Tivity Health, Inc.
Q1 2018 Earnings Call Transcript

Published: 23 Apr 2018

[Operator:]

Good afternoon. And welcome to the Tivity Health First Quarter Conference Call. Today's call is being recorded and will be available for replay beginning today through April 30th by dialing 719-457-0820. The replay passcode is 2892276. The replay may also be accessed for the next 12 months on the Company's Web site. To the extent that any non-GAAP financial measures discussed in today's call, you will also find a reconciliation of that measure to the most directly comparable financial measure calculated according to GAAP according in today's news release, which is also posted on the Company's Web site. 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 2018 and beyond. For this purpose, any statements made during this call that are not statements of historical facts may be deemed to be forward-looking statements. Without limiting to 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 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 Chief Executive Officer, Mr. Donato Tramuto. Please go ahead sir.

[Donato Tramuto:]

Thank you, very much operator and good afternoon to everyone on the call. Thank you for being with us today for Tivity Health's first quarter 2018 conference call. I am also joined today by Adam Holland, our Chief Financial Officer. However, before I get started, allow me this opportunity to provide a brief update on Chip. He is doing well with his recovery and we are all hopeful he will be back with us sometime next month. He is extremely grateful for all of your well wishes and your priorities. I’d like to now give just a high level review of some of the numbers in the quarter. I’ll then turn it over to Adam who will lead us off with a detailed review of our first quarter financial results and a look at our financial guidance for 2018, which we are today reaffirming. Then I’ll conclude today's prepared remarks with a review of some highlights from the quarter and a look at the exciting developments ahead of us for the remainder of 2018. We’ll then open up the call for your questions. Before I begin, I want to reiterate what has been communicated in past earning calls and that is our culture of empowerment and first execution continues to be the hallmark of our success activity. And I’d like to take this opportunity now to thank the nearly 500 colleagues whose dedication and focus on managing our business has helped immensely to deliver the positive results on our EBITDA, which came in at $33.1 million meeting our internal forecast. Revenue came in at $149.9 million in the first quarter. And as you will hear later in more detail, the actual visits were challenged by the severity of both the weather, as well as the flu season, particularly in January and February. Over the years and as we have grown are eligible lives for SilverSneakers, we have continued the transition of our member base from a PMPM to a hybrid model. And subsequently have become more subject to certain weather and macro health factors beyond our control, that can impact us within any given quarter, much like what we saw last year with the hurricanes. However, the good news is that as we continue to increase the momentum behind our awareness, enrollment and engagement initiatives, supported by a strong digital platform, we believe we will be able to quickly recognize these issues. Additionally, and in the future, we intend to offer alternative fitness venues that we capture activity outside the June when these conditions surface like flu and weather challenges. Our premise is clear. Even in the flu and weather screening time periods, we still want seniors to be active even if that activity is conducted in a digital offering. Fortunately, our health plan customers are now recognizing Tivity Health as a company that is taking a holistic approach to their members, and are open to the discussion around alternative revenue models for capturing activity whether it’d be at a gym, a community center, the home or a place outside of home. More details on this will be shared at our June 1st Investor Day presentation in York. And so for now, without further ado, I'll turn the call over to Adam to discuss our first quarter performance. Adam?

[Adam Holland:]

