Delaware
|
|
000-19364
|
|
62-1117144
|
|||
(State or other jurisdiction of incorporation)
|
|
(Commission
File Number)
|
|
(IRS Employer
Identification No.)
|
|||
701 Cool Springs Boulevard
Franklin, Tennessee
|
|
37067
|
|||||
(Address of principal executive offices)
|
|
(Zip Code)
|
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
|
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
|
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
|
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
|
(d) Exhibits:
|
||
Exhibit 99.1
|
|
Press Release.
|
|
|
|
|
HEALTHWAYS, INC.
|
|
|
|
|
|
|
|
|
By:
|
/s/ Alfred Lumsdaine
|
|
|
Alfred Lumsdaine
|
|
|
Chief Financial Officer
|
Exhibit 99.1
|
|
Press Release dated April 24, 2014
|
|
|
Investor Relations Contact: |
|
|
Chip Wochomurka |
|
|
(615) 614-4493 |
|
|
chip.wochomurka@healthways.com |
·
|
Total revenues for the quarter were $176.8 million, up 7.0% from $165.2 million for the first quarter of 2013.
|
·
|
Net loss for the first quarter of 2014 was $9.6 million, or $0.27 per share. Adjusted net loss was $2.6 million, or $0.07 per share for the first quarter of 2014, improved from $3.9 million, or $0.12 per share, for the same period last year. (See pages 10 and 11 for a reconciliation of non-GAAP financial measures.)
|
·
|
Adjusted net loss per share for the first quarter of 2014 excludes a previously disclosed $9.4 million pre-tax charge, or $0.17 per share, related to the settlement of a contract dispute (the "settlement charge") and non-cash interest expense of $0.03 per share.
|
·
|
Healthways affirms its 2014 financial guidance, excluding the previously announced settlement charge.
|
·
|
Guidance for 2014 revenues remains in a range of $730 million to $760 million.
|
·
|
Guidance for 2014 adjusted EBITDA margin remains in a range of 10.5% to 11.5%.
|
·
|
Earnings Guidance:
|
|
|
Year Ending December 31, 2014
|
|
|||
|
|
Previous Guidance
|
|
|
Current Guidance
|
|
Adjusted net earnings per diluted share
|
$
|
0.11 – 0.26
|
|
$
|
0.11 – 0.26
|
|
Non-cash interest expense per share
|
|
(0.11
|
)
|
|
(0.11
|
)
|
Settlement charge per share
|
|
—
|
|
|
(0.17
|
)
|
Net income per diluted share/net (loss) per share
|
$
|
0.00 – 0.15
|
|
$
|
(0.17) – (0.02
|
)
|
·
|
the effectiveness of management's strategies and decisions;
|
·
|
the Company's ability to sign and implement new contracts for our solutions;
|
·
|
the Company's ability to accurately forecast the costs required to successfully implement new contracts;
|
·
|
the Company's ability to accurately forecast the costs necessary to integrate new or acquired businesses, services (including outsourced services) or technologies into the Company's business;
|
·
|
the Company's ability to achieve estimated annualized revenue in backlog in the manner and within the timeframe we expect, which is based on certain estimates regarding the implementation of our services;
|
·
|
the Company's ability to anticipate change and respond to emerging trends in the domestic and international markets for healthcare and the impact of the same on demand for the Company's services;
|
·
|
the Company's ability to implement its integrated data and technology solutions platform within the required time frame and expected cost estimates and to develop and enhance this platform and/or other technologies to meet evolving customer and market needs;
|
·
|
the Company's ability to renew and/or maintain contracts with its customers under existing terms or restructure these contracts on terms that would not have a material negative impact on the Company's results of operations;
|
·
|
the Company's ability to accurately forecast the Company's revenues, margins, earnings and net income, as well as any potential charges that the Company may incur as a result of changes in its business;
|
·
|
the Company's ability to accurately forecast performance and the timing of revenue recognition under the terms of its customer contracts ahead of data collection and reconciliation;
|
·
|
the Company's ability to accurately forecast enrollment and participation rates in services and programs offered within the Company's contracts;
|
·
|
the costs and management distraction related to a proxy contest;
|
·
|
the risks associated with deriving a significant concentration of revenues from a limited number of customers;
|
·
|
the risks associated with foreign currency exchange rate fluctuations;
|
·
|
the ability of the Company's customers to provide timely and accurate data that is essential to the operation and measurement of the Company's performance;
|
·
|
the Company's ability to achieve the contractually required cost savings and clinical outcomes improvements and reach mutual agreement with customers with respect to cost savings, or to achieve such savings and improvements within the time frames it contemplates;
|
·
|
the risks associated with changes in macroeconomic conditions;
|
·
|
the risks associated with data privacy or security breaches, computer hacking, network penetration and other illegal intrusions;
|
·
|
the Company's ability to effectively compete against other entities, whose financial, research, staff, and marketing resources may exceed our resources;
|
·
|
the Company's ability to service its debt and remain in compliance with its debt covenants;
|
·
|
counterparty risk associated with our interest rate swap agreements and foreign currency exchanged contracts;
|
·
|
the impact of litigation involving the Company and/or its subsidiaries;
|
·
|
the impact of future state, federal and international legislation and regulations applicable to the Company's business, including the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 on the Company's operations and/or demand for its services; and
|
·
|
other risks detailed in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2013, and other filings with the Securities and Exchange Commission.
