Tivity Health, Inc. (TVTY) Q1 2021 Earnings Call Transcript

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Tivity Health, Inc. (TVTY)
Q1 2021 Earnings Call
May 5, 2021, 5:00 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good day, and thank you for standing by. Welcome to the Tivity Health Q1 2021 Earnings Conference Call. [Operator Instructions]

I would now like to hand the conference over to your speaker today, Matt Milanovich, Vice President of Investor Relations. Thank you. Please go ahead.

Matt Milanovich -- Vice President, Investor Relations

Good afternoon, and welcome to the Tivity Health first quarter 2021 financial results conference call. Before we begin, if you do not already have a copy of the first quarter earnings release, supplemental information and related 8-K 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 Tivity Health's expected quarterly and annual operating, and financial performance for 2021, 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 the Securities and Exchange Commission 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.

Richard Ashworth -- President and Chief Executive Officer

Good afternoon, and thanks, Matt. Thank you all for joining the call today to discuss Tivity Health's first quarter earnings results. Joining me on the call is Adam Holland, our CFO; and Tommy Lewis, our COO; and Matt Milanovich our new VP of IR.

As you saw in today's press release, we reported strong results for the first quarter of 2021 with revenues of $108.1 million and adjusted EBITDA from continuing operations of $41.2 million. As a result, we are increasing our revenue guidance range to $465 million to $485 million and our adjusted EBITDA guidance range to $151 million to $155 million.

Touching on a few highlights, our SilverSneakers in-person gym visits continue to gain momentum throughout Q1 and grew 19% over the fourth quarter of 2020 to 11.2 million visits. Additionally, our Q1 virtual SilverSneakers visits increased by 50% over Q4 2020, totaling 1.2 million visits, reflecting continued robust demand for our SilverSneakers branded classes and proprietary content. Our balance sheet and leverage ratio continue to improve during Q1, with net debt of $353 million, bringing our leverage ratio to 2.11 at the end of the quarter. During the quarter, we prepaid $64 million of principal and amortization of term loan debt, meaning our next amortization payment is not due until December of 2022.

Last year we dedicated ourselves to positioning the company for profitable growth, with a focus on delivering differentiated value to members, clients, and shareholders. And that growth is under way. Our SilverSneakers business is gaining momentum and reflected in strong operational performance during Q1 and raising of 2021 guidance. We are also meeting critical milestones in our strategy to become the modern destination for healthy living and I'm pleased to share key highlights with you on today's call.

I'll begin my remarks with an operational update for the quarter and then discuss progress against our strategy. SilverSneakers represented 74% of our first quarter total revenue. And as mentioned earlier, our first quarter visit trends for both in-person and live virtual substantially improved as compared to Q4. SilverSneakers live virtual visits continue to accelerate, increasing 50% in the first quarter compared to Q4 with 36% of our Q1 virtual visits representing new participants. This puts us on track to deliver our goal of more than 4 million live virtual visits for 2021. There is a growing demand for convenient, high-quality live digital engagement inside our membership base. Our continued growth in participants and visits, plus our member surveys tell us a clear story that our SilverSneakers members desire curated and focused experiences.

SilverSneakers provides one of the best platforms for members to enjoy a breadth of live offerings that are easy to use, high variety, ever-changing, and fun. We now offer over 13,000 distinct live with instructor events every month targeting different audiences with varying fitness levels and specific needs. Our on-demand library now contains over 220 videos including nutritional and other enrichment content important to members and we continue to add new content every month.

As a result of our member research in January, we increased the number of live virtual classes, while further expanding available class times for SilverSneakers members. This ensures our members will always have choices of content and availability of live classes when and how they want them. Importantly, we also expanded our national classes with a greater variety of targeted, specialized SilverSneakers format. Our SilverSneakers national instructors have become some of our most important brand ambassadors. And many have generated significant following, which helped activate new SilverSneakers members through one of the best marketing channels available, word of mouth.

And finally, we're launching a new live virtual personal training program for SilverSneakers members and we are very excited about this unique engagement experience and how we can help our members with better live by targeting their specific need and goals. As the impact of COVID-19 subsides in the world of fitness and more members return to our physical gym network, we believe our SilverSneakers digital offerings will continue to be an important and growing part of their engagement experience.

