We reiterate our Neutral recommendation for
). Second-quarter 2012 earnings per share of 15 cents beat the
Zacks Consensus Estimate of 7 cents. Net income came in at $5.1
million, down 12.5% year over year. The results for the reported
quarter reflect the loss of the
Revenues increased almost 0.4% year over year to $170.2 million
in the second quarter, surpassing the Zacks Consensus Estimate of
$169 million. Revenues were driven by acknowledgement of
performance-based fees. Upon exclusion of the Cigna contract,
revenues improved 11% year over year.
Healthways inked 23 new, expanded or extended contracts in the
quarter. This count included nine fresh contracts, one expanded
contract, two expanded and extended contracts and 11 extended
For 2012, Healthways maintained its forecast revenues in a band
of $665 million and $705 million. This estimate includes domestic
revenues in the range of $638 million to $670 million and overseas
revenues of about $27 million to $35 million.
The company maintained its forecast earnings per share in the
range of 38 cents to 50 cents for 2012. The estimate includes an
extra expenditure of 4 cents per share due to the refinancing of
Healthways' senior credit facilities. This estimate comprises
earnings per share from domestic sources in a range of 38 cents to
46 cents and from overseas operations in a band of zero to 4
The Healthways model encourages people to make favorable
lifestyle changes that lead to enhanced well-being, reduced
healthcare costs, improved performance and economic value for
customers. The company has invested in technology platforms that
provide scalable support with large populations. It has tie-ups
with a large proportion of U.S. health plans and counts many
millions of lives in its customer base.
Due to its unique scalable business model, Healthways shares may
present a long-term investment opportunity, although it may face
many challenges in the short 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
) among others.
The stock retains a Zacks #3 Rank, which translates into a
short-term Hold recommendation.
CIGNA CORP (CI): Free Stock Analysis Report
EXPRESS SCRIPTS (ESRX): Free Stock Analysis
HEALTHWAYS INC (HWAY): Free Stock Analysis
To read this article on Zacks.com click here.