Thanks, Donato and good afternoon everyone. I’d like to start by recapping some of the key financial metrics for the first quarter. First quarter revenues were $149.9 million compared to $141 million for the first quarter 2017, an increase of 6.4% over last year. We are especially pleased with our performance in light of the unusually adverse winter weather, particularly in the Northeast, coupled with a severe flu season. Net income was $21.3 million for the quarter compared to net income from continuing operations of $15.5 million in the first quarter last year. Earnings per diluted share was $0.49 compared to adjusted earnings per diluted share of $0.42 in the first quarter last year. We generated EBITDA of $33.1 million for the quarter, providing an EBITDA margin of 22.1%. SilverSneakers’ visits were approximately 25.6 million, compared to 24.2 million for the first quarter of 2017. During Q1 2018, Prime member pay enrollment increased by approximately 23,000 net new subscribers and now totals approximately 283,000 subscribers compared to 234,000 subscribers at the end of Q1 ‘17. While we are pleased with the growth in revenue year-over-year, we believe that performance could have been even better had we’ve not seen the adverse winter weather and a severe flu season, both of which we believe led to a reduction in SilverSneakers’ revenue generating visits, as well as new Prime subscriptions. The impact was most pronounced in January and February. Although, I am happy to report that we did see a meaningful improvement in SilverSneakers’ visits during March, and early indications in April show a continuing trend of improvement. Albeit we need to wait until the entire month of April is over before we can confirm these trends. Moving down the income statement. We maintained a strong gross margin this quarter with a reduction in other cost of service expenses, such as professional fees, payroll and IT maintenance compared to the first quarter last year, in both dollars and as a percentage of sales, reflecting a favorable comparison to last year's business separation costs. SG&A decreased approximately 20 basis points as a percentage of revenues compared Q1 last year. We saw expenses reductions across multiple lines during the quarter. We believe our ability to leverage the fixed base of expenses inside both of cost of services and SG&A, while continuing to grow revenue will provide meaningful support to EBITDA margin in 2018 and beyond. Our year-over-year improvement in earnings-per-share includes a favorable comparison of approximately $0.08 per diluted share from the improvement in our tax rate. And a headwind of approximately $0.04 per diluted share as our share count increased to approximately 43.6 million shares compared to 40.5 million in the first quarter of 2017. Our effective tax rate came in at approximately 25.1%, reflecting the impact of the Tax Cuts and Jobs Act, as well as the positive benefit of the tax treatment from the exercising of options and vesting of restricted shares during Q1. We entered 2018 with approximately $120 million of federal NOLs and credits, available for utilization and we expect to pay less than $5 million in federal and state cash taxes. Moving on to cash flow and debt repayment. Free cash flow for the first quarter continued to show strong momentum and totaled $10.4 million compared to $1.8 million in Q1 last year. We ended Q1 2018 with approximately $148 million of outstanding debt and $38.8 million of cash on hand. Our ratio of total debt to 12 month trailing EBITDA as calculated under our credit agreement is less than 1.0 times at the end of Q1 2018 compared to almost 2 times at the end of Q1 2017. We believe we are well positioned to address the retirement of our convertible senior notes in July and continue to explore strategic opportunities that will allow us to better serve the needs of our customers and members for long-term. Turning now to our outlook for 2018. We are reiterating the ranges that we provided on our last call with revenues in the range of $607 million to $625 million, adjusted EBITDA in the range of $139 million to $144 million, free cash flow in excess of $100 million and adjusted earnings per diluted share in a range of $2.12 to $2.20. And with that, I would like to turn the call back over to Donato.

[Donato Tramuto:]