Turning to in-person SilverSneakers performance, our gym network and other partner locations continue to gain momentum as in-person visits grew by 19% over Q4 to 11.2 million visits. As we moved through Q1, we find increase in both the number of members returning to the gym and an increase in the number of visits. Our gym and participating location network remain robust and we ended the first quarter of 2021 with approximately 16,000 SilverSneaker locations. This is in line with where we started the year.

As immunizations and confidence levels improve especially among older adults, we anticipate an acceleration of in-person visits through the remainder of 2021. Our recent survey data indicated that over 90% of SilverSneakers members had received at least one dose of the COVID-19 vaccine as recently as April. That same cohort indicate a strong desire to return to in-person SilverSneakers fitness experiences, including the gym and community fitness once it was deemed safe to do so.

We believe with the continued momentum of the vaccination rollout and the gradual removal of gym restrictions, SilverSneakers is on track to achieve an annual in-person visit goal for 2021. Our renewal and new sales season for SilverSneakers is also under way. Our key renewals, including those among our top 10 customer base are progressing as expected and we are seeing some early success with plans who are adding to SilverSneakers benefit for the very first time.

Our objective over the next few months is to continue to engage existing and potential new clients to secure long-term contracts for 2022 and beyond. And also expand the number of markets where those plans offer the SilverSneakers benefit. Aside from our new virtual offerings and social engagement capabilities, which I'll touch on in just a minute, the core SilverSneakers offering continues to show a strong ROI for our client. Just recently, we engaged Avalere Health to use real-world data and analytics to create an independent evidence-based study on the value of the SilverSneakers program related to healthcare utilization, health outcomes and healthcare costs. The objective of this research was to quantify the value of the SilverSneakers program from both a cost and overall health improvement perspective. Our members have the same chronic illnesses as many other seniors, including high blood pressure, high cholesterol and diabetes. However, the Avalere study revealed they also engage in healthier behaviors beyond just exercise, including keeping up with their routine medical appointments, going to screenings and taking medication to manage their condition.

The results of the independent research concluded that the total cost of medical care for SilverSneakers participant was 16% lower than for non-participants. Fundings also included improvements to medication adherence and areas directly tied to plan star ratings. Our participants are healthier, they're happier and they require less medical care than numbers who do not participate in the program. This further highlights the importance and urgency of our work to increase engagement and utilization among our SilverSneakers eligible members as well as alignment with our health plans, who appreciate the validation of these outcomes.

Moving on to Prime, this business accounted for 21% of total Q1 revenue and we ended the quarter with approximately 12,500 partner locations, similar to where we began the year. We ended the first quarter with 220,000 active Prime subscribers, slightly higher than where we ended 2020. We anticipate our subscriber base to range between 200,000 and 210,000 for the remainder of 2021 and believe it will give us a good launching point to start rebuilding subscribers in 2022. Our first quarter Prime visits increased sequentially by 24% to 3.1 million visits from 2.5 million in Q4, also on the higher side of our expectation.

Our Prime subscribers with an average user age in their early 40s are returning to in-person gym visit at utilization rates nearing pre-COVID levels, which highlights the demand for our unique product that incorporates one of the largest physical gym networks in the United States. Our focus for the remainder of 2021 will be to deploy new digital features within Prime, which we believe will broaden and further differentiate our value to subscribers and our plan partners. These new features will include an expanded catalog of digital fitness videos and resources plus new live virtual instructor format. Our commercial insurance and large employer relationships for Prime are healthy. Our gym network is robust and durable and we believe the growth opportunity in this area is attractive over the long-term. I look forward to updating you on our progress.

Moving onto our strategy update. We are expanding beyond a gym access company into a member focused data-driven platform engagement company, with omnichannel capabilities. Our objective is to engage members through our trusted 30-year SilverSneakers brand and to do so beyond physical fitness utilizing new tools, new data and new experiences. Fundamentally, we'll be a member-centric company to meet member needs and leverage our market-leading brand as well as digital and in-person assets, capabilities and expertise. The backbone of our strategy will be our new engagement platform, enabling us to develop a personalized data-driven set of experiences for our members, customized to their interest needs, behavioral profile and goals. All in a way that maximizes value for our clients and benefits for our members.

