Two years ago, Richard Ashworth left Walgreens and came over to Tivity Health to help turn around the consumer health company’s fortunes.
Ashworth started his career at Walgreens as a cashier and rose through the ranks as a pharmacist before becoming president of the retail giant. As the incoming CEO of the Franklin, Tennessee-based Tivity Health in June 2020, he took over a fitness and wellness company awash in financial challenges stemming from COVID-19 and a misguided acquisition. What appealed to Ashworth was the chance to be a CEO and go from the back end of healthcare as a pharmacist to the front end in working at a fitness and wellness company.
“SilverSneakers has been around 30 years. I came from Walgreens, which has been around for 100-plus years. Both are well respected brands,” Ashworth said. SilverSneakers is the company’s fitness and wellness program that is marketed to Medicare enrollees through partnerships with health insurance companies and fitness centers.
The company has spent the last few years digitizing the service, having doubled the number of virtual visits from 2020 to 2021. It also offloaded Nutrisystem, which was bought for $1.3 billion in December 2018 and sold for less than half in October 2020. On top of this, Ashworth has had to get used to leading a new company during a pandemic and supporting its members, who are among the most vulnerable to COVID-19. “It’s been a challenging leadership situation and a challenging business one too, but I’ve loved every second of it,” he said.
This week, another chapter for Tivity and Ashworth was written when the company announced it will be purchased by private equity firm Stone Point Capital for $2 billion. The deal will end Tivity’s more than 30 years as a publicly held company under various names. Digital Health Business & Technology spoke with Ashworth about the deal to go private, how the company has evolved in the last few years and more. This interview has been edited for length and clarity.
What made Tivity decide to go private and make this deal with Stone Point?
Stone Point approached us because they recognized the value of our platform and flagship brands, and like us, believe that Tivity Health can build on its strong momentum and growth in the years to come. We believe their culture and DNA are a good match with ours.
A lot of the folks on your leadership team are somewhat new. How do these changes speak to where Tivity is headed as a company?
No disrespect to my predecessors, I think they did a lot of good work in caretaking the brand. This is a passion and mission-driven organization. They helped set a foundation that most organizations just don't have. We have people who have been here a long time that really care. When I came in, we had to make some changes and adjustments. We brought in some new executives and adjusted some roles on the current leadership team.
We restructured the entire company. We divested an asset. We owned Nutrisystem, we needed to divest that and get the balance sheet in a good place. We feel we've got the financial wherewithal to drive the company forward and get some new thinking around digital and platform orientation. We did a full strategy pivot and that's where we're at today. We're in the beginning phases of that strategy pivot, which is essentially pivoting from not just being the gold standard in senior fitness…but to build on that brand equity to create kind of a front door of health and wellbeing for seniors. We're starting with mental enrichment and social connection on top of our physical fitness services. We have other supplemental benefits and healthy experiences that we can bring onto our platform over time.
There was some ambivalence [internally]. What I brought to the company was a lean forward that said, “Yes we're going to do this.” We made some real clear decisions about what's in, what's out and what the future is going to look like. Creating that North Star and then working our way back, I think has been very energizing for the organization.
How has Tivity evolved to market virtual offerings?
I would love to say that we've been building this digital asset for five years and it culminated the minute the virus was hitting. That's not true. It was on the roadmap. It was part of the discussion, but it wasn't at the forefront. There was a question of whether seniors would adopt virtual solutions. I hear all the reasons why they don't. The reaction we’ve got is well above our expectations.
Listen, at one point, all our fitness locations were closed nationwide. It was still summer, which was helpful because we can still do a lot of stuff outside and keep people moving. But when winter comes, that's all out the window. So, it's really been tough. Thus far, we’ve had more than 3.5 million virtual instructor-led visit classes. Our research says that 84% of those people who have used a digital offering with us are going to continue to use that digital offering while still going to the gym. You can see the acceleration and adoption of digital through COVID. Half of our seniors are using digital for medical appointments and telehealth. That’s crazy. That wasn’t true in 2018 and 2019.
The pandemic accelerated technological adoption, but more importantly we feel we can use digital tools to eliminate barriers to healthy behaviors, particularly in underserved areas. We weren’t in rural communities as dense as we are now because of internet connection issues. But we still need to get more broadband access to those people.
How do you maintain the momentum for virtual with pandemic restrictions being tamped down and more people willing to go out again?
I don't know what the answer is, in terms of the percentage usage of our brand digital versus physical. Working out is inherently social as well. You go into the gym, you’re in a group class, jumping in the pool and doing this with other people. There’s a tribal mentality with our population around that. I think that's a very powerful thing. But what we found so far is that the digital channel is not cannibalizing the physical one. I do think over time, folks will start to realize the flexibility. We’ve just consumer-ized it. That's all we've done. Sometimes you get food delivered. Sometimes you go to the restaurant. Your life is becoming ubiquitous in digital and physical environments. They're melding. Why can't that be true for seniors? I think it is. I think it’s something our seniors are going to adopt. I think the way we keep that driving has nothing to do with what we think. I think it has everything to do with what they want. We have to make sure we have the right class at the right time with the right trainer with the right energy with the right vehicle, and just keep optimizing and looking at what they're doing and driving that behavior.
We’re going to add more stuff on the platform. Right now, it’s physical fitness and mental enrichment, plus connecting socially with others. Maybe in the future, it can be volunteering, taking nutrition classes, finding transportation to the doctor, getting non-clinical homecare inside your home and more. These are just a few of supplemental benefits that are approved under Medicare. I’m not predicting anything but what I’ll say is we have the opportunity to add all those services over time. And I think that will raise the amount of engagement we get.
Speaking of Medicare, Tivity has put emphasis on Medicare Advantage beneficiaries in the last few years. What makes Medicare Advantage an appealing market?
There is a reason why Medicare Advantage is growing faster than traditional Medicare. When you buy a Medicare Advantage plan, you kind of get everything. It’s a simple buying proposition. When you go into fee-for-service Medicare, you have to ask questions about supplements and prescription drugs. It starts to get confusing. People who aren't in healthcare, it's absolutely foreign to them. Medicare Advantage is just an easier buying proposition. Secondly, you get a lot of other services. You get dental, vision, fitness, audiology and all these other things that you really care about. People find value in that. I think the pricing of Medicare Advantage from a member perspective is seen as attractive with low premiums and lower deductibles. Medicare Advantage penetrates the underserved communities better than fee-for- service Medicare. I love that that means that we're getting healthcare to people who need it the most. That has benefited us because we're one of those benefits offered under Medicare Advantage. Ten thousand people turn 65 every day, and as those people age in, more than half of them are moving into a Medicare Advantage plan rather than a fee-for-service plan. That's a positive tailwind for our business. And ultimately, I think it’s a positive tailwind for the collective health of seniors across the country.