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Tivity Health, Inc. (TVTY)
Q1Â 2019 Earnings Call
May. 8, 2019, 5:00 p.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
Prepared Remarks:
Operator
Good afternoon, and welcome to Tivity Health First Quarter 2019 Financial Results Conference Call. Today's call is being recorded and will be available for replay beginning today and through May 15, 2019, by dialing (800) 585-8367. The replay passcode is 1976866. The replay may also be accessed for the next 12 months on the company's website. To the extent any non-GAAP financial measures is disclosed 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 Tivity Health's expected quarterly and annual operating and financial performance for 2019 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 Tivity Health's filings with Securities and Exchange Commission and in today's news release. And consequently, actual operations and results may differ materially from those 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 Chief Executive Officer, Mr. Donato Tramuto. You may begin, sir.
Donato J. Tramuto -- Chief Executive Officer
Thank you very much. Welcome, and thank you to everyone who has joined the call today. I have with me Dawn Zier, formerly Nutrisystem's President and Chief Executive Officer, and now, Tivity Health's President and Chief Operating Officer; and Adam Holland, our CFO; as well as Mike Monahan, former CFO of Nutrisystem; and Tommy Lewis, who leads our Investor Relations and integration initiatives and who will be available during the question-and-answer session following our prepared remarks. I want to take this opportunity first to thank the more than 1,000 colleagues of our combined company, whose efforts in the first quarter delivered the positive results we are about to highlight. The results support what we all have come to recognize, namely we have a very talented team and colleagues who are mission-driven and focused on fierce execution.
As noted in my opening statement, I am very pleased with our first quarter financial results and today there are 5 key areas that I'd like to comment on. First, and as indicated in our revenue and adjusted EBITDA results for this quarter, our healthcare and nutrition segments are strong and independently performing well. Second, in our nutrition division, we had more new starts in March than in January on lower spend. Third, and related to our 2020 pipeline, our healthcare division, and I'm pleased to be announcing this, will be adding more than 0.5 million new eligible lives for SilverSneakers supporting our long-standing premise that one of our key growth levers with SilverSneakers is winning back customers loss in prior years prior to this leadership team. And allow me to remind you the selling season is not yet over. Stay tuned.
Fourth, we continue to execute on our A-B-C-D strategy. And now with the acquisition of Nutrisystem completed, we believe the assets from that acquisition will drive greater momentum across the entire strategy spectrum, and we have today some quick wins to report related to our initial cross promotional initiatives. And lastly, our SilverSneakers media efforts tallied positive results in the first quarter, and this will be an area of focus and growth for 2020. Simply stated, we believe, we have now validated first with the digital launch nearly 2 years ago and now with the expansion into television, that our SilverSneakers members respond very well to direct-to-consumer marketing efforts. Under my tenure as CEO and throughout the A-B-C-D strategy, we have intentionally embraced the notion that we are a direct-to-consumer business and the success in both the digital and television arenas have now validated that premise.
The addition of Nutrisystem, a champion of direct-to-consumer marketing and precision-based targeting, both complements and strengthens our existing A-B-C-D strategy. The combination of fitness and nutrition expands the distribution channels and opportunities for both divisions as we continue down the path to increase awareness, drive more enrollment and engage more members. We are truly better together. To quickly highlight where we are benefiting from the combination of our 2 powerful brands, I will run through each element of this strategy at a high level and we'll ask Dawn and Adam to elaborate on how this manifested during the first quarter and our plans for the remaining 2019. Allow me to frame this around our A-B-C-D strategy. As you know, A is about adding new members, and B is about building awareness and engagement. Nutrisystem strengthens the very promising SilverSneakers media strategy with their expertise and buying power. They also bring the secret sauce around precision engagement and behavioral modifications, dimensional elements so critical in getting our members to increase and sustain their activity, whether it be physical or social.
And conversely, Tivity brings to Nutrisystem a proprietary consumer database and extensive fitness partnerships that bring potential new customers to the table for a wide breadth of nutrition solutions. C, as you remember, focuses on collaboration to introduce new products and services that will generate revenue for each segment of the business and the organization. Over the last 2 years, I have telegraphed that with nearly 75 million eligible members across 70 health plans and employer contracts, we are not a product looking for members and rather we are a highway of members looking for more products. One thing we all know about a highway is that they like traffic and they can generate revenues from the tollbooths.
With a Net Promoter Score of 81 consistently in play for the last 3 years, we have a quintessential opportunity to leverage our trusting relationships with our entire stakeholder base to offer additional products and increased opportunities for other revenues and increase the traffic. You will learn more about the early signs of success related to this strategy under Don's prepared comments. And D is about deepening relationships with our partners. Stay tuned for more details on this opportunity as we flush out what this offering will look like for the future. In summary, and while new opportunities are being explored related to this transaction, you can clearly see how each segment can immediately benefit from the A-B-C-D strategy.
With that overview, I'll turn the call over to Adam to review the first quarter financials and our 2019 outlook in more detail, and then Dawn will discuss first quarter business highlights for the healthcare and nutrition divisions. Adam?