Our members will experience the platform through multiple mediums, including a new and smarter website, and SilverSneakers app, backed by AI-enabled proprietary segmentation and state-of-the-art omnichannel technology. In essence, the engagement platform will be a mean to diversify revenue beyond our historical core fitness and gym access offering. A good example is the new product within our digital transformation strategy called SilverSneakers Connect, which allows members to connect socially through a dedicated platform, either virtually or in-person. Our analysis shows that this type of connection reduces loneliness and social isolation among our participating population. We're currently engaging in discussions with our health plan partners on this unique benefit for members.

Additionally, we have recently launched a pilot with a well-known partner nutrition counseling and enrichment, under this pilot participants have access to one-on-one nutritional counseling, mental enrichment and other personalized content that targets their specific conditions using a state-of-the-art just a compliant app. We believe nutrition is an important part of addressing the underlying chronic conditions of our SilverSneakers membership base. An example, such as this pilot could lead to new commercial offerings in both WholeHealth Living and our Wisely Well brands. This pilot among others as part of a new test and learn discipline to extend our relationship with payers in new ways and identify opportunities within our additional network strategy, which could support up to 22 traditional and expanded supplemental benefits offered under Medicare Advantage.

We have made meaningful progress over the last 60 days toward launching our new engagement platform later this year. While there may be some element of investment that could include acquisitions, we don't believe the investments will meaningfully move our leverage ratio. Importantly, we've recently announced the addition of two new executives Sarah Richardson is our new Chief Information Officer and Stacey Santo as our new Chief Experience and Innovation Officer. Both executives bring significant expertise in healthcare and in fitness. Sarah will leave the delivery of the digital engagement platform and the expansion of our customer relationship management tools and data strategy.

Stacy will lead innovation initiatives, including the implementation of data-driven marketing strategies, platforms and programs, a robust voice of customer program and the development of new product and service offerings. I am confident that the addition of these hires to our already strong management team will ensure we continue to hit our milestones and create new and diversified revenue streams for Tivity Health in 2022.

In conclusion, the fundamentals of our business are strong and we have exciting growth opportunities ahead of us. As more individuals age into Medicare, the demand for high-quality engagement will only increase. Our 2021 guidance reflects year-over-year growth in both revenue and adjusted EBITDA and our healthy balance sheet affords us the financial flexibility needed to accelerate our growth. I'm confident we will leverage our market-leading SilverSneakers brand, as well as our digital and in-person assets, capabilities and expertise to bring more value to our members, our clients and our shareholders.

I'll now turn the call over to Adam.

Adam Holland -- Chief Financial Officer

Thank you, Richard. Today we reported adjusted EBITDA of $41.2 million, an increase of 36% over last year, reflecting a solid start to the year. Additionally, we ended the first quarter in a strong liquidity position, as evidenced by our cash on hand of $52.4 million and leverage ratio of 2.11 times.

Now turning to the first quarter revenue from continuing operations. Revenues for the first quarter were $108.1 million. SilverSneakers revenue was in line with our expectations at approximately $80 million, down compared to the same period last year, due to fewer revenue-generating visits as a result of COVID-19. Similar to last quarter, SilverSneakers' revenue profile during the first quarter of 2021 was different from the same period last year. Revenue from per member, per month fees represented 53% of our total SilverSneakers revenue compared to 36% in the same period last year. We expect this percentage to decline as we move through 2021 and generate more member visits as part of our overall revenue mix.

We ended the quarter with 17.6 million health plan members eligible for SilverSneakers, an increase of 9% over March 31, 2020, and on track to meet our goal of approximately 18 million eligible members by the end of the year through monthly age ins. Total SilverSneakers visits for 12.4 million during the first quarter of 2021 compared to 25.3 million for the same period last year, with monthly average participation of 2.9% compared to 7.9% last year. Within the 12.4 million visits, 1.2 million visits were in live virtual with instructor. Importantly, the average number of times, our members go to the gym per month increased by 24% compared to the same period last year.

