Well-being enhancement company
Healthways
(
HWAY
) recently revealed that it concluded the refinancing of its senior
credit facilities. The earlier facilities were scheduled to
terminate in December 2013. Those facilities have now been replaced
with new ones comprising a 5-year term loan amounting to $200
million and an additional revolving credit facility worth $200
million.
The current facilities are now priced at Libor plus an
additional margin of 250 basis points. The term loan is scheduled
to amortize at 5% for the first 2 years, 7.5% in year 3 and 10%
after that. The revolving credit facility had an initial amount of
$106 million.
The earnings guidance issued earlier by the company did not take
into account the monetary effect of refinancing. Healthways
forecasts that following the refinancing earnings per share will
drop by about 4 cents in the current year. Consequently, the
company is reducing its 2012 earnings per share guidance from an
earlier range of 42 cents to 54 cents to a new band of 38 cents and
50 cents.
The Healthways model encourages people to make favorable
lifestyle changes that lead to enhanced well-being, reduced
healthcare costs, improved performance and economic value. The
company has invested in technology platforms that provide scalable
support with large populations. It has tie-ups with a large portion
of U.S. health plans and counts many millions of people in its
customer base.
Due to its unique scalable business model, Healthways shares
present a compelling, long-term investment opportunity although it
may face many challenges in the short to medium term. Healthways is
the leader in a strategically critical and rapidly evolving part of
the health care services market. Its fitness program
(SilverSneakers) for seniors is available at 14,000 centers across
the U.S. and caters to several million eligible enrollees.
Healthways competes with
Express Scripts
(
ESRX
), among others. We are currently Neutral on the stock, supported
by a short-term Zacks #3 Rank (Hold).
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