Adam Holland -- Chief Financial Officer
Thank you, Donato, and good afternoon, everyone. As Donato indicated, we are pleased with our achievements this quarter highlighted by the completion of our acquisition of Nutrisystem on March 8. For 2019, we have prioritized execution against our 2 core brands, SilverSneakers and Nutrisystem. Along with the integration of the Nutrisystem organization, we now have been operating as one company for 60 days and I'm pleased to report that we're delivering against those core priorities. Both businesses on a stand-alone and combined basis performed well across several key metrics, including revenue and adjusted EBITDA. For your reference, we've provided supplemental financial information on our Investor Relations website, that we hope will aid you in understanding our Q1 results and outlook for the remainder of 2019. Further, please note today's press release includes non-GAAP reconciliation table with related explanations.
Going forward, we will be reporting results for the combined businesses along with 2 distinct operating segments. The legacy Tivity business is now reported as our healthcare segment and the legacy Nutrisystem business is reported as our nutrition segment. Turning now to our first quarter combined results. The combined financial results both for Q1 and our full year forecast include the healthcare segment results for the entire first quarter and the nutrition segment results for only March 8 through March 31. Total revenue for the first quarter of 2019 was $214.1 million, an increase of 43% over last year. Net income of $4.2 million compared to $21.3 million in Q1 of 2018. Adjusted net income at Q1 of 2019 was $21.9 million compared to $21.3 million last year.
As a reminder, adjusted net income for the first quarter excludes certain pre-tax items, tax adjustments incurred in connection with the acquisition of Nutrisystem. Q1 2019 earnings per diluted share of $0.10 with adjusted earnings per diluted share of $0.51. Again, adjusted diluted earnings per share for the first quarter excludes certain items and adjustment in connection with the acquisition of Nutrisystem. Adjusted EBITDA for the first quarter, which excludes cost for the acquisition, integration and restructuring was $39.5 million. Moving on to the healthcare segment. Our healthcare segment continues to perform well. The segment generated first quarter revenues of $156.5 million, an increase of 4.4% over the same period in 2018. SilverSneakers revenue represented 79% of segment revenue or $123 million, growing 1.7% over Q1 of 2018.
Due to more revenue-generating visits from SilverSneakers members under hybrid-based contracts, SilverSneakers revenue exceeded our expectations during Q1. These positive results were partially offset by a decrease in total eligible SilverSneakers lives, including the loss of UnitedHealthcare lives we previously discussed. As you may know, approximately 75% of our eligible lives are under a hybrid contract, whereby, we receive payment from our plan for each visit by SilverSneakers member to one of our participating locations. As Donato stated, we are very pleased with this outcome and believe it validates the revenue potential of the A-B-C-D strategy. Total SilverSneakers visits for Q1 of 2019 were 26.2 million, a 1.5% increase over last year. Hybrid visits made up approximately 76% of total visits in Q1 with a balance in per member per month visits. Prime Fitness accounted for 18% of total revenue or $28.7 million for the quarter, an increase of 16% over the same period last year.
Prime's growth over Q1 of 2018 was driven in part by a 42,000 net increase in member pay subscribers. Our Q1 member pay marketing campaign was successful and resulted in strong net new buyer growth. We ended the first quarter with approximately 326,000 member pay Prime subscribers, a 15% increase over last year. Our healthcare segment non-GAAP adjusted EBITDA for the first quarter totaled $26.1 million or 16.7% of segment revenues after giving effect to the add back of the acquisition. Allow me a moment to discuss 2 key factors that influenced the Q1 adjusted EBITDA profile for the healthcare segment as compared to Q1 of last year. First, influencing our adjusted EBITDA for the healthcare segment was a front-loaded nature of our 2019 marketing expense for both SilverSneakers and Prime to the first quarter 2019, primarily from digital and television advertising. This resulted in a Q1 of 2019 total marketing expense of approximately $9.3 million compared to $2.9 million in the prior year period. For fiscal 2019, we anticipate our total marketing expense for the healthcare segment to approximate $12 million.
The second factor that influenced EBITDA is we have slight increase in our cost per visit in Q1 2019 compared to last year. This was in line with our expectations and was reflected in our guidance from February. Aside from these cost of visits, our Q1 SilverSneakers media investment which drove significantly more hybrid member visit revenue was a very positive outcome. That said, the media also impacted the number of visits from our PMPM base members, who, we believe, responded to our media campaign, took note of the SilverSneakers benefit and rolled in a program at levels that exceeded our expectations, thereby creating more nonrevenue generating visits than we expected. In summary, while we had experienced success with our first TV media campaign for SilverSneakers, we will use the rest of the year to evaluate the lessons learned as a means to modify and optimize this program for next year.
Turning now to the nutrition segment. Our nutrition segment's Q1 2019 reported results are for 24 days from March 8 through March 31. I'll be speaking to those last 24 days of the quarter. For this period, our nutrition segment delivered $57.6 million in revenue with adjusted EBITDA of $13.3 million. Similar to the healthcare segment adjusted EBITDA excludes transaction, integration and restructuring-related costs incurred during the quarter. Our nutrition segment generates a majority of its revenue through 2 primary distribution channels, direct-to-consumer and retail. Our direct-to-consumer channel acquires customers who typically sign up for a multi-month orders to address their weight loss goals. The segment is performing well.
