Attached files
| file | filename |
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| 8-K - HEALTHWAYS, INC. FORM 8-K - TIVITY HEALTH, INC. | form8-k_021610.htm |
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Contact:
|
Mary
A. Chaput
|
|
|
Chief
Financial Officer
|
||
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(615)
614-4929
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HEALTHWAYS
REPORTS FOURTH-QUARTER EARNINGS
OF
$0.22 PER DILUTED SHARE
¾¾¾¾¾¾¾¾¾¾¾
ESTABLISHES
FINANCIAL GUIDANCE FOR 2010
NASHVILLE, Tenn. (Feb. 16,
2010) – Healthways, Inc. (NASDAQ: HWAY) today announced financial results
for the fourth quarter and twelve months ended December 31,
2009. Total revenues for the quarter were $175.2 million compared
with $185.3 million for the three months ended December 31, 2008. Net
income for the fourth quarter of 2009 was $7.5 million, or $0.22 per diluted
share, compared with a net loss of $3.1 million, or $0.09 per diluted share,
which included charges of $0.47 per diluted share related to the Company’s
restructuring initiative and stock option tender offer, for the three months
ended December 31, 2008.
For the
year ended December 31, 2009, total revenues were $717.4 million versus $746.7
million for the year ended December 31, 2008. Net income for 2009 was
$10.4 million, or $0.30 per diluted share, compared with $39.1 million, or $1.10
per diluted share, for the year ended December 31, 2008. Adjusted net
income per diluted share for 2009 was $1.04, excluding lawsuit settlement costs
of $0.73 per diluted share, compared with $1.57 per diluted share, excluding
costs related to the restructuring initiative and stock option tender offer of
$0.47 per diluted share, for the year ended December 31, 2008. See pages 9 and
10 for a reconciliation of GAAP and non-GAAP results.
COMPARISON
OF COMPONENTS OF NET INCOME PER DILUTED SHARE
See
pages 9 and 10 for a reconciliation of GAAP and non-GAAP results
|
Three
Months Ended December 31,
|
||||||||||||
|
2009
|
2009
|
2008
|
||||||||||
|
Actual
|
Guidance
|
Actual
|
||||||||||
|
Domestic
|
$
|
0.22
|
$
|
0.20
– 0.22
|
$
|
0.41
|
||||||
|
International
|
0.00
|
(0.01)
– 0.01
|
(0.03
|
)
|
||||||||
|
Adjusted
net income per diluted share
|
0.22
|
0.19
– 0.23
|
0.38
|
|||||||||
|
Restructuring
initiative and stock option tender offer
|
-
|
-
|
(0.47
|
)
|
||||||||
|
Net
income per diluted share
|
$
|
0.22
|
$
|
0.19
– 0.23
|
$
|
(0.09
|
)
|
|||||
|
Twelve
Months Ended December 31,
|
||||||||||||
|
2009
|
2009
|
2008
|
||||||||||
|
Actual
|
Guidance
|
Actual
|
||||||||||
|
Domestic
|
$
|
1.15
|
$
|
1.13
– 1.15
|
$
|
1.67
|
||||||
|
International
|
(0.11
|
)
|
(0.12)
– (0.10
|
)
|
(0.10
|
)
|
||||||
|
Adjusted
net income per diluted share
|
1.04
|
1.01
– 1.05
|
1.57
|
|||||||||
|
Restructuring
initiative and stock option tender offer
|
-
|
-
|
(0.47
|
)
|
||||||||
|
Lawsuit
settlement costs
|
(0.73
|
)
|
(0.73
|
)
|
-
|
|||||||
|
Net
income per diluted share
|
$
|
0.30
|
(1)
|
$
|
0.28
– 0.32
|
$
|
1.10
|
|||||
(1) Figures do not add due to rounding.
-MORE-
Ben R.
Leedle, Jr., chief executive officer of Healthways, remarked, “Given the
difficult economic environment and other headwinds we faced throughout
2009, we are pleased with our financial results for the fourth quarter and the
full year. We produced greater than expected net cash flows from operations of
$41 million for the fourth quarter and a record $113 million for the year,
despite the lawsuit settlement costs of $40 million. After capital expenditures
of $13 million for the quarter and $49 million for the year, we reduced our
total debt outstanding by $10 million for the quarter and $50 million for the
year. This debt reduction combined with solid profitability lowered
the ratio of long-term debt to total capitalization at the end of 2009 by 570
basis points to 40.5% from 46.2% at December 31, 2008. The ratio of
long-term debt to EBITDA as calculated under our credit agreement was 1.9 at the
end of 2009, better than our forecast for the year.