And now to Prime. We generated $22.6 million of revenue in Q1. We ended the quarter with 220,000 active Prime subscribers compared to 344,000 subscribers at the end of the first quarter in 2020. This subscriber decline accounted for the majority of the year-over-year revenue decline. We had approximately 3.1 million gym visits from Prime in Q1 of 2021 compared to 4.7 million in the prior-year period. For WholeHealth Living, during Q1, we recognized $5.6 million in revenue, a slight increase to last year.

Turning to our Q1 2021 balance sheet and cash flow. We ended the quarter with cash on hand of $52 million and term loan debt of $405 million, with a leverage ratio of 2.11 times, well below the maximum ratio of 5.25 times as calculated under our credit agreement. As Richard mentioned, during the first quarter we prepaid $64 million of principal and amortization of term loan debt, meaning our next amortization payment is not due until December of 2022.

Now turning to guidance, we raised our full-year guidance in our earnings release and supplemental materials this afternoon. We now expect total revenue to range between $465 million and $485 million and adjusted EBITDA from continuing operations to range between $151 million and $155 million. We increased the lower end of the revenue and adjusted EBITDA ranges as a result of better than expected SilverSneakers visits and a larger average Prime subscriber base. As our membership base returns to the gym for both SilverSneakers and Prime, we anticipate total company gross margin percentage to decrease from Q1 2021 levels. Our guidance also reflects an increase in operating expenses in Q2 and Q3 relative to Q1 levels, which relates to our omnichannel initiative.

Finally, in our updated -- finally, our updated 2021 guidance does not reflect any impact of a potential change in the value of our ownership in Sharecare. As a reminder, we hold approximately 159,000 shares of Sharecare stock as a result of selling our Population Health business to them in 2016. The shares are currently reflected at a carrying value of $10.8 billion in other assets on our balance sheet. Sharecare has announced that they are emerging with Falcon Capital Acquisition Corp., which is described in Falcon's 8-K.

From an accounting standpoint, if and when the Sharecare stock starts trading, we will begin reporting these shares at their fair value in accordance with U.S. GAAP and recognize any gains or losses through the income statement. There could be no assurance that the Sharecare transaction will move forward, what valuation our shares will have, or when we will sell our shares if the transaction does occur. In closing, we will continue to consciously manage our operating cost structure to support both operations and strategy to maximize our earnings and cash flow capability in 2021 and beyond.

On the balance sheet, we have a strong liquidity position, and we will continue to evaluate our capital structure as well as our capital allocation philosophy. Due to the strong leverage loan market conditions, we will be exploring an opportunistic refinancing of our credit facilities to reduce interest expense, lower amortization, and extend maturities. And as a reminder, it remains our intention to maintain a leverage ratio below 3.0 times as we grow the business through both organic investment and potential M&A opportunities.

I'll now turn the call back over to Richard. Richard?

Richard Ashworth -- President and Chief Executive Officer

Thank you, Adam. Appreciate your time and attention. I'll turn it back over to the moderator to take your questions.

Questions and Answers:

Operator

[Operator Instructions] For our first question, we have Steve Halper from Cantor Fitzgerald. Steve, your line is open.

Steven Halper -- Cantor Fitzgerald -- Analyst

Hi, thank you. Two questions. In terms of in-person utilization, do you still expect that number to be sort of gradually ramp to 70% by year-end? Because that was the expectation after last quarter.

Richard Ashworth -- President and Chief Executive Officer

Hey, Steve. Thank you. Good to hear from you. Good question. I'll start and then, Tommy, or Adam, if you want to weigh in, but short answer to that is, yes, we still see in-person is coming back strongly, and what we're seeing recently is in line with that plan. And so we're still expecting that amount you saw in the update on the guidance, we had a little bit of an uptick in the number of in-person visits, which you can see in the chart that we put in the supplemental materials and in the release, but Tommy, or Adam, anything you want to add?

Tommy Lewis -- Chief Operating Officer

Yeah, we saw a nice inflection point in March and we were happy with the April results as well, as markets began to open up, we're seeing people go back to the gym and it's yet to be determined what seasonality factors take place this summer as people begin to travel and things of that nature, but we're very optimistic about the return to the gym.