Thank you, Adam. Delivering the strong EBITDA results in the first quarter despite the challenges of flu season and savior weather patterns was a key focus of this organization, and I'm very pleased with the outcome. However and to help us better understand the cause and effect of both the flu and weather, we moved beyond our own internal analysis and consulted with a well respected public health expert who is associated with the Centers for Disease Control. Our focus was to understand more about the impact of this year's uncommon combination of severe flu and weather on our first quarter visits. What we found interesting in the analysis was that even for various not as hard-hit by the flu, the extensive publicity impacted people's behavior. This was further validated by the varied discussions we had with owners of our partnership facilities. Hence this year's flu epidemic likely caused our SilverSneakers’ members to take precautions and stay at home instead of visiting their favorite facility. The good news is we did see positive trends in member growth during the first quarter. And as we move to the end of the first quarter of 2018 and into the few weeks in April, we’ve seen steady improvements in more members visiting SilverSneakers’ participating locations. We do want, however, to look at the final data that will come in early next month for the entire month of April to ensure that this trend is indeed continuing, further validating that the challenges we experienced earlier in the year are now behind us. In 2018, we registered an uptick in the shift of eligible SilverSneakers lives falling into our hybrid revenue model. We believe and I shared over the last 18 months, our ABCD strategy aligns nicely with our hybrid revenue strategy, where namely we get paid when members get out of their homes and engage in physical activity. While certainly one could say that the hybrid model works against us, especially when you have uncontrollable situations like the flu, and weather, the reality is that there are 365 days in a year and the majority of those days are not burdened with those negative factors, therefore, supporting our strategic imperative to have the majority of our eligible lives in a hybrid model. This model, I believe, provides more value to the member, to our health plan customers and a greater financial return to us, especially where our scalable digital strategy is focused on driving more awareness, which should then drive more enrollment and engagement. Our health plans, and I have visited many of them, have come to recognize this business imperative as a key partnership criteria for how we will work effectively together in the coming years. Humana’s extension of their partnership with Tivity early in the year is a clear signal to our joint commitment to work together to drive increased membership and engagement leading to better health outcomes. We continue to better serve our customers and our member needs, starting with our launch of the digital marketing strategy in the first quarter of 2017. Since that time, we increased year-over-year the number of Facebook likes from 88,000 to over 500,000 impressions over a four week period from 1.5 million to over 4 million, new SilverSneakers.com registrants from 1.2 million to nearly 2 million, newsletter registrants to over 1.2 million and our Web eligibility check have increased over 46% and participation location checks have increased to nearly 1 million year-to-date. These metrics are being monitored with a fierce focus and we believe will serve as key indicators around how we can move the needle to increase the enrollment and engagement. So let me just get to the skinny. What is so what behind all of this? The A part of our strategy has resulted in early success as demonstrated by the addition of new members influenced by our strategy around increasing the awareness of SilverSneakers. We have seen, we have witnessed and we have observed in our own community of family and friends that many of the base members who have not enrolled are simply unaware that they have the benefit. At the June 1st Investor Day event, we will share more details on programs intended to address the B part of our strategy, mainly getting more of the remaining base members that is the 12.1 million members who have not enrolled to sign up for the program. And lastly, get more of all the enrollees to engage more often. Critical to all of this is our ability to execute on our C and D strategy, and collaborate with partners to introduce new programs and deepen the relationship with our national network. We will have a number of important updates for you in this area when we get together in June. One area that has and continues to be a key focus of this company is the net promoter score. And I am pleased to report that SilverSneakers’ net promoter score continues to hold an unmatched strong position in the industry with a score of 81. In addition, we also concluded a brand awareness survey again this year, and the results were 14 point increase year-over-year. I am sure you recognize a top brand position does not happen overnight, and our nearly three decade of experience has locked in SilverSneakers as a respectful and trusting brand with the senior population. We not only understand how to successfully get our members to be active, we have also learned how to communicate effectively with them. In the first quarter of this year, we handled nearly 500,000 inbound calls from the call center. I am proud of our trained colleagues who know how to connect with members in a way that often gets them committed to being active. It’s one of the key reasons why we have successfully moved nearly 23% of our eligibles over to active enrolled members. Why we are now laser focused on getting the remaining 77% who have not signed up yet have the benefit for free to get enrolled. No amount of increased market share can surpass unique opportunity we have before us to get as many of that remaining 12.1 million eligibles to activate their SilverSneakers membership and engage in the programs that we offer, whether it’d be for physical or social activity. To convert more of those inactive eligibles into active enrollees, we use an integrated approach deploying a number of assets such as our reputation, our SilverSneakers brand, our call center, our territory managers, our digital strategy, our unique behavior information collected over 26 years through nearly 600 million unique visits and our extraordinary and experienced talented staff and network partnerships to name a few. Our aspiration goal is clear, 5 million enrolled members by the end of this decade. I have always liked to quote, there are three things that never come back, the past, the spoken word and a missed opportunity. We do not intend to squander this enrollment opportunity before us, hence and as shared in the earnings press release issued an hour ago, I am pleased to announce the addition of Arra Yerganian to the Executive leadership team, assuming the new yet very important role of Chief Brand Officer for Tivity Health. Arra will be responsible to take our enrollment and engagement strategy to the next level. He brings extensive experience to this role where he most recently served as Chief Marketing and Branding Officer at Sutter Health. While there, he expanded their membership significantly. Prior to that, he served as Chief Marketing Officer of the University of Phoenix where he led the effort to revamp their