Healthways (HWAY: 13.16 +0.72 +5.79%) reported second-quarter 2010 adjusted (excluding one-time items) earnings per share of 29 cents, beating the Zacks Consensus Estimate of 27 cents and the year-ago figure of 26 cents.Healthways’ total revenue of $175.5 million in the reported quarter was approximately in line with the Zacks Consensus Estimate of $176 million.
Revenue
Revenue was $175.5 million in the second quarter, down marginally from $177.8 million in the year-ago period due to alterations or terminations of pre-existing contracts. Healthways’ volume of Request for Proposal (RFP) increased on a year-over-year basis complemented by a growth in its pipeline of potential sales.
Segment Update
In the domestic arena, the company signed several new clients besides renewing relationships with its existing clientele. The overseas operations of Healthways did well with the company signing an agreement, in June 2010, to deliver chronic care management to the U.S. Department of Defense Tricare Overseas Program. Healthways will provide its expertise to about 15,000 service personnel located overseas. The company will leverage its Embrace platform in its efforts to improve the welfare of defense employees.
Healthways expanded the scope of its pre-existing contract in Australia, with Hospital Contributions Fund, to include chronic disease management for another 100,000 lives by acquiring Manchester Unity, a private health insurer. In July 2010, it acquired its second contract in Australia, from Teachers Health Fund, a mid-sized private health insurer.
Margins
Healthways’ adjusted EBITDA margin increased to 19.2% from 17.8% in the year-ago period.
Balance Sheet and Cash Flow
Healthways generated net cash flow from operation of $34.4 million and spent $10.7 million in capital expenditure. The company reduced debt by $22.6 million during the second quarter, thereby yielding a debt to capitalization ratio of 39.1% at the end of the quarter, lower than 45.8% at the end of the year-ago period.
The company’s long-term debt to EBITDA ratio was 1.9 at the end of the reported quarter compared with 2.1 at the end of the year-ago period.
Outlook
Healthways provided fresh guidance for revenue, in 2010, of about $695 million to $718 million compared with the prior range of $677 million to $718 million. The new range assumes revenues from domestic operations of about $668 million to $685 million versus the earlier estimate of about $650 million to $685 million. International revenues continue to be in the range of $27 million to $33 million.
The company provided guidance for adjusted earnings per share of about 26 cents to 29 cents for third-quarter 2010. It also guided adjusted earnings per share in a range of $1.07 to $1.18 for 2010, higher than the 99 cents achieved in 2009.
| Overall Summary: |  45%, Bullish 55%, Bearish | Trade Quality: | Upside 30%, Poor Downside 85%, V. Good |
| Analysts' Targets | |
| Deutsche Bank Securities | $15 |
| Hold | |
| Thursday, July 15, 2010 | |
| Dougherty & Co. | $24 |
| Buy | |
| Thursday, February 18, 2010 | |
No comments:
Post a Comment