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 July 23, 2014
|
|
|
Investor Relations Contact:
|
|
|
Chip Wochomurka
|
|
|
(615) 614-4493
|
|
|
chip.wochomurka@healthways.com
|
·
|
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:
|
|
|
Guidance
Year Ending
|
||
|
|
December 31, 2014
|
||
Adjusted net earnings per diluted share |
|
$ 0.11 – 0.26
|
||
Non-cash interest expense per share
|
|
(0.11
|
) | |
Settlement charge per share |
|
(0.17
|
) | |
Net (loss) per share
|
|
$ (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 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, 2013, and other filings with the Securities and Exchange Commission.
|
|
Three Months Ended
|
Six Months Ended
|
||||||||||||||
|
June 30,
|
June 30,
|
||||||||||||||
|
2014
|
2013
|
2014
|
2013
|
||||||||||||
|
||||||||||||||||
Revenues
|
$
|
180,613
|
$
|
162,270
|
$
|
357,391
|
$
|
327,435
|
||||||||
Cost of services (exclusive of depreciation and amortization of $9,604, $8,886, $18,976, and $17,712, respectively, included below)
|
146,476
|
133,468
|
294,624
|
274,726
|
||||||||||||
Selling, general & administrative expenses
|
16,899
|
14,279
|
33,331
|
27,377
|
||||||||||||
Depreciation and amortization
|
13,536
|
13,015
|
26,872
|
26,548
|
||||||||||||
Legal settlement charges
|
—
|
—
|
9,363
|
—
|
||||||||||||
|
||||||||||||||||
Operating income (loss)
|
3,702
|
1,508
|
(6,799
|
)
|
(1,216
|
)
|
||||||||||
Interest expense
|
4,516
|
3,158
|
8,899
|
6,479
|
||||||||||||
|
||||||||||||||||
Loss before income taxes
|
(814
|
)
|
(1,650
|
)
|
(15,698
|
)
|
(7,695
|
)
|
||||||||
Income tax benefit
|
(297
|
)
|
(549
|
)
|
(5,585
|
)
|
(2,644
|
)
|
||||||||
|
||||||||||||||||
Net loss
|
$
|
(517
|
)
|
$
|
(1,101
|
)
|
$
|
(10,113
|
)
|
$
|
(5,051
|
)
|
||||
|
||||||||||||||||
Loss per share:
|
||||||||||||||||
Basic
|
$
|
(0.01
|
)
|
$
|
(0.03
|
)
|
$
|
(0.29
|
)
|
$
|
(0.15
|
)
|
||||
|
||||||||||||||||
Diluted (1)
|
$
|
(0.01
|
)
|
$
|
(0.03
|
)
|
$
|
(0.29
|
)
|
$
|
(0.15
|
)
|
||||
|
||||||||||||||||
Comprehensive loss
|
$
|
(449
|
)
|
$
|
(1,136
|
)
|
$
|
(9,702
|
)
|
$
|
(4,888
|
)
|
||||
|
||||||||||||||||
Weighted average common shares
|
||||||||||||||||
and equivalents:
|
||||||||||||||||
Basic
|
35,285
|
34,188
|
35,219
|
34,089
|
||||||||||||
Diluted (1)
|
35,285
|
34,188
|
35,219
|
34,089
|
||||||||||||
|
|
June 30,
|
December 31,
|
||||||
|
2014
|
2013
|
||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
2,427
|
$
|
2,584
|
||||
Accounts receivable, net
|
108,715
|
89,484
|
||||||
Prepaid expenses
|
9,873
|
9,228
|
||||||
Other current assets
|
7,694
|
6,857
|
||||||
Income taxes receivable
|
5,465
|
1,402
|
||||||
Deferred tax asset
|
8,562
|
9,667
|
||||||
Total current assets
|
142,736
|
119,222
|
||||||
|
||||||||
Property and equipment:
|
||||||||
Leasehold improvements
|
38,143
|
37,463
|
||||||
