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)
|
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
|
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
|
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
|
☐ 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 February 25, 2016
|
|
|
Investor Relations Contact: |
|
|
Chip Wochomurka
|
|
|
(615) 614-4493
|
|
|
chip.wochomurka@healthways.com |
·
|
Revenues of $186.3 million compared with $199.1 million for the fourth quarter of 2014;
|
·
|
Net loss of $19.4 million, or $0.54 per share, compared with net income of $2.6 million, or $0.07 per diluted share, for the fourth quarter of 2014; and
|
·
|
Adjusted net loss per share of $0.04 compared with adjusted net income per diluted share of $0.25 for the fourth quarter of 2014. The adjusted results for the fourth quarter of 2015 exclude $13.3 million of restructuring charges; $9.6 million to establish a deferred tax asset valuation allowance; $1.8 million of non-cash interest expense; and a $1.9 million gain on the sale of the Company's Navvis subsidiary. The adjusted results for the fourth quarter of 2014 exclude $8.4 million for the impact of two legal settlements and $1.7 million of non-cash interest expense.
|
Three Months Ended
December 31
|
Year Ended
December 31
|
|||||||||||||||
2015
|
2014
|
2015
|
2014
|
|||||||||||||
Revenue
|
$
|
186.3
|
$ |
199.1
|
$ |
770.6
|
$ |
742.2
|
||||||||
Net (loss) income
|
(19.4
|
) |
2.6
|
(30.9
|
) |
(5.6
|
) | |||||||||
Net (loss) income per share, GAAP basis
|
(0.54
|
)2 | $ |
0.07
|
1 | $ |
(0.86
|
)2 | $ |
(0.16
|
)2 | |||||
Non-cash interest expense per share
|
0.03
|
2 |
0.03
|
1 |
0.12
|
2 |
0.12
|
2 | ||||||||
Restructuring charges per share
|
0.23
|
2
|
—
|
0.26
|
2 |
—
|
||||||||||
Deferred tax asset valuation allowance per share
|
0.27
|
2 |
—
|
0.27
|
2 |
—
|
||||||||||
Gain on sale of Navvis per share
|
(0.03
|
)2 |
—
|
(0.03
|
)2 |
—
|
||||||||||
Joint venture impairment loss and related loss per share
|
—
|
—
|
0.33
|
2 |
—
|
|||||||||||
CEO transition-related expenses per share
|
—
|
—
|
0.08
|
2 |
—
|
|||||||||||
Legal settlement charges per share
|
—
|
0.15
|
1 |
—
|
0.32
|
2 | ||||||||||
Adjusted net (loss) income per share
|
$
|
(0.04
|
)2 | $ |
0.25
|
1 | $ |
0.16
|
1 | $ |
0.27
|
1 |
·
|
Adjusted for an aggregate year over year revenue reduction of $39 million from the HMSA contract amendment and the sale of Navvis, guidance for 2016 revenue is for a percentage growth rate in the low to middle single digits range.
|
·
|
Beginning in 2016, the Company will exclude non-cash share-based compensation from adjusted EBITDA. Guidance for 2016 adjusted EBITDA, which also excludes restructuring charges, is in a range of $85 million to $90 million, compared with adjusted EBITDA for 2015 of $80 million, which excludes non-cash share-based compensation, restructuring charges, joint venture investment impairment and related loss on the remaining investment commitment, CEO transition-related expenses and gain on the sale of Navvis.
|
·
|
The Company expects to use its free cash flow to reduce its debt by at least $30 million at December 31, 2016, compared with December 31, 2015.
|
·
|
the Company's ability to estimate the costs associated with, and to implement and realize the anticipated benefits of, the structural reorganization and cost rationalization plan;
|
·
|
the effectiveness of management's strategies and decisions and the ability to conclude the strategic review of the business on the anticipated timeframe;
|
·
|
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 and leadership;
|
·
|
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 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 of our information systems or those of third-party vendors or other service providers, which may result in unauthorized access by third parties to customer, employee or Company information or patient health information and lead to enforcement actions, fines and other litigation against the Company;
|
·
|
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, 2014, and other filings with the Securities and Exchange Commission.