Steven Halper -- Cantor Fitzgerald -- Analyst

And then when you think about some of your renewal discussions, how has virtual moved into sort of the pricing realm on those renewals?

Richard Ashworth -- President and Chief Executive Officer

Yeah, good question, Steve. So first off, I mean, virtual is becoming a very core part of the discussion. So I think it's a -- it's becoming an accepted way for our population to engage, giving them that optionality of going to a gym, or in there -- in the comfort of their home or of course our community aspects. In terms of the pricing, I would say that it -- and Tommy, you can weigh in here, but overall it's been fairly commensurate with what we've seen so far around virtual. The value proposition of virtual is very strong. When it's backed by a very large gym network, it becomes pretty compelling. Anything you want to add?

Tommy Lewis -- Chief Operating Officer

Yes. Payers appreciate what we're doing related to virtual, we're bringing on new members that hadn't engaged in the gym previously. They like the engagement. They like the activity, it's a great value proposition. Our deep proposition is that physical at the in-gym pricing and the virtual is the same and we're not really giving a lot of push back on that.

Steven Halper -- Cantor Fitzgerald -- Analyst

Great. So as this rolls out, the economics stay the same or actually improve if -- as you add more functionality to the platform in theory, correct?

Richard Ashworth -- President and Chief Executive Officer

Yeah, I would think the -- at the broadest point, yes, I think, in the short-term, the scale and size of that digital is not near what our in-person visit locations are, but we are pleased with the growth, we're getting consistent engagement. Just two other things that I think are important about this, to your point, Steve, the digital platform, 36% of our virtual participants are brand new to SilverSneakers. They've been eligible, but they haven't participated. Pre-COVID our in-person new participants was tracking around 18%. So we're getting almost double the new activation through the digital channel. And as we add more content and as we offer more services and experiences, I would expect that that would become a more compelling channel for our membership base.

Steven Halper -- Cantor Fitzgerald -- Analyst

Great, thank you.

Richard Ashworth -- President and Chief Executive Officer

Okay, Steve, appreciate it.

Operator

For our next question, we have Jailendra Singh from Credit Suisse. Your line is open.

Carlos Consuegra -- Credit Suisse -- Analyst

Hey, good afternoon, guys. This is Carlos, on behalf of Jailendra. I have two questions for you. The first one is, you guys talked about the focus of the new CIO and CXIO. I was wondering, if you could elaborate more on the change in focus and priorities with respect to those digital and innovative offerings with the new hires at the company. And second question, also noticed gross margins for Q1 were 47%, do you guys still anticipate that gradually stepping down to the mid-30% range in the back half of '21?

Richard Ashworth -- President and Chief Executive Officer

Thanks, Carlos. Appreciate it. Richard, I'll start off. And then, Adam, if you want to take the gross margin question? For the CIO, CXIO, what's good about both of these executives coming onboard is the significance of their background, having experienced in almost start-up environment, having experience with very large fitness companies, having experience in very large health plans, very robust healthcare services companies, and having a lot of digital experience was what we were looking for in both of these roles to come and accelerate and to continue the strategic outline that we gave a couple of months back.

And so, we just feel really good that both of these executives who are now here with us, and I can tell you are up and running for sure, delivering a lot of value already, but giving fresh perspective on ways to solve for some of our member needs and wants as it relates to our platform. So just really excited about their background and the pace that they're going to bring for us. Adam, you want to take gross margin?

Adam Holland -- Chief Financial Officer

Yeah, so we pointed out the gross margin percentage is expected to go down and what drives that is you have more visits, not all of our visits, as you remember, Carlos, are revenue-generating visits. Prime is an example of that our PMPM SilverSneakers members, and other example of that. So as those increase, you're going to have more visits, more costs, and that's going to drive your percentage down back to more historical levels.

It's hard to say, if we're going to get all the way back to the pre-COVID historical normal 30% this year. It all really depends on the speed of the return to normal. I think with what we've got it to is kind of 70% pre-COVID by the very end of this year that we probably won't get back there all the way this year. It's probably going to be into 2022. But directionally, it's what we want to see, and we're happy to see the visits return as fast as they have.

