The Philadelphia Inquirer reports Tivity Health of Nashville, one of the South’s largest health-care companies, saw its stock (TVTY) fall by more than $7 after hours to $15.40, down more than 32 percent by mid-evening.
Tivity bought Nutrisystem, the diet meals company, for about $1.4 billion in cash and stock in March 2019. The merger plan had called for Nutrisystem chief executive Dawn Zier to stay on as Tivity’s president and chief operating officer, reporting to Tivity chief executive Donato Tramuto.
Tivity “mutually terminated” Zier’s employment with the company in December 2019. Zier, who received a graduate degree from the Massachusetts Institute of Technology and an MBA from MIT’s Sloan School of Management, now serves on the boards of Spirit Airlines and the Hain Celestial Group Inc.
Her former boss, Tramuto, was “terminated without cause” and resigned from Tivity’s board of directors effective Tuesday, according to documents filed Wednesday with the Securities and Exchange Commission. The board appointed current director Robert J. Greczyn Jr. interim CEO while it conducts a CEO search. Greczyn, a board member since 2015, has over 30 years of experience in leadership roles in managed care and health care.
Michael Petusky, a health-care analyst for Chicago-based Barrington Research, put the onus for Tivity’s problems squarely on Nutrisystem.
“They’ve been woefully short on attracting customers through digital advertising," he said. “Weight Watchers does a much better job. Their TV ads were better this year, but they were still using Marie Osmond as an occasional spokeswoman” even though she started appearing for the company in 2007.
“They went 0 for 3 in three diet seasons [after Christmas]," Petusky continued. "They’re growing customer base, but if they’re cutting price so that the revenues are meaningfully impacted, that’s not a win on a net basis.”
Tivity also appointed Tommy Lewis, recently named chief operating officer, as interim president of the Nutrition Business Unit to replace Keira Krausz, who resigned, effective Feb. 18.
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