We reiterate our Neutral rating for
). The company reported first-quarter 2012 adjusted loss per share
of 8 cents, falling short of the Zacks Consensus Estimate of
breakeven earnings per share and lower than the year-ago earnings
of 12 cents per share.
Healthways sank into a loss in the quarter on account of
negative factors such as loss of revenues from the
) contract, delay in implementation of the Caisse Nationale
d'Assurance Maladie des Travailleurs Salaries ("CNAMTS") contract
and the timing of accounting for productivity-linked contracts. Net
loss amounted to $2.7 million (8 cents per share) in the reported
quarter compared with a profit of $4.1 million (12 cents per share)
in the year-ago quarter.
Revenues came in at $165.2 million in the first quarter, up 1.4%
year over year, beating the Zacks Consensus Estimate of $154
million. Upon exclusion of the Cigna contract, revenue growth was
13% year over year.
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.
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 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 centers across the U.S. Healthways
) among others.
Growth in the U.S. is expected to slow down, and total billable
lives may stagnate a bit, which will be partly offset by cross-sell
opportunities. Also, on the negative side, Healthways considers
itself to be a world-wide well-being company but overseas contract
wins have been few. Moreover, cash flow is modest and will be
utilized to pare debt.
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.