Carlos Consuegra -- Credit Suisse -- Analyst

Okay, thanks.

Richard Ashworth -- President and Chief Executive Officer

Thanks, Carlos.

Operator

For the next question, we have Sean Wieland from Piper Sandler. Sean, Your line is open.

Sean Wieland -- Piper Sandler -- Analyst

Hi, thank you very much. I'd like to learn a little bit more about engagement levels on the virtual visit. So beyond the actual number of total overall virtual visits, how do you measure engagement at the individual level around maybe frequency or watch time? And what are the strategies you've been in place to really drive engagement?

Tommy Lewis -- Chief Operating Officer

Hey, Sean. This is Tom. Great question. What we're seeing so far is that our average visit per participant for virtual is actually higher than the physical. So the people that are participating really like the experience, they like to convenient, time slots offered, they like the instructors. So they're are actually attending more, which is good for member, good for us, good for the health plan.

In terms of what we're doing to enhance that engage. We're -- we -- there are a number of things that we do. We have a waterfall type of marketing strategy, if you will, where we communicate with those members, we advice them on the upcoming schedule if they're -- if they like a particular instructor, we will provide them content related to the instructor. We give them a lot of great content, a lot of great information and we're continue -- in a digital format, we're continually to -- continuing to communicate with them to try to nurture that relationship and get them to come back.

Now the new technology that we're investing in that you heard us talk about last quarter related to our consumer data platform, our new market capabilities are coming online this summer, that will give us even greater ability to do precision communications and messaging and ideally continue to increase engagement levels.

Sean Wieland -- Piper Sandler -- Analyst

Is it typically for the members either or kind of they either use going in-person or virtual or is it a combination?

Tommy Lewis -- Chief Operating Officer

Right now, what we're seeing is, they're really sticking to a single modality. So if they're -- if they prefer the gym, we're seeing them stick with the gym. The mid-single digit cross-over right now, we expect that that will continue -- that will increase over time. For example, when we had weather issues back in February, we did some proactive communication to encourage the gym goers to take virtual classes and that worked out pretty well. So we would expect the crossover rate to continue in the future. And so we really want to leave it up to the members to attend whichever type of session they like, whether it's in the community, whether it's virtual or in the gym. But we believe that our efforts will raise utilization across the board because we have a variety of options.

Richard Ashworth -- President and Chief Executive Officer

Yeah. Sean, I think, the other good point here is, as we can get more people to engage with us virtually, there is a kind of an upfront process right to them in. And once we get them over that line based off how they participate more frequently and how they're stickier. I think over time we're going to see a large -- larger number of people who will kind of go back and forth. But so far it's been pretty single modality where if they like the gym they go that way and if they like to digital they stick with it too.

Sean Wieland -- Piper Sandler -- Analyst

And last question I promise. This was helpful, is -- can you tell us what the margin differential is between -- at the gross margin level between virtual and in-person?

Richard Ashworth -- President and Chief Executive Officer

Well, I can't give you the exact percentage, obviously, there is a different cost structure involved and it can come in at a higher margin depending on the format. We have several different formats of live classes. The two most popular are SilverSneakers live classes, which is a large audience, almost a peloton type experience with a national instructor. And then the second class is a what we call it FLEX live, which is a more intimate group, maybe the group that you would have maybe done your classes, down the street at your local gym, 10 to 15 people and your local instructor have done online because the gyms is closed or there are restrictions or inclement weather.

And so, we'll be working through the different models. I mean, we're going to offer what the members want and that's what's going to drive us first versus what has higher margin or lower margin. But the important thing is, Tommy, mentioned is that we're engaging new members. We're tracking new data on these members that are helpful to the plans and the members. And we're excited about where this can go.

Sean Wieland -- Piper Sandler -- Analyst

That's super helpful. Thank you.

Richard Ashworth -- President and Chief Executive Officer

Thanks, Sean.

Operator

And we have time for one last question and it's from Ryan Daniels from William Blair. Ryan, your line is open.

