(Source: Business Wire)
Healthways, Inc. (NASDAQ: HWAY) today announced financial results for the second quarter and six months ended June 30, 2009. Total revenues for the quarter were $177.8 million compared with revenues of $193.0 million for the three months ended June 30, 2008. Net income for the second quarter of 2009 was $8.9 million, or $0.26 per diluted share, which was one cent above the Company's earnings guidance range. Net income for the second quarter of 2008 was $16.3 million, or $0.46 per diluted share.
COMPARISON OF COMPONENTS OF NET INCOME PER DILUTED SHARE Three Months Ended June 30, 2009 2009 2008 Actual Guidance Actual Domestic $ 0.31 $ 0.27 -- 0.29 $ 0.49 International (0.05 ) (0.05)-(0.04 ) (0.02 ) Net income per diluted share $ 0.26 $ 0.22 -- 0.25 $ 0.46 (1) (1) Figures do not add due to rounding. -------------------------------------------------------------------------------
"We are pleased with our second-quarter performance," said Ben R. Leedle, Jr., chief executive officer of Healthways. "As was true with our first quarter, our results were primarily driven by stronger than anticipated revenues from our Silver Sneakers® fitness program. In addition, we benefited from higher than expected organic growth in our current customer base and lower than expected attrition in our billed lives. We also continued to experience positive contracting momentum during the quarter, signing contracts with new and existing customers across our continuum of health promotion, prevention and chronic care management solutions.
"We are also pleased to report that, excluding $40.0 million in cash payments related to a previously announced legal settlement, we generated substantial cash flow from operations totaling $31.5 million for the second quarter for a total of $70.0 million for the first half of the year. In addition, we reduced our long-term debt by $14.1 million and invested $10.7 million for the quarter in capital expenditures, primarily related to the accelerating development of the Embrace operating platform."
Signing of Our First WholeHealth Contract
"Throughout 2009, we have discussed two strategic priorities for Healthways and our intention to complete major milestones this year in each," continued Mr. Leedle. "The first priority is the ongoing development of an order-of-magnitude increase in our value proposition by introducing our WholeHealth solution. This solution, in addition to improving health and reducing direct healthcare costs, targets a much larger impact on employer profitability by lowering the costs of lost productivity due to health-related reasons. The second priority is the completion of our proprietary next generation technology platform known as Embrace. This platform, which is essential to our WholeHealth solution, enables us to integrate data from all the healthcare entities interacting with an individual. Embrace enables the delivery of our integrated solutions and ongoing communications between the individual and their medical and health experts, using any method desired, including venue-based face-to-face; print; phone; mobile and remote devices; on-line; emerging media; and any combination thereof. Simply put, our WholeHealth solution will help keep healthy people healthy, reduce risks for future disease by mitigating unhealthy lifestyle habits and, through evidence-based medicine, support people who already have a disease or persistent condition.
"It is with great pleasure, therefore, that we announce the signing of our first WholeHealth contract with a Fortune 100 company that is one of the country's largest employers. Through this multi-year contract, we will provide to approximately 200,000 employees and dependents our WholeHealth solution designed to deliver measureable and sustained improvements in health and well-being, while lowering medical costs and improving health related productivity. Healthways will:
Deliver the full scope of our WholeHealth solution, identifying, engaging and enabling employees and their family members to improve their health and well-being through individualized plans regardless of health status or age;
Integrate all of the employer's health programs, and health and healthcare cost data -- irrespective of supplier -- through use of our proprietary Embrace platform;
Employ the Gallup-Healthways Well-Being IndexTM to baseline the population and identify areas of focus for new interventions; and
Measure progress against the goal of value creation through improved health and well-being, reduced medical expense and improved health-related productivity.
"Through this first WholeHealth contract, we will complete major milestones in each of the strategic priorities discussed above. More important, we will be establishing a new standard for comprehensive, integrated care, which we expect will produce a significant advance toward our ultimate goal of helping individuals achieve fully optimized well-being. With the success of our WholeHealth solution, we expect to gain a significant competitive advantage in responding to employers' needs for a healthier, higher performing and less costly workforce."
Financial Guidance
Based on the performance of the Company's domestic operations for the first six months of 2009, Healthways today increased its guidance for 2009 revenues to a range of $685 million to $700 million from the previous range of $652 million to $680 million. This revision includes a new range for revenues from domestic operations of $668 million to $680 million, up from $635 million to $660 million previously. Guidance for 2009 revenues from international operations remains unchanged in a range of $17 million to $20 million.
COMPARISON OF COMPONENTS OF REVENUES FOR THE YEAR ENDING DECEMBER 31, 2009 (GUIDANCE) AND THE YEAR ENDED DECEMBER 31, 2008 (Dollars in millions) Twelve Months Ending Ended Dec. 31, 2009 Dec. 31, 2008 (Guidance) (Actual) Domestic $ 668.0 - 680.0 $ 731.3 International 17.0 - 20.0 15.4 Total Company $ 685.0 - 700.0 $ 746.7 -------------------------------------------------------------------------------
Due to the anticipated increase in revenues, Healthways has also raised its 2009 earnings guidance. The Company's new guidance for 2009 adjusted net income per diluted share, which excludes previously announced lawsuit settlement costs, is in a range of $0.97 to $1.05 compared with the previous range of $0.90 to $1.04. This new earnings guidance reflects the margin impact from fitness programs, which account for a significant majority of the higher than anticipated revenues for 2009, as well as from increased spending in preparation for January 1, 2010 contract launches, including the market-leading contract discussed above.