Computer equipment and related software
|
305,482
|
290,392
|
||||||
Furniture and office equipment
|
23,230
|
22,881
|
||||||
Capital projects in process
|
35,618
|
25,228
|
||||||
|
402,473
|
375,964
|
||||||
Less accumulated depreciation
|
(238,949
|
)
|
(217,766
|
)
|
||||
|
163,524
|
158,198
|
||||||
|
||||||||
Other assets
|
63,886
|
53,629
|
||||||
Intangible assets, net
|
74,029
|
79,162
|
||||||
Goodwill, net
|
338,800
|
338,800
|
||||||
|
||||||||
Total assets
|
$
|
782,975
|
$
|
749,011
|
||||
|
|
June 30,
|
December 31,
|
||||||
|
2014
|
2013
|
||||||
Current liabilities:
|
||||||||
Accounts payable
|
$
|
42,206
|
$
|
33,125
|
||||
Accrued salaries and benefits
|
17,325
|
20,157
|
||||||
Accrued liabilities
|
47,767
|
32,065
|
||||||
Deferred revenue
|
6,717
|
4,496
|
||||||
Contract billings in excess of earned revenue
|
23,783
|
17,411
|
||||||
Current portion of long-term debt
|
18,533
|
14,340
|
||||||
Current portion of long-term liabilities
|
784
|
2,822
|
||||||
Total current liabilities
|
157,115
|
124,416
|
||||||
|
||||||||
Long-term debt
|
234,224
|
237,582
|
||||||
Long-term deferred tax liability
|
28,971
|
33,320
|
||||||
Other long-term liabilities
|
64,775
|
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,
|
||||||||
35,334,275 and 35,107,303 shares outstanding, respectively
|
35
|
35
|
||||||
Additional paid-in capital
|
288,146
|
283,244
|
||||||
Retained earnings
|
37,887
|
48,000
|
||||||
Treasury stock, at cost, 2,254,953 shares in treasury
|
(28,182
|
)
|
(28,182
|
)
|
||||
Accumulated other comprehensive income (loss)
|
4
|
(407
|
)
|
|||||
Total stockholders' equity
|
297,890
|
302,690
|
||||||
|
||||||||
Total liabilities and stockholders' equity
|
$
|
782,975
|
$
|
749,011
|
||||
|
|
|
Six Months Ended
|
|||||||
|
June 30,
|
|||||||
|
2014
|
2013
|
||||||
Cash flows from operating activities:
|
||||||||
Net loss
|
$
|
(10,113
|
)
|
$
|
(5,051
|
)
|
||
Adjustments to reconcile net loss to net cash provided by
|
||||||||
operating activities, net of business acquisitions:
|
||||||||
Depreciation and amortization
|
26,872
|
26,548
|
||||||
Amortization of deferred loan costs
|
925
|
483
|
||||||
Amortization of debt discount
|
3,303
|
—
|
||||||
Share-based employee compensation expense
|
3,558
|
3,458
|
||||||
Deferred income taxes
|
(3,332
|
)
|
500
|
|
||||
Excess tax benefits from share-based payment arrangements
|
(310
|
)
|
(231
|
)
|
||||
(Increase) decrease in accounts receivable, net
|
(19,373
|
)
|
26,613
|
|||||
Increase in other current assets
|
(940
|
)
|
(3,917
|
)
|
||||
Decrease in accounts payable
|
(3,251
|
)
|
(1,611
|
)
|
||||
Decrease in accrued salaries and benefits
|
(3,489
|
)
|
(8,090
|
)
|
||||
Increase in other current liabilities
|
17,913
|
293
|
||||||
Other
|
7,548
|
(96 |
)
|
|||||
Net cash flows provided by operating activities
|
19,311
|