|
Three Months Ended
|
Twelve Months Ended
|
|||||||||||||||
December 31,
|
December 31,
|
|||||||||||||||
2015
|
2014
|
2015
|
2014
|
|||||||||||||
Revenues
|
$
|
186,281
|
$
|
199,136
|
$
|
770,598
|
$
|
742,183
|
||||||||
Cost of services (exclusive of depreciation and amortization of $10,281, $9,373, $39,485, and $37,741, respectively, included below)
|
156,762
|
154,705
|
635,909
|
598,280
|
||||||||||||
Selling, general & administrative expenses
|
16,499
|
16,292
|
68,142
|
65,377
|
||||||||||||
Depreciation and amortization
|
12,756
|
13,128
|
49,855
|
53,378
|
||||||||||||
Restructuring and related charges
|
13,345
|
—
|
15,097
|
—
|
||||||||||||
Gain on sale of business
|
(1,873
|
)
|
—
|
(1,873
|
)
|
—
|
||||||||||
Legal settlement charges
|
—
|
8,352
|
—
|
17,715
|
||||||||||||
Operating income (loss)
|
(11,208
|
)
|
6,659
|
3,468
|
7,433
|
|||||||||||
Interest expense
|
4,843
|
4,108
|
18,328
|
17,581
|
||||||||||||
Equity in income (loss) from joint ventures
|
214
|
—
|
(20,229
|
)
|
—
|
|||||||||||
Income (loss) before income taxes
|
(15,837
|
)
|
2,551
|
(35,089
|
)
|
(10,148
|
)
|
|||||||||
Income tax expense (benefit)
|
3,542
|
(27
|
)
|
(3,771
|
)
|
(4,587
|
)
|
|||||||||
Net income (loss)
|
$
|
(19,379
|
)
|
$
|
2,578
|
$
|
(31,318
|
)
|
$
|
(5,561
|
)
|
|||||
Less: net income (loss) attributable to non-controlling interest
|
49
|
—
|
(371
|
)
|
—
|
|||||||||||
Net income (loss) attributable to Healthways, Inc.
|
$
|
(19,428
|
)
|
$
|
2,578
|
$
|
(30,947
|
)
|
$
|
(5,561
|
)
|
|||||
Earnings (loss) per share attributable to Healthways, Inc.:
|
||||||||||||||||
Basic
|
$
|
(0.54
|
)
|
$
|
0.07
|
$
|
(0.86
|
)
|
$
|
(0.16
|
)
|
|||||
Diluted (1)
|
$
|
(0.54
|
)
|
$
|
0.07
|
$
|
(0.86
|
)
|
$
|
(0.16
|
)
|
|||||
Comprehensive income (loss)
|
$
|
(19,015
|
)
|
$
|
1,651
|
$
|
(33,509
|
)
|
$
|
(7,202
|
)
|
|||||
Less: comprehensive income (loss) attributable to non-controlling interest
|
59
|
—
|
(523
|
)
|
—
|
|||||||||||
Comprehensive income (loss) attributable to Healthways, Inc.
|
$
|
(19,074
|
)
|
$
|
1,651
|
$
|
(32,986
|
)
|
$
|
(7,202
|
)
|
|||||
Weighted average common shares
|
||||||||||||||||
and equivalents:
|
||||||||||||||||
Basic
|
36,060
|
35,417
|
35,832
|
35,302
|
||||||||||||
Diluted (1)
|
36,060
|
36,560
|
35,832
|
35,302
|
||||||||||||
(1)The impact of potentially dilutive securities for the three and twelve months ended December 31, 2015 and the twelve months ended December 31, 2014 was not considered because the effect would be anti-dilutive in each of those periods.