While it is still early in the year, March saw a year-over-year increase in program starts, along with improvement in our customers length of stay compared to our original expectations. We anticipate the revenue cadence in 2019 to be slightly different than previous years due to the timing shift of our customer onboarding. Given March's strong performance acquiring customers, we expect to see a slightly higher percentage of 2019 revenue delivered in Q2 and Q3 as these customers take subsequent orders. Additionally, gross margins are projected to improve year-over-year versus the comparative period as we continue to optimize our portfolio. Finally, the retail channel is delivering to plan. Turning to our balance sheet. In conjunction with closing of the acquisition of Nutrisystem on March 8, we entered into a credit agreement, which provided Tivity a senior secured term loan A and term loan B facility totaling $1.18 billion as well as a $125 million revolving facility.
I'm pleased to report that as of today's call, we repaid approximately $55 million of the initial amounts borrowed on the term loans. We are confident in our ability to continue to pay down this manageable amount of leverage because we expect the combined businesses to continue to generate strong free cash flow. Turning to our outlook for 2019. Today we have affirmed the guidance we had issued on February 19, 2019. I do want to reemphasize that the guidance reflects our nutrition segment's results starting on March 8 and not for the full first quarter of 2019. We anticipate total revenue in the range of approximately $1.146 billion to $1.177 billion; non-GAAP adjusted EBITDA of approximately $240 million to $258 million, which includes our expectation to deliver cost synergy savings of $9 million to $12 million in 2019. This would equate to adjusted earnings per diluted share in the range of $2.24 to $2.52. Our guidance contemplates interest expense including noncash interest between $79 million and $81 million, a tax rate of approximately 28% for quarters 2 through 4 and weighted average diluted shares of approximately $47 million. Free cash flow, including cash paid for interest of approximately $70 million to $80 million, reflecting capital expenditures of approximately $22 million to $24 million. We will continue to pay down the debt and expect to reach our goal of less than 3.5x leverage by the end of 2020. In summary, we are very excited about the prospects for the company, our progress on the integration and our long-term growth opportunity.
Thanks again, and I will now turn the call over to Dawn. Dawn?
Dawn M. Zier -- President and Chief Operating Officer
Thank you, Adam. As Adam just shared and Donato mentioned in his opening remarks, both the healthcare and nutrition segments had a solid first quarter. For the flagship SilverSneakers business, the addition of our first-ever television campaign has proven to be a strong driver of success. In the first quarter of 2019, SilverSneakers incremental enrollment from member engagement initiatives were 65% higher than anticipated and visits to the SilverSneakers' website were up 67% over the same period in 2018. As of today, we believe that SilverSneakers combined television and digital push in January and February will drive $7 million to $10 million in revenue for 2019 as a result of increased hybrid visits. This was in line with our original forecast from February. All leading indicators for SilverSneakers enrollment were up across the board, including inbound cost and eligibility checks.
From a precision engagement standpoint, our 2018 pilots continue to show promise and we're excited about quickly leveraging Nutrisystem's core competencies in this area. We believe that the success in Nutrisystem's direct-to-consumer program will benefit the healthcare division as we infuse our media know-how to reach and engage eligible SilverSneakers and Prime Fitness members. Based on our successful SilverSneakers pilot, we'll be developing a more robust plan for 2020 on the marketing front, especially designed to leverage Nutrisystem's extensive marketing capabilities to drive awareness and engagement. As Donato stated earlier, driving awareness and engagement are significant leverage points for our business. For example, every additional 100,000 members enrolled translates into $10 million to $12 million in revenue. We also have an opportunity with those who are already active and engaged if we can get 100,000 of them to go to the gym just one more time per month. That's worth $3 million to $5 million over the course of the year. The health plans selling season is also off to a good start.
We have already added more than 500,000 new members for SilverSneakers for 2020. This helps to offset the lives we lost discussed on the fourth quarter call this past February. Please keep in mind the selling season is not over and we will continue to provide updates during the second quarter earnings call. In the past quarters, Donato has addressed the growing problem of loneliness and social isolation among today's senior population. As an example of our continuing to build on our strategy, I'm very proud to announce that Tivity Health is taking a leadership position in this and is partnering with Humana to address this issue head on. Humana has developed a predictive model to identify Medicare Advantage members that potentially feel socially isolated or lonely. They've allowed us to engage with that cohort, invite them to one of our locations or get them involved in a SilverSneakers class. We're having an ongoing dialogue with those members to engage them and we're measuring the impact on their loneliness, health and overall healthcare claims and medical cost. The goal is to publish a study by the end of this year of the results and ideally prove that we can positively impact these members lives. In our Prime Fitness business, we're seeing positive indicators, including net new subscriptions trending favorable and cancellations coming in lower than expected for the quarter.
As we discussed on the Q4 earnings call, we plan to implement an associate program with Walmart this summer. We're excited about our new partnership with Walmart and this is the first of several initiatives that we will be pursuing with them. We also believe that based on a successful rollout of the Walmart associate program, we'll be able to attract other large employers to Prime. Now turning to our nutrition segment, which encompasses both the Nutrisystem and South Beach Diet brands. On the last call, I mentioned that while the first 6 weeks of diet season started softer than anticipated, we were beginning to see momentum built in mid-February as we made some deliberate adjustments to our media plan. Nutrisystem finished the quarter strong as we introduced new creative that focused more on the value of our program, expanded our top-of-funnel digital sources and layered back in television spend, which we believe we cut too far back on in January.
