8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

___________________

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of report (Date of earliest event reported): June 18, 2008

HEALTHWAYS, INC.

(Exact name of registrant as specified in its charter)

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)

(615) 614-4929

(Registrant's telephone number, including area code)

3841 Green Hills Village Drive, Nashville, TN 37215

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

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))

Item 2.02 Results of Operations and Financial Condition.

On June 18, 2008, Healthways, Inc. issued a press release announcing earnings results for the third quarter ended May 31, 2008, the text of which is attached hereto as Exhibit 99.1. This information furnished pursuant to this Item 2.02 and Exhibit 99.1 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and shall not be deemed to be incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act except as shall be expressly set forth by specific reference in such filing.

Item9.01. Financial Statements and Exhibits.

(c) Exhibits:
Exhibit 99.1	Press Release.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

HEALTHWAYS, INC.
By:	/s/ Mary A. Chaput
	Mary A. Chaput
	Chief Financial Officer

Date: June 18, 2008

EXHIBIT INDEX

Exhibit 99.1 Press Release dated June 18, 2008

EX-99

Exhibit 99.1

Contact:	Mary A. Chaput
	Executive Vice President and
	Chief Financial Officer
	(615) 614-4929

HEALTHWAYS REPORTS 34% GROWTH IN EARNINGS
TO $0.39 PER DILUTED SHARE FOR THE THIRD QUARTER OF FISCAL 2008

AFFIRMS ESTABLISHED GUIDANCE FOR FISCAL 2008

NASHVILLE, Tenn. (June 18, 2008) – Ben R. Leedle, Jr., president and chief executive officer of Healthways, Inc. (NASDAQ: HWAY), today announced financial results for the third quarter of fiscal 2008, ended May 31, 2008. Total revenues for the quarter were $191.4 million, a 14% increase from $167.9 million for the third quarter of fiscal 2007. Net income rose 30% to $14.0 million from $10.8 million. Net income per diluted share increased 34% to $0.39 for the third quarter of fiscal 2008 from $0.29 for the third quarter of fiscal 2007.

COMPARISON OF COMPONENTS OF NET INCOME PER DILUTED SHARE
See pages 7 and 8 for a reconciliation of GAAP and non-GAAP results

	Three Months Ended						Nine Months Ended
	May 31, 2008			May 31, 2007			May 31, 2008			May 31, 2007
Domestic	$	0.41		$	0.31		$	1.10		$	0.97
International		(0.02	)		(0.02	)		(0.09	)		(0.06	)
Earnings per diluted share, GAAP basis	$	0.39		$	0.29		$	1.01		$	0.91

“We are pleased with our earnings growth for the third quarter of fiscal 2008, which included expenses of $0.07 per diluted share related to moving to our new headquarters during the quarter,” Mr. Leedle said. “Our fiscal 2008 financial guidance is based on demonstrated market demand for our services, reflected in the addition of 1.8 million billed lives since the third quarter of fiscal 2007. During the latest quarter, we entered into 29 new, expanded and extended contracts to provide a wide range of Health and Care Support^SM solutions. We also continue to see an increasing number of Requests for Proposal for comprehensive, integrated and sole-source solutions. We believe Healthways remains uniquely positioned to meet this demand through proven approaches and models that address the needs of every person in a given population, regardless of age or health status, with the overall goal of sustainably improving health outcomes, reducing healthcare costs and enhancing productivity.

“Reflecting continuing employer demand for our solutions, we ended the quarter with contracts to provide services to over 1,000 self-insured employers, a 20% increase from the third quarter of fiscal 2007 and a 6% sequential increase from the second quarter of fiscal 2008. This growth in our

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June 18, 2008

employer business accounted for a substantial portion of our backlog of annualized revenues, which totaled approximately $14 million at the quarter’s end.

“During the third quarter, we repurchased 2.5 million shares of our common stock for $89.7 million under the share repurchase plan authorized in fiscal 2007. We also funded capital expenditures of $24.9 million. Healthways completed the quarter with cash and cash equivalents of $17.8 million, a ratio of debt to trailing-12-months EBITDA of 2.4 and debt to total capitalization of 52%."