|
December 31,
|
|
December 31,
|
||||||
2015
|
|
2014
|
||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
1,870
|
|
$
|
1,765
|
|||
Accounts receivable, net
|
108,195
|
126,559
|
||||||
Prepaid expenses
|
10,207
|
10,680
|
||||||
Other current assets
|
5,230
|
7,662
|
||||||
Income taxes receivable
|
1,076
|
2,917
|
||||||
Deferred tax asset
|
8,209
|
13,118
|
||||||
Total current assets
|
134,787
|
162,701
|
||||||
Property and equipment:
|
||||||||
Leasehold improvements
|
37,565
|
39,285
|
||||||
Computer equipment and related software
|
315,890
|
316,808
|
||||||
Furniture and office equipment
|
19,776
|
23,257
|
||||||
Capital projects in process
|
13,676
|
38,389
|
||||||
386,907
|
417,739
|
|||||||
Less accumulated depreciation
|
(230,907
|
)
|
(252,043
|
)
|
||||
156,000
|
165,696
|
|||||||
Other assets
|
27,919
|
75,550
|
||||||
Intangible assets, net
|
61,317
|
69,161
|
||||||
Goodwill, net
|
336,974
|
338,800
|
||||||
Total assets
|
$
|
716,997
|
|
$
|
811,908
|
|||
December 31,
|
December 31,
|
|||||||
2015
|
2014
|
|||||||
Current liabilities:
|
||||||||
Accounts payable
|
$
|
41,035
|
$
|
37,204
|
||||
Accrued salaries and benefits
|
21,620
|
24,198
|
||||||
Accrued liabilities
|
50,074
|
62,674
|
||||||
Deferred revenue
|
7,056
|
8,282
|
||||||
Contract billings in excess of earned revenue
|
12,893
|
15,232
|
||||||
Current portion of long-term debt
|
23,308
|
20,613
|
||||||
Current portion of long-term liabilities
|
6,204
|
2,127
|
||||||
Total current liabilities
|
162,190
|
170,330
|
||||||
Long-term debt
|
212,362
|
231,112
|
||||||
Long-term deferred tax liability
|
23,617
|
32,883
|
||||||
Other long-term liabilities
|
38,238
|
72,993
|
||||||
Stockholders' equity:
|
||||||||
Preferred stock
|
||||||||
$.001 par value, 5,000,000 shares
|
||||||||
authorized, none outstanding
|
—
|
—
|
||||||
Common stock
|
||||||||
$.001 par value, 120,000,000 shares authorized,
|
||||||||
36,079,446 and 35,511,221 shares outstanding, respectively
|
36
|
35
|
||||||
Additional paid-in capital
|
302,488
|
292,346
|
||||||
Retained earnings
|
9,659
|
42,439
|
||||||
Treasury stock, at cost, 2,254,953 shares in treasury
|
(28,182
|
)
|
(28,182
|
)
|
||||
Accumulated other comprehensive loss
|
(4,087
|
)
|
(2,048
|
)
|
||||
Total Healthways, Inc. stockholders' equity
|
279,914
|
304,590
|
||||||
Non-controlling interest
|
676
|
—
|
||||||
Total stockholders' equity
|
280,590
|
304,590
|
||||||
Total liabilities and stockholders' equity
|
$
|
716,997
|
$
|
811,908
|
||||
|
Twelve Months Ended
|
|||||||
December 31,
|
||||||||
2015
|
2014
|
|||||||
Cash flows from operating activities:
|
||||||||
Net loss
|
$
|
(31,318
|
)
|
$
|
(5,561
|
)
|
||
Adjustments to reconcile net loss to net cash provided by
|
||||||||
operating activities:
|
||||||||
Depreciation and amortization
|
49,855
|
53,378
|
||||||
Amortization of deferred loan costs
|
2,520
|
1,855
|
||||||
Amortization of debt discount
|
7,148
|
6,757
|
||||||
Share-based employee compensation expense
|
10,469
|
8,349
|
||||||
Equity in loss from joint ventures
|
20,229
|
—
|
||||||
Deferred income taxes
|
(5,916
|
)
|
(6,972
|
)
|
||||
Gain on sale of business
|
(1,873
|
)
|
—
|
|||||
Excess tax benefits from share-based payment arrangements
|
—
|
(525
|
)
|
|||||
Decrease (increase) in accounts receivable, net
|
16,971
|
(38,130
|
)
|
|||||
Decrease in other current assets
|
2,796
|
1,589
|
||||||
Increase (decrease) in accounts payable
|
5,248
|
(9,343
|
)
|
|||||
(Decrease) increase in accrued salaries and benefits
|
(4,345
|
)
|
3,165
|
|||||
(Decrease) increase in other current liabilities
|
(11,764
|
)
|
