Tivity Health fields takeover interest, say sources: Reuters

Tivity Health Inc (TVTY.O), a U.S. provider of fitness and health improvement programs, is considering a potential sale after receiving takeover interest from private equity firms, people familiar with the matter said on Thursday.

Going private would accelerate Tivity Health’s ongoing transformation, that included changing its name from Healthways earlier this year and divesting its total population health division, which uses coaching and clinical protocols to improve the overall health of employees and insurance plan members.

Tivity Health’s deal talks are preliminary, and there is no certainty that negotiations with buyout firms or other potential acquirers will advance and lead to any deal, the sources said. They asked not to be identified because the deliberations are confidential.

Tivity Health declined to comment.

Tivity Health shares jumped as much as 10 percent on the news, and were up 4 percent at $37.91 in afternoon trading in New York, giving the Franklin, Tennessee-based company a market capitalization of $1.5 billion.

Following a strategic review, Tivity Health last year decided against an outright sale, instead opting to divest its population health unit to Sharecare Inc, a U.S. health and wellness online platform co-founded by TV personality Dr. Oz.

As part of that deal, Tivity paid ShareCare around $25 million to take on the loss-making division, which made up more than a third of Tivity Health’s revenues.

In exchange, Tivity Health received a claim on up to $30 million in ShareCare common stock, which could be reduced if losses from the population health business exceed $25 million.

Tivity’s stock has tripled since then, as investors cheered the divestment. The deal significantly widened Tivity Health’s margins and focused it on its faster growing businesses, which sell healthy lifestyle products and services, primarily to seniors.

Tivity Health’s main businesses are SilverSneakers, a program that provides regular exercise and social opportunities for seniors; Prime Fitness, which helps people stick with fitness plans; and WholeHealth Living, a specialty health benefits manager.

Changes at the company were catalyzed by hedge fund North Tide Capital, which in 2014 installed three board members and a new chief executive at the company.