COMPARISON OF EBITDA AND RECONCILIATION TO NET INCOME
See pages 7 and 8 for a reconciliation of GAAP and non-GAAP results
(In millions)

	Three Months Ended				Nine Months Ended
	May 31, 2008		May 31, 2007		May 31, 2008		May 31, 2007
EBITDA	$	42.0	$	33.3	$	113.5	$	95.0
Interest expense		5.2		6.0		15.6		12.5
Income tax expense		9.8		6.4		26.3		21.6
Depreciation and amortization		13.0		10.1		34.0		27.2
Net income	$	14.0	$	10.8	$	37.6	$	33.7

Mr. Leedle concluded, “Our solid third-quarter financial performance met our expectations and positions us well for the remainder of fiscal 2008. In addition, we continued to progress during the quarter on our three central growth initiatives of increasing our domestic commercial business, expanding our addressable markets worldwide and enhancing our value proposition. The significant long-term potential of each of these initiatives reflects ongoing industry demand. We expect our success in fulfilling this potential will continue to be predicated on both our ability to deliver leading solutions to meet this demand and the outcomes we produce. We are, therefore, committed to remaining at the forefront of industry innovation to expand our extensive and documented history of achieving meaningful outcomes for our customers, which we expect will continue to be one of our key market differentiators.”

Financial Guidance

Revenue

Healthways today affirms its guidance for fiscal 2008 revenues in a range of $720 million to $740 million, an increase of 17% to 20% from fiscal 2007. This guidance includes revenue of $5.2 million recognized in the third quarter related to the Medicare Health Support Pilot. As expected, it also includes international revenues related to the Company’s contract in Germany with Deutsche Angestellten Krankenkasse (DAK) in a range of $8 million to $10 million. Healthways does not expect its second international contract, with Fleury, S.A. in Brazil, to have a material impact on fiscal 2008 results.

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COMPARISON OF COMPONENTS OF REVENUES FOR
FISCAL 2008 (GUIDANCE) AND FISCAL 2007
(Dollars in millions)

	Fiscal 2008 (Guidance)		Fiscal 2007		% Change
Domestic	$	712.0 - 730.0	$	615.6		16 - 19	%
International		8.0 - 10.0		—
Total Company	$	720.0 - 740.0	$	615.6		17 - 20	%

Earnings

The Company today also affirmed its guidance for fiscal 2008 earnings per diluted share in the range of $1.50 to $1.55, an increase of 23% to 27% from fiscal 2007.

COMPARISON OF FISCAL 2008 EPS GUIDANCE TO FISCAL 2007 RESULTS
AND COMPONENTS OF FOURTH-QUARTER FISCAL 2008 GUIDANCE
See pages 7 and 8 for a reconciliation of GAAP and non-GAAP results

	Twelve Months									Three Months Ending Aug. 31, 2008 (Guidance)
	Ending Aug. 31, 2008 (Guidance)			Ended Aug. 31, 2007			% Change
Domestic	$	1.61 - 1.64		$	1.34			20 - 22	%	$	0.51 - 0.54
International		(0.11)-(0.09	)		(0.12	)					(0.02) - 0.00
Earnings per diluted share,
GAAP basis	$	1.50 - 1.55		$	1.22			23 - 27	%	$	0.49 - 0.54

Conference Call

Healthways will hold a conference call to discuss this release today at 5:00 p.m. Eastern time. Investors will have the opportunity to listen to the conference call live over the Internet by going to www.healthways.com and clicking Investor Relations, or by going to www.earnings.com, at least 15 minutes early to register, download and install any necessary audio software. For those who cannot listen to the live broadcast, a telephonic replay will be available for one week at 719-457-0820, code 9329154, and the replay will also be available on the Company’s web site for the next 12 months.

