) reported first-quarter 2013 adjusted (excluding one-time
expenses) loss per share of 12 cents, narrower than the Zacks
Consensus Estimate of a loss of 15 cents per share.
Net loss was $3.9 million (or 12 cents per share) versus a
loss of $2.7 million (or 8 cents per share) a year ago. The
company's results continue to reflect the loss of the
) contract and one other contract.
Revenues were flat year over year at $165.2 million in the
first quarter, beating the Zacks Consensus Estimate of $164
million. Upon exclusion of the two terminal contracts, sales
Gross margin dipped 60 basis points year over year to 14.5% in
the quarter. Healthways posted an operating margin of (1.6%),
compared with (0.6%) a year ago. Selling, general and
administrative expenses dipped 4.7% year over year to $13.1
Healthways ended the first quarter with cash and cash
equivalents of only $2.4 million, up about 35.5% on a sequential
basis. Long-term debt was $257.2 million, down 7.7% year over
Healthways inked 21 new, expanded or extended contracts in the
quarter. This count included five fresh contracts, nine extended
contracts and seven expanded contracts.
The company affirmed its guidance for 2013. For 2013, Healthways
continues to expect sales in a band of $710 million and $750
million, up 5% to 11% year over year. The company expects higher
revenues for 2013 despite a drop of $80 million from the loss of
the Cigna contract and another contract. Healthways forecasts
higher sales in the second half of 2013 as fresh contracts inked
in 2012 will take 6 months to 24 months to take off. Moreover,
performance-linked fees will be recognized in the second half of
2013. The company expects its pre-existing clientele at closure
of 2012 to generate higher revenues of $85 million for 2014 as
compared with 2013.
The company continues to project EBITDA margin of about 10.5%
to 12.5% (compared with EBITDA margin of 11.9% for 2012) for
2013. It expects EBITDA margin to increase sequentially during
2013 on account of initial ramp up of expenses for new large
contracts and as performance-linked fees kick in with the passage
Healthways continues to guide to earnings per share of about
25 cents to 35 cents for 2013. Loss per share is expected to be 5
cents for the second quarter of 2013.
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.
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 over
15,000 centers across the U.S. and caters to several million
eligible enrollees. Despite its unique scalable model, Healthways
may face many challenges in the short term. The company competes
Express Scripts Holding Company
) among others.
The stock carries a Zacks Rank #3 (Hold).
Align Technology Inc.
) carries a Zacks Rank #2 (Buy) and is expected to do well.
ALIGN TECH INC (ALGN): Free Stock Analysis
CIGNA CORP (CI): Free Stock Analysis Report
EXPRESS SCRIPTS (ESRX): Free Stock Analysis
HEALTHWAYS INC (HWAY): Free Stock Analysis
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