38,899
|
||||||
|
||||||||
Cash flows from investing activities:
|
||||||||
Acquisition of property and equipment
|
(20,976
|
)
|
(19,579
|
)
|
||||
Business acquisitions, net of cash acquired
|
—
|
(830
|
)
|
|||||
Other
|
(3,829
|
)
|
(3,843
|
)
|
||||
Net cash flows used in investing activities
|
(24,805
|
)
|
(24,252
|
)
|
||||
|
||||||||
Cash flows from financing activities:
|
||||||||
Proceeds from issuance of long-term debt
|
224,900
|
228,625
|
||||||
Payments of long-term debt
|
(233,554
|
)
|
(254,252
|
)
|
||||
Deferred loan costs
|
(88
|
)
|
(1,180
|
)
|
||||
Excess tax benefits from share-based payment arrangements
|
310
|
231
|
||||||
Exercise of stock options
|
1,265
|
2,164
|
||||||
Change in outstanding checks and other
|
12,114
|
11,366
|
||||||
Net cash flows provided by (used in) financing activities
|
4,947
|
(13,046
|
)
|
|||||
|
||||||||
Effect of exchange rate changes on cash
|
390
|
(1,109
|
)
|
|||||
|
||||||||
Net (decrease) increase in cash and cash equivalents
|
(157
|
)
|
492
|
|||||
|
||||||||
Cash and cash equivalents, beginning of period
|
2,584
|
1,759
|
||||||
|
||||||||
Cash and cash equivalents, end of period
|
$
|
2,427
|
$
|
2,251
|
|
Three Months Ended
June 30, 2014
|
Three Months Ended
June 30, 2013
|
Six Months Ended
June 30, 2014
|
Six Months Ended
June 30, 2013
|
||||||||||||||||||||||||||||
|
$ in thousands
|
Per Share
|
$ in thousands
|
Per Share
|
$ in thousands
|
Per Share
|
$ in thousands
|
Per Share
|
||||||||||||||||||||||||
Adjusted net income (loss) (1)
|
$
|
494
|
$
|
0.01
|
$
|
(1,101
|
)
|
$
|
(0.03
|
)
|
$
|
(2,079
|
)
|
$
|
(0.06
|
)
|
$
|
(5,051
|
)
|
$
|
(0.15
|
)
|
||||||||||
Net loss attributable to non-cash interest charges (2)
|
(1,011
|
)
|
(0.03
|
)
|
—
|
—
|
(1,997
|
)
|
(0.06
|
)
|
—
|
—
|
||||||||||||||||||||
Net loss attributable to legal settlement charges (3)
|
—
|
—
|
—
|
—
|
(6,037
|
)
|
(0.17
|
)
|
—
|
—
|
||||||||||||||||||||||
Net loss, GAAP basis (4)
|
$
|
(517
|
)
|
$
|
(0.01
|
)
|
$
|
(1,101
|
)
|
$
|
(0.03
|
)
|
$
|
(10,113
|
)
|
$
|
(0.29
|
)
|
$
|
(5,051
|
)
|
$
|
(0.15
|
)
|
|
Twelve Months Ending
|
|||
|
December 31, 2014
|
|||
Adjusted EPS guidance (5)
|
$
|
0.11-0.26
|
||
EPS (loss) guidance attributable to non-cash interest charges (6)
|
(0.11
|
)
|
||
EPS (loss) guidance attributable to legal settlement charges (7)
|
(0.17
|
)
|
||
EPS (loss) guidance, GAAP basis
|
$
|
(0.17)-(0.02
|
)
|
|
Six Months Ended
|
Six Months Ended
|
|
||||||||
|
June 30, 2014
|
June 30, 2013
|
Growth
|
||||||||
Adjusted EBITDA (8)
|
$
|
29,436
|
$
|
25,332
|
16
|
%
|
|||||
Legal settlement charges (9)
|
(9,363
|
)
|
—
|
||||||||
Depreciation and amortization
|
(26,872
|
)
|
(26,548
|
) | |||||||
Interest expense
|
(8,899
|
)
|
(6,479
|
) | |||||||
Income tax benefit
|
5,585
|
2,644
|
|||||||||
Net loss, GAAP basis
|
$
|
(10,113
|
)
|
$ |
(5,051
|
) |