Safe Harbor Provisions

This press release contains forward-looking statements that are based upon current expectations and involve a number of risks and uncertainties. Those forward-looking statements include all statements that are not historical statements of fact and those regarding the intent, belief or expectations of the Company, including, without limitation, all statements regarding the Company’s future earnings and results of operations. In order for the Company to utilize the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, investors are hereby cautioned that the following important factors, among others, may affect these forward-looking statements. Consequently, actual operations and results may differ materially from those expressed in these forward-looking statements. The important factors include but are not limited to: the effect of any new or proposed legislation,

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regulations and interpretations relating to the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, including the potential expansion to Phase II for Medicare Health Support Programs; the Company’s ability to accurately forecast performance and the timing of revenue recognition under the terms of its contracts with customers and/or its Cooperative Agreement with the Centers for Medicare and Medicaid Services (CMS) ahead of data collection and reconciliation in order to provide forward-looking guidance; the Company’s ability to effect the financial, clinical, and satisfaction outcomes under its Cooperative Agreement with CMS and reach mutual agreement with CMS with respect to results necessary to achieve success under Phase I of Medicare Health Support; the Company’s ability to anticipate the rate of market acceptance of Health and Care Support solutions and the individual market dynamics in potential international markets; the ability of the Company to accurately forecast the costs necessary to implement the Company’s strategy of establishing a presence in these markets; the Company’s ability to sign and implement new contracts for Health and Care Support solutions; the Company’s ability to effect cost savings and clinical outcomes improvements under Health and Care Support contracts and reach mutual agreement with customers with respect to cost savings, or to effect such savings and improvements within the time frames contemplated by the Company; the ability of the Company to recognize estimated annualized revenue in backlog in the manner and within the timeframe the Company expects; the ability of the Company and/or its customers to enroll participants in the Company’s Health and Care Support programs in a manner and within the timeframe anticipated by the Company; the ability of the Company’s customers and/or CMS to provide timely and accurate data that is essential to the operation and measurement of the Company’s performance under the terms of its contracts; the Company’s ability to favorably resolve contract billing and interpretation issues with its customers and the Company’s ability to service its debt and make principal and interest payments as those payments become due; the Company’s ability to integrate the operations and technology platforms of Axia and other acquired businesses or technologies into the Company’s business; 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 ability of the Company’s customers to maintain the number of covered lives enrolled in the plans during the terms of the agreements; unusual and unforeseen patterns of healthcare utilization by individuals with diabetes, cardiac, respiratory and/or other diseases or conditions for which the Company provides services; the impact of litigation involving the Company and/or its subsidiaries; and other risks detailed in the Company’s Annual Report on Form 10-K for the fiscal year ended August 31, 2007 and other filings with the Securities and Exchange Commission. The Company undertakes no obligation to update or revise any such forward-looking statements.

About Healthways

Healthways is the leading provider of specialized, comprehensive Health and Care Support^SM solutions to help millions of people maintain or improve their health and, as a result, reduce overall healthcare costs. Healthways’ solutions are designed to help healthy individuals stay healthy, mitigate and slow the progression of disease associated with family or lifestyle risk factors and promote the best possible health for those already affected by disease. Our proven, evidence-based programs provide highly specific and personalized interventions for each individual in a population, irrespective of age or health status, and are delivered to consumers by phone, mail, internet and face-to-face interactions, both domestically and internationally. Healthways also provides a national, fully accredited complementary and alternative Health Provider Network, offering convenient access to individuals who seek health services outside of, and in conjunction with, the traditional healthcare system. For more information, please visit www.healthways.com.

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HEALTHWAYS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands, except per share data)

	Three Months Ended				Nine Months Ended
	May 31,				May 31,
	2008		2007		2008		2007
Revenues	$	191,439	$	167,900	$	546,225	$	445,236
Cost of services (exclusive of depreciation and amortization of $9,290, $7,330, $24,575, and $20,423, respectively, included below)		129,014		115,697		378,557		302,266
Selling, general & administrative expenses		20,474		18,931		54,168		47,990
Depreciation and amortization		12,990		10,139		34,053		27,225
Operating income		28,961		23,133		79,447		67,755
Interest expense		5,237		5,988		15,572		12,534
Income before income taxes		23,724		17,145		63,875		55,221
Income tax expense		9,750		6,353		26,264		21,571
Net income	$	13,974	$	10,792	$	37,611	$	33,650
Earnings per share:
Basic	$	0.40	$	0.31	$	1.06	$	0.96
Diluted	$	0.39	$	0.29	$	1.01	$	0.91
Weighted average common shares
and equivalents:
Basic		34,593		35,133		35,444		34,907
Diluted		35,971		37,070		37,196		36,855

Certain reclassifications have been made in prior periods to conform to current classifications.