|
|
Three Months Ended
|
|||||||
|
March 31,
|
|||||||
|
2014
|
2013
|
||||||
|
||||||||
Revenues
|
$
|
176,777
|
$
|
165,165
|
||||
Cost of services (exclusive of depreciation and amortization of $9,372 and $8,825, respectively, included below)
|
148,148
|
141,257
|
||||||
Selling, general and administrative expenses
|
16,431
|
13,098
|
||||||
Depreciation and amortization
|
13,336
|
13,533
|
||||||
Legal settlement charges
|
9,363
|
—
|
||||||
|
||||||||
Operating loss
|
(10,501
|
)
|
(2,723
|
)
|
||||
Interest expense
|
4,383
|
3,321
|
||||||
|
||||||||
Loss before income taxes
|
(14,884
|
)
|
(6,044
|
)
|
||||
Income tax benefit
|
(5,288
|
)
|
(2,095
|
)
|
||||
|
||||||||
Net loss
|
$
|
(9,596
|
)
|
$
|
(3,949
|
)
|
||
|
||||||||
Loss per share:
|
||||||||
Basic
|
$
|
(0.27
|
)
|
$
|
(0.12
|
)
|
||
|
||||||||
Diluted(1)
|
$
|
(0.27
|
)
|
$
|
(0.12
|
)
|
||
|
||||||||
Comprehensive loss
|
$
|
(9,253
|
)
|
$
|
(3,751
|
)
|
||
|
||||||||
Weighted average common shares
|
||||||||
and equivalents:
|
||||||||
Basic
|
35,151
|
34,018
|
||||||
Diluted (1)
|
35,151
|
34,018
|
||||||
|
||||||||
(1)The assumed exercise of stock-based compensation awards for the three months ended March 31, 2014 and 2013 was not considered because the impact would be anti-dilutive.
|
|
March 31,
|
December 31,
|
||||||
|
2014
|
2013
|
||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
2,158
|
$
|
2,584
|
||||
Accounts receivable, net
|
113,007
|
89,484
|
||||||
Prepaid expenses
|
13,979
|
9,228
|
||||||
Other current assets
|
6,527
|
6,857
|
||||||
Income taxes receivable
|
3,941
|
1,402
|
||||||
Deferred tax asset
|
9,598
|
9,667
|
||||||
Total current assets
|
149,210
|
119,222
|
||||||
|
||||||||
Property and equipment:
|
||||||||
Leasehold improvements
|
37,559
|
37,463
|
||||||
Computer equipment and related software
|
296,281
|
290,392
|
||||||
Furniture and office equipment
|
23,004
|
22,881
|
||||||
Capital projects in process
|
32,880
|
25,228
|
||||||
|
389,724
|
375,964
|
||||||
Less accumulated depreciation
|
(228,264
|
)
|
(217,766
|
)
|
||||
|
161,460
|
158,198
|
||||||
|
||||||||
Other assets
|
61,011
|
53,629
|
||||||
Intangible assets, net
|
76,592
|
79,162
|
||||||
Goodwill, net
|
338,800
|
338,800
|
||||||
|
||||||||
Total assets
|
$
|
787,073
|
$
|
749,011
|
||||
|
||||||||
|
|
March 31,
|
December 31,
|
||||||
|
2014
|
2013
|
||||||
Current liabilities:
|
||||||||
Accounts payable
|
$
|
40,257
|
$
|
33,125
|
||||
Accrued salaries and benefits
|
14,159
|
20,157
|
||||||
Accrued liabilities
|
51,894
|
32,065
|
||||||
Deferred revenue
|
6,077
|
4,496
|
||||||
Contract billings in excess of earned revenue
|
20,187
|
17,411
|
||||||
Current portion of long-term debt
|
16,230
|
14,340
|
||||||
Current portion of long-term liabilities
|
1,956
|
2,822
|
||||||
Total current liabilities
|
150,760
|
124,416
|
||||||
|
||||||||
Long-term debt
|
246,692
|
237,582
|
||||||
Long-term deferred tax liability
|
29,973
|
33,320
|
||||||
Other long-term liabilities
|
64,779
|
51,003
|
||||||
|
||||||||
Stockholders' equity:
|
||||||||
Preferred stock
|
||||||||
$.001 par value, 5,000,000 shares
|
||||||||
authorized, none outstanding
|
—
|
—
|
||||||
Common stock
|
||||||||
$.001 par value, 120,000,000 shares authorized,
|
||||||||
35,223,754 and 35,107,303 shares outstanding, respectively
|
35
|
35
|
||||||
Additional paid-in capital
|
284,676
|
283,244
|
||||||
Retained earnings
|
38,404
|
48,000
|
||||||
Treasury stock, at cost, 2,254,953 shares in treasury
|
(28,182
|
)
|
(28,182
|
)
|
||||
Accumulated other comprehensive loss
|
(64
|
)
|
(407
|
)
|
||||
Total stockholders' equity
|
294,869
|