digital strategy, successfully expanding member enrollment through digital means. His member obsession will serve us well as we move our SilverSneakers brand beyond the gym and into a more holistic position where we are paid for all activity we affect, whether it’d be physical or social. In 2018, we intend to look at other products that have the capacity to engage members into some form of activity. Unfortunately, the senior populations more than any other demographic, are exposed to newest chronic condition of the 21st century, now known as loneliness. Of late, there has been significant publicity on loneliness, most recently this morning with an article that appeared in the Wall Street Journal. The good news for us here at Tivity is that we have been ahead of the curve in identifying many years ago that one of the key benefits of SilverSneakers is our proven ability to great social connections. Tailgating off this widely recognized new chronic condition called loneliness, we have a quintessential opportunity within our existing membership base to guide our members to see SilverSneakers as a social and physical fitness program and to alleviate the effects of social isolation and the feeling of being alone. As reported this morning by the Wall Street Journal, many health plan leaders now understand the epidemic of loneliness and how its risk factors are equivalent to the effects of smoking 15 cigarettes per day. I like to say if physical fitness and social interactions were a drug today, I believe it could be one of the bestsellers to improving the health of America's seniors. Social isolation among seniors living in rural America is adding a cost burden of approximately $135 per month to the Medicare advantage plans. Tivity Health SilverSneakers is well-positioned to help our Medicare advantage and Medicare supplement plans address the risks associated with loneliness and the senior population. Hence our conversations with our members have now changed. We now take the time to help them understand they can go beyond the treadmill. We are executing our SilverSneakers members that there are other options they can walk and communion with other members, they can build social connections and create new friendships. We recognize that not everyone is a gym person and with more than 15 million people now eligible for SilverSneakers, we want to assemble a basket of programs designed to meet the needs and demands of all of our members and our partnership locations, such as getting them involved in a diabetes prevention and management program, which is offered by many of the YMCAs. We view this beyond the gym initiative that’s a highly complementary opportunity for Tivity and our partners, and 2018 will be a year where you will see and you will hear more about what initiatives we intend to roll out to expand on this notion. The more, we can list the remaining 12.1 million eligible members to activate their SilverSneakers’ membership, the greater the value we will be able to bring to our health plans. To highlight this notion of social fitness, allow me for a moment as I have done in previous earnings calls to share a story about a SilverSneakers member I met last month in New York City. I heard from a very prominent member who ran a very successful chain of restaurants with her husband in New York, the New York area. He died unexpectedly 10 years ago and her entire life fell apart. Happily married for nearly 30 years despite having met thousands of people for her restaurants, her life changed the day her husband died and she did not know how to move forward. A friend, a native recommended she joined SilverSneakers. She told me SilverSneakers saved her life, moving her from a staff state to one where she has met so many new friends. She shared with me how this network of friends continually checks up on her when she misses a visit, how the one appointment that is on her calendar three times a week is SilverSneakers. She shared with me how she recommends the program to others, and now she is the SilverSneakers ambassador during the annual Medicare advantage open enrollment period, getting the news out all SilverSneakers, as well as making sure members select plans that offer this signature program. One of the other outcomes of our successful awareness campaign was not only gain the attention of current and perspective new SilverSneakers members, but also gaining the attention of perspective clients who are now aware of the significant positive impact that the SilverSneakers brand can bring to their organization. Under the leadership of our Chief Growth Officer, Steve Janicak, who is with me today coupled with a renewed commitment to strengthening client relationships, as well as the power of the SilverSneakers brand, we have in front of us a healthy, a healthy mix of greenfield opportunities, the potential to expand markets and products within existing clients and the introduction of new products to continue to both maintain and expand eligible lives. In addition to significant potential new business opportunities before us, our renewal rates for calendar 2018, if you recall last year, we tallied a 99.9% renewal rate. And looking ahead to next year, while we’re in this selling season right now, we are on track to where we were last year at this time, having already achieved approximately 60% of our renewals at the end of the first quarter. While I am tremendously proud of our renewal track record, I am also keenly aware of the fact that anything can happen in this business. Our customers have choices so our products and services must continue to demonstrate value to our clients every day, both in contributing to the health of their members and to their overall financial performance. Our pipeline is healthy and robust. The high level interest we are seeing is certainly higher than at any other time since I became CEO. We have for the last few years talked about this revenue mosaic, and perhaps it would be helpful for me to explain precisely what is behind that term. In every year, since I have been affiliate with the Company, the factors that inform the following year revenue, in this case 2019, are typically; one, new customer sales and renewals; two, expanded markets from current customers; three, upsells of new products; four, demographic growth, which is both durable and expanding; and last, organic growth fueled by more enrollment and engagement. These positive factors help to offset any potential losses. This was the case in 2017 going into 2018 and hence this is the mosaic that we have leaned on and why this business model has a strong sense of predictability, of course, with the exception obviously of flu and weather. As is the case with any sales process, it’s not over until it's over. Please keep in mind we are in the middle of our 2018 sales cycle and look forward to providing an update on our progress at the Investor Day conference on June 1st. With the combination of the first quarter, I am very confident that Tivity is well positioned to achieve our 2018 objectives, and capitalize on the long term opportunities ahead of us. At our Investor Day on June 1st, I look forward to providing you with a deeper dive into our awareness and engagement digital strategy and to introducing you to members of our senior team who you may not have met yet. Thank you for your continued interest in Tivity Health and for being with us today. Operator, we now would like to take the call to questions. Thank you.