Nick Spiekhout -- William Blair & Co. -- Analyst

Hey, guys. And Nick Spiekhout in for Ryan. Thanks for taking my question. I guess to kind of follow up on Sean's line, as you move more and more into this kind of a little bit of virtual here, a little bit of physical there more kind of omnichannel fitness offering. How do you guys envision that affecting PMPM? So I would think could you move more into these different offerings, you shift a little bit away from the visit fee and have a larger chunk of that be more of a PMPM rate. But I guess how are you guys thinking about that?

Richard Ashworth -- President and Chief Executive Officer

Hey, Nick. It's a good question. To start off with, we're very flexible. So how our plans want to engage with us commercially, we're very open to that. PMPM versus a fixed fee or some hybrid of the two are very often. We like to be in alignment with the plan on our behavior. What we really want is to be the mono destination probably living and help people get as physically fit and active and socially connected and mentally enriched they can.

And so, as we're doing that and now we've got this virtual and digital capability, which is proving to be enthusiastically responded to, I would think that because engagement percentage, the type of touchpoints in number we have go up, could we see a shift in the way that payers think about how to commercial engage with us, we could. My point would be, no problem with that. We're really excited about engaging more people and we want the economics to of course work for us, but we also wanted to work for the plan, and ultimately, we just want members more engaged.

So it's a good question. I don't know the answer to it, yeah, it's a little too far out. What we're seeing right now is a lot of our plans are sticking with whatever commercial construct they had before, we're going through renewal season now. We're not seeing any seismic shift in the way that we're contracting with them, everything seems to be pretty consistent with past history, obviously COVID through a curve-ball for everybody. But our plans are seeing more longer-term on the member health, really appreciating the difference that SilverSneakers make, not only on the health side, as we announced at the Avalere study, but also on the importance for the Medicare Advantage offering.

So, good question, tim will tell, but we're pretty open and flexible to different constructs.

Nick Spiekhout -- William Blair & Co. -- Analyst

Great, thanks. That's helpful color. And then I guess, kind of shifting gears a little bit, the virtual personal training kind of feature seems pretty interesting. What are the plans to monetize that? I can see something where someone goes into the gym you get paid as swipe and then it's an extra service that they have up on their with a virtual training assistant while they're in the gym by themselves. How do you guys kind of envision that taking place?

Richard Ashworth -- President and Chief Executive Officer

Yeah, good question. Thank you. It's almost -- in one way it's like what you're used to in gyms, but with a kicker benefit. So, let me explain. So right now you get a gym membership that doesn't usually include personal training, right. Maybe you get one or two free, but then you pay for some specific sessions. That'll be similar here, sort of the construct to get access to SilverSneakers and then the live one-on-one personal training is a top-up, if you will, that's the plan can fund for. But the kicker would be that it is in concert and in partnership with the plan.

So as someone has a specific need, more clinical or healthcare-related need, so maybe they got discharge from physical therapy, but still need some more quarter training and some more strength training or maybe they need some help with fall prevention because they're at higher risk, then we can work in concert with the plan to enable the personal training for that member. But that is done through very specific curated proprietary engagement of our senior fitness instructors. And so that's the unique difference is that, yes, it's one-on-one like normal personal training but the goals are very health-oriented and in concert with the plan.

Nick Spiekhout -- William Blair & Co. -- Analyst

Thanks, guys. Very helpful color. Appreciate taking the questions.

Richard Ashworth -- President and Chief Executive Officer

No, I appreciate it. Thank you.

Operator

Presenters, we don't have any further questions. You may continue.

Richard Ashworth -- President and Chief Executive Officer

Well, we just want to thank you for your time. Very good questions as usual and appreciate your time and attention. Everyone have a good rest of your evening.

Operator

[Operator Closing Remarks]

Duration: 38 minutes

Call participants:

Matt Milanovich -- Vice President, Investor Relations

Richard Ashworth -- President and Chief Executive Officer

Adam Holland -- Chief Financial Officer

Tommy Lewis -- Chief Operating Officer

Steven Halper -- Cantor Fitzgerald -- Analyst

Carlos Consuegra -- Credit Suisse -- Analyst

Sean Wieland -- Piper Sandler -- Analyst

Nick Spiekhout -- William Blair & Co. -- Analyst

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