As a result, we had a strong close to the quarter with March customer starts finishing higher than January on lower spend. For the remainder of the year, we're expecting customer starts to be stronger than prior year. For South Beach Diet, we continue to differentiate this product offering from Nutrisystem with our focus on keto-friendly options and are migrating our media efforts toward more digital by dialing back TV spend as we expand our efforts to target a more do-it-yourself customer. We're also planning to launch several pilots in retail in 2020 with South Beach and have secured our first customer.
Lastly, our reactivation and returning customer programs and a la carte offerings are performing well across both of these brands. I'd now like to talk about the steps we're taking to realize the combined value of bringing 2 strong companies together under 1 roof. For this year, we're focused on our integration efforts and are prioritizing the SilverSneakers and Nutrisystem brands. When the acquisition was announced back in December, Tivity began receiving inbound inquiries from interested health plans relating to potential ways to partner around a holistic approach that included nutrition-based solutions. From a product innovation perspective, we're proud of the science and studies behind our nutrition program, and have already received several RFPs in this area. We'll continue to focus and lead on the personalized nutrition front. We'll take our expertise around food, science and development and continue to innovate on personalized solutions around weight loss and management, which is a consumer-facing imperative and we'll also be able to serve the needs of health plans as we develop broader base nutrition solutions for chronic conditions in food insecurities.
Additionally, we have the ability to do food delivery at scale all throughout the United States. We expect to be able to offer solutions that can have a meaningful impact on outcomes in 4 key areas, by, one, providing meal delivery for post-discharge patients, as health plans have recognized that individuals with food insecurity or poor nutrition habits have a higher propensity for costly readmissions. Under certain conditions, CMS will provide 4 weeks of meal delivery. Beyond the initial 4 weeks to a beneficiary, we believe, this is an opportunity for us to offer caregivers a solution for meal delivery, which will extend nutrition beyond that initial 4-week period. Considering that family members often reside hours away from their aging parents, we believe that a market exists for adult children and caregivers to provide ongoing nutritional support for their parents and others.
Two, providing condition-specific meal plans for patients with one or more chronic conditions, Nutrisystem's currently available Nutrisystem D program was designed specifically to help customers with diabetes or prediabetes manage their condition. And we're partnering with Dr. Arthur Agatston, a renowned cardiologist and yes, the founder of the South Beach Diet principles, who serves on our Science Advisory Board, so you can easily envision the solutions we can provide around heart health. Based on our expertise around food science, we have the ability to develop custom nutrition programs for various chronic conditions our patient needs. And a DNA Body Blueprint kit and plan, which creates a personalized nutrition plan for customers based on their individual and highly specific health needs. Three, addressing obesity or malnutrition in Medicare Advantage populations; and four, providing nutrition guidance, health counseling and maintenance management, features that are already available to Nutrisystem's customers through our premier contact center. It's important to note that most of these opportunities are not tied to the Medicare Advantage bidding cadence and that they can be launched any time throughout the course of the year.
We look forward to sharing more details on future calls. During my first 2 months as part of the Tivity Health leadership team, it's been invigorating to see the evolution and mindset around creating awareness and engagement for the end consumer coupled with deepening the strong relationships already in place with the health plans and fitness partners. Just as I think, there are significant opportunity for the Nutrisystem South Beach and DNA Body Blueprint brands over time to leverage Tivity Health's health plan and partner relationships, there is also tremendous opportunity for the SilverSneakers and Prime products to capitalize on the performance-based and precision engagement capabilities that the company has gained by way of this acquisition.
To close my comments today, I'll provide an update on the cross divisional synergies that we've been working to unlock. I'll retouch on the significant opportunity to design nutrition-based solutions for the health plans that lead to better outcomes and reduce cost, which further develops our A strategy. We're also developing plans to address our D strategy as we know that many of our fitness partners are looking for nutrition-based programs for their members as well. The product development teams are at work designing these programs and we'll show more on future calls. The other area, which I'll term as more quick hit opportunities given the ease of execution are the leveraging on our databases and cross-promotion of our products between the healthcare and nutrition divisions. On Day 1 after the close, we began executing against key initiatives and right out of the gate, we're seeing early positive results that will translate into approximately 750,000 in revenue from the pilots alone. We sent targeted emails to individuals on our silversneakers.com and Prime databases and interest is strong.
The initial email open rate exceeded our normal open rates and these fast-start activities resulted in new Nutrisystem program starts. As our first synergy win, we'll roll this out to scale soon. In March, we examined the Nutrisystem database and found that roughly 25% of our customers are over the age of 65, so we delivered them a SilverSneakers promotion. We sent an email encouraging Nutrisystem members to check their eligibility. From that single email alone, 10% of the Nutrisystem customers emailed, visited the SilverSneakers portal to check their eligibility. We'll continue to refine these efforts and believe that there is opportunity to do more. And finally, in late April, we started the integration of our call centers and also began testing cross-promoting calls within the contact center. While we're still evaluating the results of these quick start initiatives, we believe, these early wins will provide incremental revenue synergies. So in summary, the healthcare division had a solid quarter. The nutrition division is on track to achieve its numbers. We're seeing abundant interest in a combined fitness and nutrition solution and we're excited about the revenue synergies as we move forward.
I now like to turn the call back to Donato. Donato?