[Operator:]

Thank you [Operator Instructions]. And our first question comes from Ryan Daniels with William Blair.

[Ryan Daniels:]

Adam, a quick housekeeping because I missed it. Can you give me again the year ago SilverSneakers visit for Q1 ’17?

[Adam Holland:]

It was 24.2 million visits year ago.

[Ryan Daniels:]

So that’s up about 5.8% year-over-year for the entire quarter. Can you speak to the magnitude of the improvement you saw in March? I think that'll probably one of the key questions for investors. So I am curious if it was up 5.8% for the quarter, what was it year-over-year in March?

[Adam Holland:]

Ryan, without giving exact dollar figure, I’d say that what we saw in March was that the visits were more on our internal plan.

[Ryan Daniels:]

Closer to high single digits?

[Adam Holland:]

Yes, just closer to our original planned expectations.

[Ryan Daniels:]

And then I want to ask more about 2019 with some of the changes that are eligible for Medicare Advantage plans. It sounds like; number one, they’re easing up on some of the marketing in the MA plan beneficiaries. So I am curious how you think that could potentially benefit you; and then number two, it also seems like there’s an ability for MA to offer a lot of ancillary benefits like meals, and transportation et cetera. So it seems like that could be an area where you really step up the collaboration and partnership with clients going forward. So I am curious if you think some of those legislative changes will benefit the organization?

[Donato Tramuto:]

Absolutely, and let me work backwards. That's part of that whole social isolation. If you look at Meals on Wheels, for example, Ryan, what a great way to be partnering with them and to have connections in the home, so we think that that is going to be a -- and that’s what I talked about if you remember the C part of our strategy, is to collaborate with partners. That's exactly you’ve identify them, whether it’d be transportation, whether it’d be just connecting people. For example, it’s not just Meal on Wheels. Many of the physical locations have other programs that they offer beyond just treadmill. So we’re working with them to make sure we escalate those opportunities. And with respect to the, first on the marketing and not just these greatly -- nicely into this whole digital strategy and so there is not a plan out there, I can say that and I have our Chief Growth Officer who can correct me. There’s not a plan out there right now that is not applauded us in terms of what we’re doing with respect to digital. And I think the whole region. Now you know why the silversneakers.com is incredibly important to us. We see that as our great conduit to forming digital relationship and to encourage them, if you will, to get to the gym, not just physical workout but for social interactions. We will be talking about, I don't want to get into it right now, we will be talking about an incentive program at the June 1st. We’re very excited. We have an exclusive partnership that we’re forming that we think is going to be really the cohesive venue to get more members to enroll and engage. It’s a no brainer. Again, let me talk about that on June 1st, because we’re just finalizing that partnership. But you can still see that we’re thinking outside the box in terms of how we incentivize these folks within the parameters of our team SOLs.

[Ryan Daniels:]

And then last one and I’ll hop off. Just last quarter you talked about $4 million in annualized savings from the Q4 restructuring that took place. Did you achieve the full 1 million quarterly run rate benefit? And if so, have you already started to reinvest that into growth initiatives or is that more on the comp as we think about the SG&A spend in the model? Thanks.

[Adam Holland:]

Some of that was reinvested in Q1 with some of the marketing initiatives with open enrollment. You will see those as we progress through the year, meaningful decrease especially in the SG&A on an annualized basis.

[Donato Tramuto:]

Certainly, the investment in the Chief Brand Officers is a significant investment for this company.

[Operator:]

Thank you. Our next question comes from Nina Deka with Piper Jaffray.

[Nina Deka:]

So you’re reaffirming your guidance, so suggest any potential acceleration then in the relating quarters, maybe more pronounced than the usual seasonality. How should we think about the quarterly ramp in revenue or the remainder in year? And what provides you with confidence that revenue will increase at a faster rate? I know you provided some indication about enrollment being up. But could you maybe provide a little bit more insight?