26,990
|
|||||
Other
|
940
|
10,546
|
||||||
Net cash flows provided by operating activities
|
60,960
|
52,098
|
||||||
Cash flows from investing activities:
|
||||||||
Acquisition of property and equipment
|
(34,730
|
)
|
(42,991
|
)
|
||||
Investment in joint ventures
|
(5,881
|
)
|
(7,050
|
)
|
||||
Proceeds from sale of business
|
4,369
|
—
|
||||||
Other
|
(1,121
|
)
|
(1,164
|
)
|
||||
Net cash flows used in investing activities
|
(37,363
|
)
|
(51,205
|
)
|
||||
Cash flows from financing activities:
|
||||||||
Proceeds from issuance of long-term debt
|
572,981
|
467,126
|
||||||
Payments of long-term debt
|
(597,837
|
)
|
(481,515
|
)
|
||||
Deferred loan costs
|
(892
|
)
|
(391
|
)
|
||||
Excess tax benefits from share-based payment arrangements
|
—
|
525
|
||||||
Exercise of stock options
|
2,467
|
2,851
|
||||||
Repurchase of common stock
|
(1,833
|
)
|
—
|
|||||
Proceeds from non-controlling interest
|
1,615
|
—
|
||||||
Change in cash overdraft and other
|
1,648
|
11,227
|
||||||
Net cash flows used in financing activities
|
(21,851
|
)
|
(177
|
)
|
||||
Effect of exchange rate changes on cash
|
(1,641
|
)
|
(1,535
|
)
|
||||
Net increase (decrease) in cash and cash equivalents
|
105
|
(819
|
)
|
|||||
Cash and cash equivalents, beginning of period
|
1,765
|
2,584
|
||||||
Cash and cash equivalents, end of period
|
$
|
1,870
|
$
|
1,765
|
Three Months Ended
December 31,
|
Twelve Months Ended
December 31,
|
|||||||||||||||
2015
|
2014
|
2015
|
2014
|
|||||||||||||
Adjusted EPS (1)
|
$
|
(0.04
|
)
|
$
|
0.25
|
$
|
0.16
|
$
|
0.27
|
|||||||
EPS (loss) attributable to non-cash interest charges (2)
|
(0.03
|
)
|
(0.03
|
)
|
(0.12
|
)
|
(0.12
|
)
|
||||||||
EPS (loss) attributable to restructuring charges (3)
|
(0.23
|
)
|
—
|
(0.26
|
)
|
—
|
||||||||||
EPS (loss) attributable to impairment charge and loss on related purchase commitment (4)
|
—
|
—
|
(0.33
|
)
|
—
|
|||||||||||
EPS (loss) attributable to CEO transition-related expenses (5)
|
—
|
—
|
(0.08
|
)
|
—
|
|||||||||||
EPS (loss) attributable to valuation allowance against U.S. deferred tax assets (6)
|
(0.27
|
)
|
—
|
(0.27
|
)
|
—
|
||||||||||
EPS (loss) attributable to gain on sale of business (7)
|
0.03
|
—
|
0.03
|
—
|
||||||||||||
EPS (loss) attributable to legal settlement charges (8)
|
—
|
(0.15
|
)
|
—
|
(0.32
|
)
|
||||||||||
EPS (loss), GAAP basis (9)
|
$
|
(0.54
|
)
|
$
|
0.07
|
$
|
(0.86
|
)
|
$
|
(0.16
|
)
|
|||||
|
Twelve Months Ended
|
|||||||
|
December 31, 2015
|
Margin %
|
||||||
Adjusted EBITDA (10)
|
$
|
70,589
|
9.2
|
%
|
||||
Restructuring charges (11)
|
(15,097
|
)
|
||||||
Impairment charge and loss on related purchase commitment (12)
|
(19,550
|
)
|
||||||
Gain on sale of business (13)
|
1,873
|
|||||||
CEO transition-related expenses (14)
|
(4,721
|
)
|
||||||
Depreciation and amortization
|
(49,855
|
)
|
||||||
Interest expense
|
(18,328
|
)
|
||||||
Income tax benefit
|
3,771
|
|||||||
Net loss including non-controlling interest, GAAP basis
|
$
|
(31,318
|
)
|
|||||
|
Twelve Months Ended
|
|||
|
December 31, 2015
|
|||
Adjusted EBITDA (15)
|
$
|
80,140
|
||
Non-cash share-based compensation (16)
|
(9,551
|
)
|
||
Restructuring charges (17)
|
(15,097
|
)
|
||
Impairment charge and loss on related purchase commitment (18)
|
(19,550
|
)
|
||
Gain on sale of business (19)
|
1,873
|
|||
CEO transition-related expenses (20)
|
(4,721
|
)
|
||
Depreciation and amortization
|
(49,855
|
)
|
||
Interest expense
|
(18,328
|
)
|
||
Income tax benefit
|
3,771
|
|||
Net loss including non-controlling interest, GAAP basis
|
$
|
(31,318
|
)
|
|
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