Donato J. Tramuto -- Chief Executive Officer
Thank you, Dawn. And let me remind all of you that today is 60 days that we've closed the transaction. And I am very pleased with how quickly these 2 organizations have been able to activate on the cross promotions, work together to bring a combined offering to the industry and our respective clients and execute with fierceness on our integration strategy. I will close out our commentary today by briefly touching on a couple of key points. First, in tailgating of all the latest literature around social determinants of health, Tivity Health is now well positioned to provide a bundle of services that address aspects of social determinants of health most notably, social isolation and loneliness, inactivity and food insecurity. It has been reported that social determinants of health factors are directly responsible for at least 40% of total healthcare spending.
Conditions in the places where people live and work impact their health more than their genetical and health plans are recognizing this. They are now paying for food delivery, paying rent or providing access to affordable housing as a means to improve health outcomes and help their members avoid getting sick or suffering a more serious illness or being hospitalized in the future. In late April, Humana published its Bold Goal 2019 Progress Report. And I would like to take this opportunity to complement Bruce Broussard and his entire leadership team for recognizing that the future success of our healthcare system will be linked to addressing healthcare and not sick care. The Bold Goal Report correlated loneliness, social isolation and food insecurity to the number of unhealthy days. And there are increased risks for chronic conditions among food insecure seniors.
Additionally, lonely or socially isolated individuals are 4x more likely to be rehospitalized within a year of discharge. The report indicates that "There is a long-term potential for cost savings that could result from improving individual healthy days." Tivity Health has already shown that if a senior is actively involved in SilverSneakers, there is at least a 40% reduction in unhealthy days contributing to better quality outcomes for the plan and a savings of approximately $16 per unhealthy day that has been eliminated. The Bold Goal Report suggested that similar savings maybe achieved by addressing the issues that are inherent to loneliness and food insecurity. Humana, Anthem and other plans aligned perfectly with Tivity Health strategy to provide integrated solutions, including fitness, nutrition and social engagement to improve one's lifestyle, mobility and overall health, while at the same time eliminate loneliness and social isolation. Dr. William Shrank, Humana's Chief Medical Officer had this to say, "Addressing food insecurity, social isolation and loneliness is at the heart of our Bold Goal initiatives. To improve the health of the communities we serve, we need partners like Tivity Health who share our commitment to improve overall health with solutions that address social determinants." We have an opportunity as we move forward to move this organization to where our health plans are heading.
Again, I want to thank all of you who have joined this call. And operator, we will take questions at this point.
Questions and Answers:
Operator
(Operator Instructions) Your first question comes from Steve Halper with Cantor Fitzgerald. Your line is open.
Steve Halper -- Cantor Fitzgerald -- Analyst
Hi, I appreciate taking the question. I have one question and then a follow-up. Could you just provide a little bit more color January, February, the Nutrisystem, we know it was weak, you changed your marketing approach. But a little bit more detail on that would be really helpful, just because it's helpful in terms of thinking about what should happen in subsequent quarters? And then the other question is would you be able -- are you confident that you, as plans designed their 2020 benefits for Medicare Advantage that you will have nutrition benefits and your customers will be using Nutrisystem for that benefit?
Dawn M. Zier -- President and Chief Operating Officer
This is Dawn. Let me start with the January, February question. And so first off, we believe the addressable markets for our products and services are very large. And what happens, January and February did start off a little weaker than expected for many different reasons. But what we ended up doing was we revamped our offerings and advertisements based on the macro environment factors that we were seeing, both for television and digital and saw improvement in customer acquisition trends in March. So the cadence of our business is shifting slightly for this year. And that March starts came in very strong and we're confident as we go ahead in the guidance that we provided. I feel the business is definitely back on track.
Donato J. Tramuto -- Chief Executive Officer
Yes. Let me answer your -- Steve, it's Donato. So since we announced this acquisition now that we are closed, we have been very enlightened by the number of RFPs that have come in, the number of telephone calls and inquiries. And so one of the things that I will said always a caution is that certainly we are now discussing pilots with our health plans. We certainly would like to be in a position, where in 2020, we can now file or have them file, if you will, what that relationship might look like with Nutrisystem and Tivity. And so we are in active play. I think what Dawn stated here today, we have low-hanging fruits that we're grabbing. Certainly the post-discharge opportunity does not need any special filings. We are responding to RFPs that are coming in there. So I think you can tell in my that certainly we are optimistic by what the future holds for us.
Steve Halper -- Cantor Fitzgerald -- Analyst
Thank you.
Operator
Your next question comes from Alex Fuhrman with Craig-Hallum Capital. Your line is open.
Alex Fuhrman -- Craig-Hallum Capital
Great, thanks very much for taking my question. I wanted to ask a couple questions about Nutrisystem that was certainly really nice to see that the business has rebounded here in March. Couple of questions. Want to be curious what the time line is that we could expect to see for when Nutrisystem might be offered for sale through some of the many thousands of partner fitness locations that work with SilverSneakers? And then I'm not sure if you ever gave a target when you gave your initial guidance for 2019, but will be curious if you could give us a sense how much of that initial guidance for Nutrisystem, is the core Nutrisystem brand versus the newer South Beach Diet brand?