[Adam Holland:]

Yes, very similar to what we said last in February that we expected that this was going to -- we’re going to see an acceleration at the back half the year. But I don’t take too much into that this in Q1. We still feel solid about the range, the reason just still the same. We have a higher propensity of average lives in the SilverSneakers’ model this year. So there is going to be a little bit more work to get those folks converted from eligible to active. That is one factor. The other factor is our Prime business. We have new business. We have promotions. Both of those are going to be weighted towards the back half years. So really nothing has changed from what we had said back in February, not to the degree where I would say we have to alter the plan for the back of half the year.

[Donato Tramuto:]

If I may just add to that on to the Prime, we will be announcing certainly coming up the June 1st meeting, a new partnership with the new product that is going to have an enormous momentum we believe for Prime. So there's a lot of these that are on track, whenever you develop a new product, you always get a little bit scared if you’re not on target for launch we are on target. We’re on target for respect to the market roll outs and we’re on target with respect to this significant partner who we will be hopefully getting that contract signed by the end of the month. So everything is on track. In terms of the one unfortunate area that we can’t control and I wish I could and you know if I could I would, would be the flu. So I think everything else hasn’t changed.

[Nina Deka:]

And then also can you provide any additional detail regarding -- you mention the flu and also the extreme weather and you even indicated the North East region previously. But was there any concentration, any pressure on the revenue among any particular clients?

[Adam Holland:]

No, it really -- because our client base is as we have may be the top MA plans in our portfolio, we’re in many of the states. I can say, we were looking at it and this is something we really haven’t done before is looking at the visits geographically, because that where when we were looking at the heat maps of the flu, we were looking at the extreme weather, we did see a difference where winter weather of course it incur on the West Coast and this impact was not as noticeable. So if that helps you then that was one thing that we believe that continue into January and February of this year.

[Operator:]

Thank you. We’ll move on to Mohan Naidu with Oppenheimer.

[Mohan Naidu:]

Can you remind us what portion of your members are in hybrid model right versus the traditional PMPN?

[Adam Holland:]

Mohan, it’s entire this year and perhaps it would be [indiscernible].

[Donato Tramuto:]

So that’s about 5 points, so that’s exactly the direction of course we want to take. By the way somebody, I don’t know if that’s your, the background noise is very, very challenging.

[Mohan Naidu:]

I’ll try to mute myself it's probably me I’m at an airport. And I guess a follow up question. In the hybrid model, does it change your payments and fitness center when you move from the PMPM to hybrid?

[Adam Holland:]

No, Mohan, it does not. It is agnostic depending on the PMPM or hybrid model.

[Mohan Naidu:]

Just one final question. Donato, you talked about the selling season. Apart from the renewals, can you see any opportunities to expand your market share? I think you have a little bit or 60% market share in SilverSneakers, any opportunities that you are seeing right now?

[Donato Tramuto:]

Well, I would love to, we once again this year expanded it. And so one of the areas that I’ve been very encouraged and I think a lot of this just in Gulfs and to the change in leadership that in Gulf in terms of the change that the way we were approaching our business, many of our customers have asked for years get more digital and get more programmed, we want more member enrollees. And I think that is just really -- I've been out with Steve and it’s a very encouraging sign. Some of those will be reserved for next year just because of where they are in their cycle of agreements. Others are queued up for this year. I would be certainly disappointed if we did not add a few more clients this year, and that’s what Steve is working on. I would think by June 1st, we’re going to have some good updates for you.

[Mohan Naidu:]

Maybe one more if I can seek in. Donato, last couple of quarters, you’ve been talking about increasing metrics around Facebook interactions, Web site contractions. Are you seeing indications now that these metrics are actually helping you in maybe member visiting more or make somewhere -- it’s actually flowing into your business in one way or other?

[Donato Tramuto:]

Yes, so the two that we are -- it’s a great question. The two that we are seeing and now you want to convert it, it's my favorite saying about McDonalds when they say 8 billion people visit, it doesn’t tell you how many ate there. So what we’re now looking at the two that have been very encouraging is the Facebook has led to more members registering SilverSneakers.com and those members are now doing eligibility checks. We are up significantly in eligibility checks and we’re up in location searches, and both of those are good signals and signs. Now with Arra coming on board, he is going to be very instrumental now in moving that in terms of how we get them enrolled. We will share with you on June 1st, there is four or five very really unique things that we are doing that now poles that through the channel. You don't want to leave anything to chance. So just saying they are going into SilverSneakers.com and they’re now checking their eligibility and they’re checking the locations, is not good enough for us. We have three or four really pull through programs that we’ll talk about in greater detail on June 1st that will give us confidence that the second half into '19 will begin to convert these members into actual enrollees. That’s what I say, my aspirational goal and the Company's aspirational goal is by the end of 2020, we want to get to 5 million enrolled members.

