Medicare Advantage ( MA ), Medicare Supplement ( MS ), and group retirees 8 of the top 10 MA plans use SilverSneakers 2016 Revenue by Service Offering 83% SilverSneakers By the Numbers 25 years of experience 14.5 million eligible members 63 health plan clients 94% customer satisfaction 13,000+ participating locations including fitness centers and alternative venues 1,000+ addition FLEX venues in places where older adults congregate 10
Eligible Members Member Visits SilverSneakers Growth Programming Expanded Signature Offerings Next Generation Fitness 70+ Expanded Fitness Choices Additional Gym Classes SilverSneakers Classic BOOM Move It Tai Chi Dance Classes SilverSneakers Circuit BOOM Mind Pole Walking Aerobics SilverSneakers Cardio BOOM Muscle Zumba Step Classes SilverSneakers Yoga Boot Camp Cycling Classes SilverSneakers Splash SilverSneakers Stability Membership and Member Visits 25.0 84.5 90.0 76.1 80.0 (in millions) 20.0 65.3 70.0 15.0 10.0 5.0 58.2 49.7 13.5 12.4 39.6 11.4 10.4 3.5 9.2 3.3 7.9 3.1 2.8 2.5 2.2 5.7 6.7 7.6 8.3 9.1 10.0 60.0 50.0 40.0 30.0 20.0 10.0 0.0 0.0 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 Medicare Advantage Medicare 11 Supplement Number of Visits
SilverSneakers is the Leader in Senior Fitness Medicare Advantage (MA) (Total MA population 19.2M) Medicare Supplement (MS) (Total MS population 13.7M) 57% 10.9MM 26% 3.6MM #1 Market share in senior fitness (44%) 8 of the top 10 MA plans use SilverSneakers Approaching 15MM Seniors covered >13,000 participating fitness centers & >1000 alternative venues 12
The SilverSneakers Brand is Synonymous with Senior Fitness Broad coverage across the United States allows SilverSneakers to maintain a diverse clientele SilverSneakers leads a pack of world-renowned brands with a Net Promoter score of 81 59 79 72 69 81 68 78 77 US Health Plans ranged in net promoter score from -1 to 43, with an average score of 18 Note: Data for 2016 13
Three Value Added Outcomes To Payors Member Acquisition 73 % Member Retention Claims Reduction 68 % Source: 2014 SilverSneakers Annual Member Survey and Company Materials 14
Prime Overview Membership access to largest network of gyms for a broad-based audience (18-64 years of age) Offered through commercial health plans, employers and exchanges Fitness locations pass rigorous evaluation process based on strict criteria prior to becoming a participating location Network established based on member addresses Flexible delivery models allows payors to maximize benefits while managing costs 2016 Revenue by Service Offering 14.0% Prime By the Numbers 8+ years of experience 40+ million eligible members 10,000+ participating locations including fitness centers and alternative venues Member Pay Member Reimbursement Fully Funded Client Profile Health plan aggregators, health plans, and employer groups Mid and smaller sized employer groups, exchanges, or health plans Large employers and large health plans Delivery Method Access to network with discounted rates Participants pay out of pocket Participants receive a reimbursement on monthly fee when they reach a visit threshold each month Sponsor fully subsidizes entire covered population to use benefit Includes national reciprocity 15
WholeHealth Overview Specialty physical medicine benefits management offering a network of valueadded discount services, with 40+ alternative medicine provider specialties, 29 vendors, and educational content 2016 Revenue by Service Offering 3% WholeHealth 1 Network can be customized by geography and specialty Offers discounts on health related offerings Core Competencies Network Management and Development By the Numbers 30+ years of experience 25+ Payor Partners 20+ million eligible members 88,000+ national network of practitioners and providers Partners 2 3 4 5 Credentialing Utilization Management Claims Processing Consulting 16 16
Four Priorities Guiding our 2017 Focus A WHAT WE ARE DOING Add New Members in all three networks AND WHY Build awareness and relevance with current and future members, and relationships with their influencers B Build more empowerment and engagement in the eligible population Resolve barriers to engagement and positively influence daily decision making while aligning to our fundamental growth model C Collaborate with partners to introduce new products and services that leverage our brand trust Brand Loyalty allows for other opportunities to create a stickier experience that drives loyalty, and outcomes D Deepen relationships with our partners and their instructors within our national network Building transformational relationships allows us to align incentives to reward for increased participation and delightful experiences 17
Financial Profile and Outlook KEY METRICS 2016 2017 Revenue $501MM $550MM - $558MM ADJ. EBITDA $106.5MM $119MM - $123MM Capital Investment $4.3MM $8MM - $10MM Net Debt $218MM <$130MM 18
The SilverSneakers Community Highway What can be accomplished with a TRUSTED BRAND?? >18MM By 2020 Fall Prevention? SilverSneakers?? 14.5MM In 2017? Home Health Management? 19