Dawn M. Zier -- President and Chief Operating Officer
Alex, nice to be speaking with you again. So regarding the -- we are actively exploring different partnerships with different fitness partner out there, but have nothing specific to disclose at this moment. But you can be sure that we will keep you posted as we go forward. We're also, at this time, not commenting on details around the breakout of the 2 different brands, but I am pleased as I'm looking at the different metrics on length of stay, on total program starts for the year and other key metrics that we look at in that they all are going to be up as we move forward. Given all the competing post-close priorities in 2019, we really are electing to primarily focus on the 2 core brands, SilverSneakers and Nutrisystem, along with our integration efforts, which are pretty considerable. Again, we've been company for 60 days, 1 company for 60 days and are happy with these -- with where we're going. We've seen improvements in television. We're driving more digital. So we really on plan for the things that we stated that we were going to be doing, but started out soft at the beginning of the year and now are definitely back on track.
Alex Fuhrman -- Craig-Hallum Capital
Thanks, Dawn. That's really helpful. And then just thinking about the comment about how March new starts exceeded that, that you saw in January. I'm just trying to get a sense of how unusual that is relative to your normal pace of business? Can you give us any kind of a sense of just on a historical multiyear basis, how many of your new starts typically would come in, in January or Q1 relative to the whole year, just that seems like certainly quite a turnaround given the normal seasonality of your business, I would think.
Dawn M. Zier -- President and Chief Operating Officer
Yes. It's definitely an anomaly. And then again as we look at March coming stronger than January, I can say that under my tenure, I hadn't seen that happen before. But I think as we think about it, it goes to how quick the team can react to different conditions, get new creative out in place and do things a little differently. So I'm really pleased with the action-oriented nature that the team pursued and pleased with what I'm seeing in March, and as I'm looking ahead for the full year guidance on what we'll be able to deliver.
Alex Fuhrman -- Craig-Hallum Capital
That's great, thank you very much.
Operator
And you next question comes from Mohan Naidu with Oppenheimer. Your line is open.
Mohan Naidu -- Oppenheimer -- Analyst
Thanks for taking my questions. Donato, on the healthcare side, how much more leverage do you have to turn on the media efforts to drive more enrollment? And can you use these efforts to drive utilization as well or do you need a different strategy for that?
Donato J. Tramuto -- Chief Executive Officer
Mohan, how are you doing? Great questions. And so remember, we have nearly 15 million members. And when you look at the number that is enrolled, we're teetering around 3.6 million, 3.7 million enrolled. We know that out of the 15 million in the personas that we have defined, half of them, about 8 million want to do some form of physical activity. And so do the math, we have an enormous opportunity. As you know, I've been telegraphing this for the last few years. Our biggest problem is that those who know SilverSneakers love it, not enough people know about it. And so the beauty of what we did in 2 years ago, was the digital strategy that work and the fact that we now have experimented with January and February and you've heard the results here today, this was a really great signal that we can move the needle.
Now to what degree and how much? This is what, I think, Dawn will help us with. These are the media experts. We deliberately by design, I think, you would have upset me if I would've committed a year to media and it didn't work. The reality now is we know it works, let's fine tune it and let's begin to design the plan for next year. And I think that the optimism we have is that we put our toe in the water this year and we had good results. Imagine if we throw our entire body in the water. So stay tuned for what that looks like for 2020.
Mohan Naidu -- Oppenheimer -- Analyst
Okay. That make sense. And I guess, I think, Adam made some comments about focusing more on driving revenue-generating visits. How do you plan on that one? I guess are you going to target specific geographies that have hybrid contracts? Any color on that would be very useful.
Adam Holland -- Chief Financial Officer
Yes. Mohan, this is Adam. That is a piece of it, but that's not all of it. One thing we learned last year, unfortunately, as side effect to the weather flu from 2018 in the first quarter as we were trying to employ marketing efforts later in the year, it became crystal clear to us that the biggest thing for our part was going to be to push the marketing spend in the first quarter when enrollment at fitness centers naturally happen. And maybe if you think back just the commercials you see on television beyond just the SilverSneakers, that's what a lot of the national chains advertised to get fit, go to the gym. The same holds true for SilverSneakers members and Prime subscribers as well. So we shifted to the first quarter, we drove the revenue in SilverSneakers and Prime to get to the precision marketing.
I think it's going to take a few things, is this going to take -- the channel is going to be piece, the geography it certainly a piece. It really gets down though to the more nuanced areas where Dawn's team is frankly much more than experienced that we are at the legacy Tivity business. And so the plan all along was run it for the first couple of months, which we did. As you can see, we've -- vast majority of our marketing spend is now behind us. And we will use the data that we'll continue to come in over the next several months because remember the visits continue and the lives of the SilverSneakers members go on. We'll take that data and learn from that niche models of Nutrisystem on how to apply that for enrollment season for 2020.
Mohan Naidu -- Oppenheimer -- Analyst
Thanks, Adam. Maybe one quick follow-up on the Prime Fitness side. Is Walmart contract up and alive and is it contributing already?
Adam Holland -- Chief Financial Officer
No. That will be for later in the year.
Mohan Naidu -- Oppenheimer -- Analyst
Okay, thank you so much.
Adam Holland -- Chief Financial Officer
Thank you.
Operator
Your next question comes from Nick Spiekhout with William Blair. Your line is open.
Nick Spiekhout -- William Blair
Hey guys, thanks for taking my question. I guess, to start, I was curious if you guys -- are you guys targeting or plan to target any health systems, in particular? It kind of seems like a lot of the larger academic medical centers have a lot of focus on the social determinants of health and kind of food is medicine. It seems like it would be a pretty right market for the nutrition segment there, so just kind of wondering if you have any plans to target those at all?