[Operator:]

Thank you [Operator Instructions]. And we’ll move now to Dave Styblo with Jefferies.

[Dave Styblo:]

I just want to come back again just to make sure I understand the cadence of timing back in February 22nd when you provided the guidance then. I think at that point, flu had already peaked and you should have had probably pretty good read on flu and weather at that point. So I am curious just to understand why maybe didn’t know that visits would be more muted at that time. Is it more of a function that your reads on SilverSneakers visit isn’t very much real-time or maybe you can help us understand the lag and in terms of data collection from this business that do collect?

[Adam Holland:]

There’s a piece of it that is a lag effect. We get the data. There’s a lot of auditing and scrubbing of the data to make sure that we understand the demographic, the visits for locations. And so to answer your question all that information was still maturing when we had a call back in February. And really when we closed the books for February and early March is when it became apparent and we had better visibility. We brought in the consultant that Donato referenced to validate the analysis we were seeing. So hopefully that covers some of those answer to your questions.

[Dave Styblo:]

And the comments about March meaningfully improving, I think you said that’s pretty close to what your original plan was for this year. Did I hear that right?

[Adam Holland:]

Correct.

[Dave Styblo:]

So it feels like things are pretty much back where they should be at this point. Obviously, you’re still waiting for data. But maybe like how complete is the data that you get. As you’ve seen here when you look back two weeks or three weeks, do you feel like you have 70% of data collected, half of it. Is there some rule of thumb that you have in terms of data collection visibility?

[Donato Tramuto:]

We’re not giving too much of the sausage making and timing. I’d just point you back to the prepared remarks where we’ve got March. We’re looking at early indications of April. April data still has to mature. We really won’t get that month closed out and perform that same analysis as I described earlier to make sure that we have it handled. But so far trends look positive.

[Dave Styblo:]

And then maybe moving over to capital deployment plans. Is there an update there? I was still looking at paying off the notes here or -- it sounds like there’s quite a bit of internal initiatives that you guys are still evaluating that we’ll hear more about in June at the Investor Day. But is it sufficient to say right now that’s the normal course and we shouldn’t really be thinking about M&A at this point or share repurchases. Or what should we thinking about as we go forward for the rest of the year?

[Donato Tramuto:]

Well, we always look at options. Certainly, one of the first option we have is invest in the company. I think the investment in -- I hope sends a strong signal that we do believe very strongly that we have enormous amount of runway in terms of investments in companies. The other stuff you talked about, of course we’re looking at all areas and we continue to believe our strong position both in terms of the market and financial strength gives us options. So I would say stay tuned.

[Dave Styblo:]

And then my last one that I’d ask. So obviously, there’s a large insurer that started to in-source some of their own competitive products at SilverSneakers. I was curious, at what point are you going to know what they're doing going forward? Obviously, they’ve to submit bids in June for what their MA offerings are. But I am curious, how the dialogue may have gone? When we look at data, there’s some evidence that suggests that perhaps they’re not winning as much market share in the areas where they in-source. So has there been any ongoing dialogue with the value proposition that you guys have or their next steps of intention?

[Donato Tramuto:]

So let me answer it like this, we don’t get into individual conversations. With all our plans, we certainly talk about the value proposition. It’s no different than the one that you’re referencing. We have no word from them at this point. I would have to think that they would have to do their filing in June. And so as soon as we do have, I think we’ll use that for the June 1st in terms of updating on the entire mosaic. But at this point, we don't have any update at all to provide.

[Operator:]

Thank you. That concludes today’s question-and-answer session. Mr. Tramuto, at this time, I will turn the conference back to you for any additional or closing remarks.

[Donato Tramuto:]

Very good, thank you operator. And I want to thank you all again for attending today’s call. And I certainly want to once again thank the executive leadership team and the entire organization for their performance. I also want to thank our partners from Westwicke. And if you have any further question, I guess we’ll stay on for follow up calls here then tomorrow what have calls as well. Make it a great evening, thank you, let’s no more flu.

[Operator:]

Thank you. This does conclude today’s presentation. We thank you for your participation.