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Financials

Hedge fund to add directors to Tivity Health board

NEW YORK, Feb 25 (Reuters) - Tivity Health, which owns diet management company Nutrisystem and fitness and health programs for seniors, said on Tuesday it agreed for hedge fund HG Vora to recommend two directors to its board.

“The board of directors of the company has determined to add two new independent directors to the board at the recommendation of HG Vora,” Tivity said in a regulatory filing.

The company has not named the new directors who will join its 10-member board.

The agreement comes just days after a management overhaul and signals that Tivity’s board was willing to work with one of its largest shareholders in trying to put the company on firmer footing after the stock price tumbled 41% last week.

HG Vora, which oversees $5.3 billion in assets and invests in debt and deeply undervalued companies, is not a traditional activist investor but has from time to time pushed for companies to sell certain businesses or the entire operation.

The New York-based hedge fund owns 4.75 million shares, or a 9.9% stake, in the company and reached the agreement just days after Tivity installed an interim chief executive officer.

The company, based in Franklin, Tennessee, announced last week that Donato Tramuto, who had been CEO for five years and oversaw the acquisition of Nutrisystem early last year, was leaving his position and resigning from the board immediately.

Often activist hedge funds push for board seats at target companies in order ultimately to replace top management or convince the board to divest poorly performing divisions.

Tivity’s share price tumbled last week after earnings and sales missed expectations and the interim CEO said “the nutrition business has not worked out as well as planned since the completion of the acquisition in March 2019.”

Tivity’s stock climbed 2.7% on Tuesday to close at $13.36 in the wake of the HG Vora news.

The 11-year old hedge fund has returned an average 12.4% every year it has been in business.

Reporting by Svea Herbst-Bayliss; Editing by Dan Grebler

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