Donato J. Tramuto -- Chief Executive Officer
Yes. That's a great question. And you're alluding anyone who's at risk for the healthcare dollar. The programs that we have would be absolutely appropriate. But I have seen in the company slot, so what we have here today and we have an enormous great relationships with about 70 health plans. And so I think we have a opportunity to hit those first. It doesn't exclude us in terms of the future, in terms of how we can broaden the opportunity, but right now I think that these health plans and I've had the opportunity over the last number of months and in the next few months of meeting with the various CEOs of these health plans and I've been extremely encouraged that we have a great opportunity, A, because of the relationship we have. And what we're forgetting is that we have proven through the SilverSneakers opportunity, the ability to return on their investment. So let's go after them first and then begin to expand it into other groups of opportunities.
Nick Spiekhout -- William Blair
Got you. Great. That make sense. And then I guess, going to the gyms who are offering Nutrisystem, I know you said that you don't have really anything in the works at the moment. But just was wondering in your conversations with those gyms, are you getting good feedback? Do they seem receptive like they're willing to go along with this? Or I guess, a little bit more color on that end.
Donato J. Tramuto -- Chief Executive Officer
Yes. And Yogi Berra once said, "You don't want to make the wrong mistake." And so listen, we want to flush this out. We have heard and I heard this all through the due diligence through the time that we were looking at nutrition. And you know this as well as I do, that these fitness centers make their money, not just off of membership, they make their money off of other ancillary products. The good news about what we're talking about is that this is not just for Tivity Health members, we've got to kind of breakaway from that mold, that whatever we offer to these fitness centers will go beyond what we have as members and that's what gets them excited. And Dawn has already -- one of the things I will say and complement Dawn and the team that she's assembled on the integration that they've been moving fast. We're doing our own research. We're meeting with the various fitness centers to make sure we get this right. But just keep it in mind that we had -- if we have 16,000 fitness centers and we have half of them that are representing a distribution channel for all their members, you can see the opportunity that it provides for the nutrition division, but also for the health division. The more we can get tighter in terms of an integrated value proposition with those fitness centers, it really does solidify, if you will, our position with them.
Nick Spiekhout -- William Blair
Great. That's helpful color. I guess one more thing. As far as key integration milestones go, have you finished any so far in 2019? Is there any big ones that you're kind of looking forward to going on for the rest of the year?
Donato J. Tramuto -- Chief Executive Officer
Well, I'll hand it off to Tommy in a second. One of the things that we did here 2 weeks ago, Dawn, correct me if I'm wrong in this. But we saw a huge advantage with the integration of our call center with the Nutrisystem call center. I was very impressed during my due diligence in terms of their state-of-the-art. We made that decision a few weeks ago, we're integrating that and that provides more than just a cost synergy. The opportunity to really have every associate, who is accepting inbound calls and making outbound calls in one area provides, if you will, an enormous amount of revenue benefits. Tom, do you want to talk about others?
Tommy Lewis -- Chief Transformation Officer & Chief of Staff to the CEO
Yes. Nick, it's good to hear from you. Aside from the contact center, we have already closed 2 offices, which will benefit us. We are evaluating all of our third-party relationships, our procurement spending. And so we're making good progress on all of the cost synergies. We're well into the information technology type of integration and planning there that's a major spend. Obviously, Nutrisystem was a public company, so we've eliminated their governance spending. So I think we're on plan.
Nick Spiekhout -- William Blair
Awesome. Great, thanks guys for the color -- hop back in. Thanks.
Operator
Your next question comes from Dave Styblo with Jefferies. Your line is open.
Dave Styblo -- Jefferies -- Analyst
Hi, good afternoon and thanks for the questions. Maybe a question for Dawn or Adam to start out with. I'm wondering if you could give us what the full year Nutrisystem contribution was, I know, obviously, it was just 20 days or so on the P&L on a combined unit, but just so maybe a better sense of how that business compare to the initial guidance? And Dawn, I guess, from your comments it sounds like things really did tick up better especially in March. I'm wondering how you're feeling about that business relative to perhaps additional guidance you guys said are we sort of trending to consistent with that range? Or is there perhaps a biased to the upper end of the range with the longer duration as well as the more starts that you saw?
Adam Holland -- Chief Financial Officer
Hey Dave, this is Adam. I will start. Yes. And this will be a disclosure in our 10-Q, which will go out. The full first quarter revenue for the legacy nutrition business, I believe, is right at $191 million. So you can see the shift that Dawn is talking about. We don't go into the monthly cadence of the business. But I think the important takeaway is that the waiting to March is, as Dawn said, unusual and welcome because what it's basically doing is resetting the cadence for the following months because you then take out those orders throughout April, May, June and so forth. So I think that will help frame up the difference between what you see in terms of historical cadence and that what we're laying up for 2019.
Dave Styblo -- Jefferies -- Analyst
Okay. Yes. That sounds like that was spot on with what I've expected for the first full quarter.
Adam Holland -- Chief Financial Officer
And that was also in range with what we had put out in February.
