) reported fourth quarter 2012 adjusted (excluding one-time
expenses) earnings per share of 5 cents, missing the Zacks
Consensus Estimate of 6 cents per share.
Net income was minor at $0.6 million (or 2 cents per share)
versus a loss of $177.1 million ($5.32 per share) a year ago. The
company's results continue to reflect the loss of the
For 2012, adjusted earnings per share were 27 cents, trailing
the Zacks Consensus Estimate of 28 cents.
Revenues decreased 2.7% year over year to $175 million in the
fourth quarter, in line with the Zacks Consensus Estimate. Sales
were adversely impacted in the fourth quarter by the early inking
of two large contracts.
For 2012, sales were $677 million, down 1.7% year over year,
meeting the Zacks Consensus Estimate. Revenues dropped by $70
million in 2012 on account of the gradual conclusion of the Cigna
Gross margin dipped 450 basis points year over year to 21.5%
in the quarter. Healthways posted an operating margin of 2.8%,
compared with -96.3% a year ago. Selling, general and
administrative expenses increased 15.3% year over year to $17.4
Balance Sheet and Cash Flow
Healthways ended the fourth quarter with cash and cash
equivalents of only $1.8 million, up about 100% year over year.
Long-term debt was $278.5 million, up 4.7% year over year.
Healthways inked 34 new, expanded or extended contracts in the
quarter. This count included twelve fresh contracts, twelve
extended contracts and ten expanded contracts.
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 end of the Cigna and one other 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
The company projects EBITDA margin of about 10.5% to 12.5%
(earlier 10% to 13%) 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 of time.
Healthways guided to earnings per share of about 25 cents to
35 cents for 2013. Loss per share is expected to be 15 cents for
the first 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.
Healthways carries a Zacks Rank #2 (Buy).
) also carry a Zacks Rank #2 (Buy) and is expected to do
CIGNA CORP (CI): Free Stock Analysis Report
EXPRESS SCRIPTS (ESRX): Free Stock Analysis
HEALTHWAYS INC (HWAY): Free Stock Analysis
OMNICARE INC (OCR): Free Stock Analysis
To read this article on Zacks.com click here.