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Healthways, Inc.

Statistical Information

(In thousands)

(Unaudited)

	May 31,		May 31,
	2008		2007
Operating Statistics
Domestic commercial available lives		189,400		187,400
Domestic commercial billed lives		28,900		27,100
Annualized revenue in backlog	$	13,774	$	22,871

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Healthways, Inc.

Reconciliations of Non-GAAP Measures to GAAP Measures

(Unaudited)

Reconciliation of Domestic Diluted Earnings Per Share (EPS) to Diluted EPS, GAAP Basis

	Three Months			Nine Months			Three Months			Nine Months
	Ended			Ended			Ended			Ended
	May 31, 2008			May 31, 2008			May 31, 2007			May 31, 2007
Domestic EPS (1)	$	0.41		$	1.10		$	0.31		$	0.97
EPS (loss) attributable to international initiatives (2)		(0.02	)		(0.09	)		(0.02	)		(0.06	)
EPS, GAAP basis	$	0.39		$	1.01		$	0.29		$	0.91

	Twelve Months
	Ended
(Continued)	August 31, 2007
Domestic EPS (1)	$	1.34
EPS (loss) attributable to international initiatives (2)		(0.12	)
EPS, GAAP basis	$	1.22

(1) Domestic EPS is a non-GAAP financial measure. The Company excludes EPS (loss) attributable to international initiatives from this measure and relies on domestic EPS because of its comparability to the Company's historical operating results and EPS guidance. The Company believes it is useful to investors to provide disclosures of its operating results and guidance on the same basis as that used by management. You should not consider domestic EPS in isolation or as a substitute for EPS determined in accordance with accounting principles generally accepted in the United States.

(2) EPS (loss) attributable to international initiatives includes costs to implement the Company's strategy of establishing a presence and securing contracts in international markets as well as revenues and costs attributable to operating international contracts.

Reconciliation of Domestic Diluted EPS Guidance to Diluted EPS Guidance, GAAP Basis

	Three Months Ending		Twelve Months Ending
	August 31, 2008		August 31, 2008
Domestic EPS guidance (3)	$	0.51 – 0.54	$	1.61 – 1.64
EPS (loss) guidance attributable to international initiatives (4)		(0.02) – 0.00		(0.11) - (0.09	)
EPS guidance, GAAP basis	$	0.49 - 0.54	$	1.50 - 1.55

(3) Domestic EPS guidance is a non-GAAP financial measure. The Company excludes EPS (loss) guidance attributable to international operations from this measure and relies on domestic EPS guidance because of its comparability to the Company's historical operating results. The Company believes it is useful to investors to provide disclosures of its operating results and guidance on the same basis as that used by management. You should not consider domestic EPS guidance in isolation or as a substitute for EPS guidance determined in accordance with accounting principles generally accepted in the United States.

(4) EPS (loss) guidance attributable to international initiatives includes costs to implement the Company's strategy of establishing a presence and securing contracts in international markets as well as revenues and costs attributable to operating international contracts.

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Reconciliation of Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA) to Net Income (in millions)

	Three Months		Nine Months		Three Months		Nine Months
	Ended		Ended		Ended		Ended
	May 31, 2008		May 31, 2008		May 31, 2007		May 31, 2007
EBITDA (5)	$	42.0	$	113.5	$	33.3	$	95.0
Interest expense		5.2		15.6		6.0		12.5
Income tax expense		9.8		26.3		6.4		21.6
Depreciation and amortization		13.0		34.0		10.1		27.2
Net income	$	14.0	$	37.6	$	10.8	$	33.7

	Twelve Months
	Ended
(Continued)	May 31, 2008
EBITDA (5)	$	149.0
Interest expense		21.2
Income tax expense		34.8
Depreciation and amortization		43.9
Net income	$	49.1

(5) EBITDA is a non-GAAP financial measure. The Company excludes interest, taxes, depreciation and amortization from this measure and provides EBITDA to enhance investors' understanding of the Company's operating performance and its capacity to fund capital expenditures and working capital requirements. The Company believes it is useful to investors to provide disclosures of its operating results on the same basis as that used by management. You should not consider EBITDA in isolation or as a substitute for net income determined in accordance with accounting principles generally accepted in the United States.