Dave Styblo -- Jefferies -- Analyst
Yes. Okay. Okay. And then maybe just a more strategic question of opportunities for Donato. As you lookout, I certainly appreciate all the color that you provided about some of the revenue synergies and so forth, and it sounds like there's some opportunities you're exploring on both sides. As you look forward, what would you imagine might happen first? Are we more likely to see upside from Nutrisystem type sales or more so on the fitness contribution where you're working through different arrangements with obviously all the different parties that created these additional revenues synergy opportunities?
Donato J. Tramuto -- Chief Executive Officer
Well, that's a great question. And I'd like to have it all. So let me answer it like this. Certainly, there are some low-hanging fruits right now. And I think the media is certainly one that we have to find for you. That's a low-hanging fruit for us because we have approximately 12 million members that have not registered. So I see that as a very significant opportunity. These exchanged databases. This was a very good sign. Dawn related to you that they sent out an email and nearly 40% of those who receive the email opened up that email. And so there's an opportunity for Nutrisystem to really take advantage, if you will, of orders coming in. But quite honestly, CMS gave us a gift. When they elected and approved the 4-week reimbursement, we think that's a gift and if that gets wrapped around, the caregiver model, there is an opportunity to extend that 4 weeks perhaps to 3 or 4 months. So I see that as an opportunity for the nutrition division. And quite frankly, the fitness centers. I don't want to underestimate the opportunity to strengthen the relationships that we've always have had and want to keep with the fitness side and the opportunity to give the Nutrisystem or nutrition division a whole new channel. So it's a multiplicity. It's not one. I think that the fierce execution that we are undertaking and, I think, speaks to the opportunity to ensure that it's not all one-sided that there is an advantage for both sides to benefit from this integration.
Dave Styblo -- Jefferies -- Analyst
Very good, thanks.
Operator
Your next question comes from Nina Deka with Piper Jaffray. Your line is open.
Nina Deka -- Piper Jaffray
Hi. thanks for taking the question. You mentioned that you're adding 0.5 million new eligible lives in SilverSneakers, is this due to a large win back or several new accounts, can you describe the composition?
Donato J. Tramuto -- Chief Executive Officer
Yes. I was waiting for that question to surface. There are a number of clients. And for reasons that I think you would know, it's that, A, they don't want their name mentioned at this point. And quite honestly, we don't get into individual contracts. But I think you could safely say that the more than 500,000 new lives is representative of a number of contracts that we've been able to pull in.
Nina Deka -- Piper Jaffray
Okay. And then what gives you confidence that the amount of spending required for marketing to deploy the, I guess, the Nutrisystem knowledge into the SilverSneakers and Prime networks, what gives you confidence that, that same level of investment isn't going to be required every quarter moving forward?
Donato J. Tramuto -- Chief Executive Officer
Well, I'll answer that and have Dawn comment on it. First of all, what we've seen and in many respects it's like the diet season has had the influx and interest of gym membership. And this is something that we learned over the last few years getting into our database, is that the high interest in terms of enrollment happens in the first few months and it's very similar to the diet season. And so this is not a every day 24/7 media blitz. We know that, that doesn't work. What we do know is we want to capture the interest at the time when we know that our seniors are most interested in the program. Dawn, do you want to?
Dawn M. Zier -- President and Chief Operating Officer
Yes. It's -- and again, television is broad stroke, so television drive awareness, which is what we're looking for. As Donato talked about, we have an extraordinarily high Net Promoter Score. We want more people to be aware of the SilverSneakers brand. So television provides us the venue to do that and we can do television in a targeted way as well which we will as we go forward. And let's say, that is in early in this -- in the part of the year where we'd be focusing on things like that as we look forward. Then we move into more our precision engagement, which will require some -- which will require sophisticated digital marketing, which the Tivity Health team is already doing a good job and will continue to be able to build out and do more. So I don't view media spend as a negative thing because I think we will have the discipline to make sure that the media that we're spending similar to a direct-to-consumer mindset with Nutrisystem that the direct -- that the media spend that we'll be spending will drive positive ROI as we go forward. So I think it's a good thing to come. And again, looking forward to more that we can do in 2020 as we let these results that we've currently tested in the first quarter of the year mature, get more insights and then prepare for a robust strategy in Q1 of next year.
Nina Deka -- Piper Jaffray
Okay. Thank you.
Operator
There are no further questions at this time. I'll turn the call back to the presenters for closing remarks.
Donato J. Tramuto -- Chief Executive Officer
Very good. Thank you very much. I hope that you share my excitement by the speed and diligence to which we have commenced our integration. Again, I remind you this is 60 days post close. I believe we have the right team in place. I believe that our strategic direction is aligned with the market. And after having numerous conversations with our health plan leaders over the last number of months, I'm even more confident that our current integrated offerings align with their strategic objectives. Thank you very much for joining us. Make it a great evening.
Operator
This does concludes today's conference call. You may now disconnect.
Duration: 59 minutes
Call participants:
Donato J. Tramuto -- Chief Executive Officer
Adam Holland -- Chief Financial Officer
Dawn M. Zier -- President and Chief Operating Officer
Tommy Lewis -- Chief Transformation Officer & Chief of Staff to the CEO
Steve Halper -- Cantor Fitzgerald -- Analyst
Alex Fuhrman -- Craig-Hallum Capital
Mohan Naidu -- Oppenheimer -- Analyst
Nick Spiekhout -- William Blair
Dave Styblo -- Jefferies -- Analyst
Nina Deka -- Piper Jaffray