302,690
|
||||||
|
||||||||
Total liabilities and stockholders' equity
|
$
|
787,073
|
$
|
749,011
|
||||
|
|
|
Three Months Ended
|
|||||||
|
March 31,
|
|||||||
|
2014
|
2013
|
||||||
Cash flows from operating activities:
|
||||||||
Net loss
|
$
|
(9,596
|
)
|
$
|
(3,949
|
)
|
||
Adjustments to reconcile net loss to net cash flows provided by operating activities, net of business acquisitions:
|
||||||||
Depreciation and amortization
|
13,336
|
13,533
|
||||||
Amortization of deferred loan costs
|
463
|
235
|
||||||
Amortization of debt discount
|
1,630
|
—
|
||||||
Share-based employee compensation expense
|
1,699
|
1,537
|
||||||
Excess tax benefits from share-based payment arrangements
|
(230
|
)
|
(137
|
)
|
||||
(Increase) decrease in accounts receivable, net
|
(23,190
|
)
|
15,936
|
|||||
Increase in other current assets
|
(711
|
)
|
(128
|
)
|
||||
Increase in accounts payable
|
7,436
|
77
|
||||||
Decrease in accrued salaries and benefits
|
(6,584
|
)
|
(7,193
|
)
|
||||
Increase in other current liabilities
|
18,387
|
6,969
|
||||||
Other
|
6,469
|
(851
|
)
|
|||||
Net cash flows provided by operating activities
|
9,109
|
26,029
|
||||||
|
||||||||
Cash flows from investing activities:
|
||||||||
Acquisition of property and equipment
|
(10,566
|
)
|
(11,264
|
)
|
||||
Other
|
(1,910
|
)
|
(1,918
|
)
|
||||
Net cash flows used in investing activities
|
(12,476
|
)
|
(13,182
|
)
|
||||
|
||||||||
Cash flows from financing activities:
|
||||||||
Proceeds from issuance of long-term debt
|
107,225
|
105,200
|
||||||
Payments of long-term debt
|
(103,335
|
)
|
(127,078
|
)
|
||||
Deferred loan costs
|
(60
|
)
|
(744
|
)
|
||||
Excess tax benefits from share-based payment arrangements
|
230
|
137
|
||||||
Exercise of stock options
|
163
|
360
|
||||||
Change in outstanding checks and other
|
(1,589
|
)
|
10,257
|
|||||
Net cash flows provided by (used in) financing activities
|
2,634
|
(11,868
|
)
|
|||||
|
||||||||
Effect of exchange rate changes on cash
|
307
|
(354
|
)
|
|||||
|
||||||||
Net (decrease) increase in cash and cash equivalents
|
(426
|
)
|
625
|
|||||
|
||||||||
Cash and cash equivalents, beginning of period
|
2,584
|
1,759
|
||||||
|
||||||||
Cash and cash equivalents, end of period
|
$
|
2,158
|
$
|
2,384
|
|
Three Months Ended
March 31, 2014
|
Three Months Ended
March 31, 2013
|
||||||||||||||
|
$ in thousands
|
Per Share
|
$ in thousands
|
Per Share
|
||||||||||||
Adjusted net loss (1)
|
$
|
(2,573
|
)
|
$
|
(0.07
|
)
|
$
|
(3,949
|
)
|
$
|
(0.12
|
)
|
||||
Net loss attributable to non-cash interest charges (2)
|
(986
|
)
|
(0.03
|
)
|
—
|
—
|
||||||||||
Net loss attributable to legal settlement charges (3)
|
(6,037
|
)
|
(0.17
|
)
|
—
|
—
|
||||||||||
Net loss, GAAP basis
|
$
|
(9,596
|
)
|
$
|
(0.27
|
)
|
$
|
(3,949
|
)
|
$
|
(0.12
|
)
|
|
Twelve Months Ending
|
|||
|
December 31, 2014
|
|||
Adjusted EPS guidance (4)
|
$
|
0.11-0.26
|
||
EPS (loss) guidance attributable to non-cash interest charges (5)
|
(0.11
|
)
|
||
EPS (loss) guidance attributable to legal settlement charges (6)
|
(0.17
|
)
|
||
EPS (loss) guidance, GAAP basis
|
$
|
(0.17)-(0.02
|
)
|
|
Three Months Ended
|
Three Months Ended |
|
||||||||
|
March 31, 2014
|
March 31, 2013 |
|
Growth
|
|||||||
Adjusted EBITDA (7)
|
$
|
12,198
|
$
|
10,810
|
13
|
%
|
|||||
Legal settlement charges (8)
|
(9,363
|
)
|
—
|
||||||||
Depreciation and amortization
|
(13,336
|
)
|
(13,533
|
) | |||||||
Interest expense
|
(4,383
|
)
|
(3,321
|
) | |||||||
Income tax benefit
|
5,288
|
2,095
|
|||||||||
Net loss, GAAP basis
|
$
|
(9,596
|
)
|
$ |
(3,949
|
) |
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