By MATT BLOIS
The acquisition of the mail-order diet Nutrisystem boosted revenue and expenses at Franklin-based Tivity Health.
Tivity earned $214 million in revenue during the first quarter of 2019, more than a 40% increase compared to the year before.
Much of that increase in revenue comes from the company’s acquisition of Nutrisystem in early March for $1.3 billion. Nutrisystem generated $58 million in revenue during the last few weeks of the quarter following the acquisition.
“With the acquisition of Nutrisystem completed, we believe the assets from that acquisition will drive greater momentum across the entire strategy spectrum,” Tivity CEO Donato Tramuto said on a conference call on May 8.
However, expenses increased across several categories for Tivity. Selling, general and administrative expenses more than doubled.
The company’s marketing expenses during the first quarter of 2019 were more than seven times higher than the previous year. That’s partly because Tivity implemented a more aggressive marketing strategy for Silver Sneakers, a segment of the business offering fitness classes for older people.
Despite higher revenues, expenses and taxes related to the Nutrisystem acquisition pushed Tivity’s profits down to $4.2 million in the first quarter, compared to $21.3 million during the same period last year.
Profits would have been similar to the previous year without the acquisition expenses and taxes.
As Nutrisystem fully integrates into Tivity, the company expects to find $30 to $35 million in costs savings over the next three years. The company expects to see $9 million and $12 million of those savings during 2019.
Those savings come from eliminating redundant positions, dissolving the Nutrisystem board of directors, combining IT support operations and consolidating some call centers.