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Tivity Health, Inc. Class Action Lawsuit

Case Summary

Company Name
Tivity Health, Inc.
Stock Symbol
TVTY
Class Period
March 8, 2019 to February 19, 2020
Court
Middle District of Tennessee

On February 25, 2020, the Tivity Health, Inc. securities class action lawsuit was filed charging Tivity Health and certain of its current and former officers with violations of the Securities Exchange Act of 1934.  The Tivity Health securities class action lawsuit was commenced in the Middle District of Tennessee on behalf of purchasers of Tivity Health securities between March 8, 2019 and February 19, 2020 (the “Class Period”) and is captioned Strougo v. Tivity Health, Inc., et al., No. 20-cv-00165.

Tivity Health provides fitness and health improvement programs in the United States.  Tivity Health was formerly known as Healthways, Inc. and changed its name to Tivity Health, Inc. in January 2017.

In December 2018, Tivity Health announced that it would acquire Nutrisystem, Inc., a provider of weight management products and services (the “Nutrisystem Acquisition”).  On March 8, 2019, Tivity Health announced the completion of the Nutrisystem Acquisition for approximately $1.3 billion in cash and stock.

The Tivity Health securities class action lawsuit alleges that throughout the Class Period, defendants made materially false and misleading statements and/or failed to disclose adverse information regarding Tivity Health’s business and operations.  Specifically, defendants failed to disclose that, following the Nutrisystem Acquisition, Tivity Health’s Nutrition segment faced significant operational challenges that, foreseeably, would have a significant impact on Tivity Health’s revenues.  As a result of this information being withheld from the market, Tivity Health securities traded at artificially inflated prices during the Class Period, with Tivity Health’s stock price reaching a high of more than $25 per share.

Then on February 19, 2020, Tivity Health announced its financial results for the fourth quarter and year ended December 31, 2019.  Tivity Health disclosed, among other things, that its “Nutrition segment had a disappointing end to 2019,” including “a non-cash impairment charge of $(377.1) million,” which contributed to a net loss for Tivity Health of $272.8 million in the fourth quarter.  Concurrently, Tivity Health announced the resignation of the its Chief Executive Officer, Donato Tramuto, effective immediately.  Discussing Tivity Health’s financial results on an earnings call, Tivity Health’s interim Chief Executive Officer, Robert Greczyn, stated that “[a]dmittedly, the nutrition business has not worked out as well as planned since the completion of the [Nutrisystem Acquisition] in March 2019.”  On this news, the price of Tivity Health shares fell $10.43 per share, or more than 45%, to close at $12.50 per share on February 20, 2020.

Robbins Geller Rudman & Dowd LLP is one of the world’s leading law firms representing investors in securities class action litigation.  With 200 lawyers in 9 offices, Robbins Geller has obtained many of the largest securities class action recoveries in history.  For seven consecutive years, ISS Securities Class Action Services has ranked the Firm in its annual SCAS Top 50 Report as one of the top law firms in the world in both amount recovered for shareholders and total number of class action settlements.  Robbins Geller attorneys have helped shape the securities laws and have recovered tens of billions of dollars on behalf of aggrieved victims.  Beyond securing financial recoveries for defrauded investors, Robbins Geller also specializes in implementing corporate governance reforms, helping to improve the financial markets for investors worldwide.  Robbins Geller attorneys are consistently recognized by courts, professional organizations and the media as leading lawyers in the industry.

Class Period: March 8, 2019 - February 19, 2020
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