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HEALTHWAYS, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands, except share and per share data)

		May 31,			August 31,
		2008			2007
Assets
Current assets:
Cash and cash equivalents	$	17,836		$		47,655
Accounts receivable, net		121,412				80,201
Prepaid expenses		9,115				10,370
Other current assets		4,813				4,319
Income taxes receivable		—				1,741
Deferred tax asset		7,554				7,145
Total current assets		160,730				151,431
Property and equipment
Leasehold improvements		34,422				19,268
Computer equipment and related software		127,909				87,843
Furniture and office equipment		28,036				20,435
Capital projects in process		14,266				12,336
		204,633				139,882
Less accumulated depreciation		(94,952	)			(81,160	)
Net property and equipment		109,681				58,722
Long-term deferred tax asset		8,045				—
Other assets		17,995				15,609
Customer contracts, net		36,333				41,777
Other intangible assets, net		73,635				77,722
Goodwill, net		484,178				483,584
Total assets	$	890,597		$		828,845
Liabilities and stockholders' equity
Current liabilities:
Accounts payable	$	13,942		$		13,630
Accrued salaries and benefits		27,616				18,960
Accrued liabilities		23,499				22,146
Deferred revenue		8,032				7,918
Contract billings in excess of earned revenue		74,873				72,829
Income taxes payable		17,692				—
Current portion of long-term debt		3,446				2,213
Current portion of long-term liabilities		3,901				2,943
Total current liabilities		173,001				140,639

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Long-term debt		350,905			297,059
Long-term deferred tax liability		—			14,009
Other long-term liabilities		33,973			14,388
Stockholders' equity
Preferred stock
$.001 par value, 5,000,000 shares authorized,
none outstanding		—			—
Common stock
$.001 par value, 75,000,000 shares authorized,
33,571,928 and 35,606,482 shares outstanding		34			35
Additional paid-in capital		202,884			188,126
Retained earnings		130,568			174,641
Accumulated other comprehensive loss		(768	)		(52	)
Total stockholders' equity		332,718			362,750
Total liabilities and stockholders' equity	$	890,597		$	828,845

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HEALTHWAYS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

	Nine Months Ended
	May 31,
	2008			2007
Cash flows from operating activities:
Net income	$	37,611		$	33,650
Adjustments to reconcile net income to net cash provided by
operating activities, net of business acquisitions:
Depreciation and amortization		34,053			27,225
Amortization of deferred loan costs		874			697
Share-based employee compensation expense		12,201			12,546
Excess tax benefits from share-based payment arrangements		(9,367	)		(7,257	)
Increase in accounts receivable, net		(41,230	)		(7,641	)
(Decrease) increase in other current assets		4,266			(4,841	)
Decrease in accounts payable		(1,869	)		(212	)
Increase (decrease) in accrued salaries and benefits		8,656			(18,007	)
Increase in other current liabilities		24,568			37,690
Deferred income taxes		(11,068	)		(8,157	)
Other		13,902			4,071
(Increase) decrease in other assets		(1,356	)		1,732
Payments on other long-term liabilities		(1,972	)		(1,247	)
Net cash flows provided by operating activities		69,269			70,249
Cash flows from investing activities:
Acquisition of property and equipment		(70,682	)		(19,864	)
Acquisitions, net of cash acquired		(358	)		(466,979	)
Purchase of investment		—			(9,047	)
Other, net		(2,439	)		(13	)
Net cash flows used in investing activities		(73,479	)		(495,903	)
Cash flows from financing activities:
Proceeds from issuance of long-term debt		85,420			350,000
Deferred loan costs		—			(4,357	)
Proceeds from sale of unregistered common stock		—			5,000
Repurchases of common stock		(94,340	)		—
Excess tax benefits from share-based payment arrangements		9,367			7,257
Payments of long-term debt		(32,208	)		(30,641	)
Exercise of stock options		6,152			5,224
Net cash flows (used in) provided by financing activities		(25,609	)		332,483
Net decrease in cash and cash equivalents		(29,819	)		(93,171	)
Cash and cash equivalents, beginning of period		47,655			154,792
Cash and cash equivalents, end of period	$	17,836		$	61,621

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