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Humana and Healthways recently revealed that the former has lengthened its contract to make Healthways’ SilverSneakers Fitness Program available for eligible enrollees till 2016.

At present, over 2.1 million Humana enrollees are eligible to participate in SilverSneakers. The Humana Medicare Advantage and Medicare Supplement programs have provided enrollees with the SilverSneakers social support and exercise regimen since 2004.

The SilverSneakers Fitness Program 2011 Annual Member Survey reported that Humana SilverSneakers enrollees stated better health and lower incidence of disease than the nationwide averages for elderly Americans. 87% of incoming members stated that they exercised twice as frequently in 2011 than they did before taking part in the SilverSneakers fitness routine.     
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.

Due to its unique scalable business model, Healthways shares may present a long-term investment opportunity, although it faces 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 over 15,000 centers across the U.S. and is available to over nine million eligible enrollees through Medicare Supplement, Medicare Advantage plans and group retiree plans. Healthways competes with Express Scripts among others.

We currently have a Neutral recommendation on Healthways. The stock retains a Zacks #3 Rank, which translates into a short-term Hold rating.

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