Back to top

Analyst Blog

On Mar 7, 2013, we retained Healthways (HWAY - Analyst Report) at Neutral after the company missed Zacks Consensus Estimate for earnings while reporting in line revenues for fourth quarter 2012. Healthways is still recovering from the loss of the Cigna contract.

Why the Retention?

Healthways released its results for the fourth quarter on Feb 7. The company posted adjusted earnings per share of 5 cents per share, missing the Zacks Consensus Estimate by a penny. Revenues in the reported quarter dropped 2.7% year over year to $175 million, in line with the Zacks Consensus Estimate.

Over the past 60 days, the Zacks Consensus Estimate for 2013 has dropped by 5 cents to 30 cents. For 2014, the Zacks Consensus Estimate has declined by 6 cents to 58 cents during the same timeframe.

For 2013, Healthways continues to expect sales in a band of $710 million and $750 million, up 5% to 11% year over year. HWAY 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 take off.

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. 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 over nine million eligible enrollees. Healthways competes with Express Scripts Holding Company (ESRX - Analyst Report) among others.

Other Stocks to Consider

We currently have a Zacks Rank #3 (Hold) on Healthways. We are more positive about Air Methods Corp. (AIRM - Snapshot Report) and Covance Inc. (CVD - Analyst Report), which carry a Zacks Rank #1 (Strong Buy) and Zacks Rank #2 (Buy), respectively, and are expected to do well.

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
RPC INC RES 24.91 +8.35%
LITHIA MOTO… LAD 94.59 +4.60%
DELTA AIR L… DAL 39.15 +3.90%
FLAMEL TECH… FLML 14.51 +3.50%
SOUTHWEST A… LUV 28.87 +2.92%