“In
addition to our continued profitability and strengthened financial position, we
were pleased with the stability our business demonstrated over the course of
2009. Despite the high national unemployment rate, we offset
attrition and maintained or increased billed lives sequentially for each quarter
of the year. We renewed all four significant contracts up for renewal
in 2009. After declining on a comparable-quarter basis for the first
quarter, the number of RFPs we received stabilized on a comparable-quarter basis
for the last three quarters of the year. This rebound in market
activity was further augmented by a significant increase in unsolicited calls
from existing or potential customers with regard to our
capabilities. Although we face continuing challenges in 2010 due to
the uncertain economy, ongoing near double-digit unemployment and lack of
clarity with regard to health care reform, the stabilization of our business
during 2009 supports our outlook for increased earnings for 2010.
“Our
outlook for 2010 and beyond is predicated on a number of industry trends and
Company initiatives that we believe will be long-term growth
drivers. Among these are:
|
·
|
Increasing
market interest in prevention and wellness. Nearly 80%
of our RFPs for 2009 required wellness and prevention services, either
stand alone or integrated with chronic care services. We also
experienced substantial growth in our SilverSneakers®
Fitness Program and entered our first major contract to make our
fitness network available to millions of individuals in an existing
customer’s commercial population. In addition, we continue to
believe that any ultimate version of health care reform will include a
strong focus on wellness and
prevention.
|
|
·
|
Successful
introduction of expanded value proposition. The signing
of our first WholeHealth contract, with a Fortune 100 company,
successfully introduced an order-of-magnitude increase in our value
proposition. Through this contract, we expect to deliver
measurable and sustained improvements in health and well-being, while
lowering medical costs and improving health-related
productivity. We expect the success of this solution will
provide Healthways a significant competitive advantage. We believe
we stand alone in our ability to respond to employers’ demands
for a healthier, more productive and less costly workforce, which is
critical to their corporate
performance.
|
|
·
|
Continuing
demand for greater integration. During 2009,
approximately one-third of our RFPs were related to integrated services
covering wellness, prevention and chronic care. An increasing
number of RFPs also focus on our ability to accomplish varying degrees of
data
integration. The substantial interest generated by the announcement of our
first WholeHealth contract, which represents a new standard of
comprehensive, integrated services and data management, substantiates our
expectation that this trend will strengthen over time. That
expectation is further supported by the recent extension and expansion of
our contract with Blue Cross Blue Shield of Massachusetts to provide our
full suite of total population management services for their approximately
2 million members. This agreement provides evidence that our
solution and data integration capabilities are not just of interest to
employers, but are resonating with our health plan customers and prospects
as well.
|
-MORE-
|
·
|
Increased
ability to sustain engagement of individuals. Healthways
continued to enhance its long-term position as the industry’s leader in
multi-behavior change solutions through the acquisition of
HealthHonors. This acquisition provides Healthways a unique,
scientific basis for sustaining behavior change through highly
individualized incentives that are both more effective and lower in
cost.
|
|
·
|
International
performance and expansion. Our development work in
countries around the world validates the potential we see for significant
long-term growth in our international business. From this work,
we know that the focus on improving health outcomes and addressing
escalating healthcare costs is as intense internationally as it is
domestically. During 2009, we expanded our international
business with the launch of our first contract in Australia, the third
country and continent in which we have expanded beyond the
U.S. As anticipated in our guidance for 2009, our international
business reached break-even performance for the fourth
quarter.”
|
Financial
Guidance
Healthways
today established its guidance for 2010 revenues in a range of $677 million to
$718 million, which includes revenues from domestic operations in a range of
$650 million to $685 million and from international operations in a range of $27
million to $33 million. This guidance reflects the full-year impact
of previously discussed renegotiated or terminated contracts that were in effect
during all or part of 2009, as well as those that have an effective date in
2010. This impact is expected to be somewhat offset by the backlog from
contracts awarded but not yet implemented at the end of 2009 totaling
approximately $32 million in estimated annualized revenue at target
performance. Given the uncertain economic environment and consistent
with the Company’s original guidance for 2009, the low end of revenue guidance
for 2010 assumes no new unsigned business and no organic growth in billed
lives.
COMPARISON
OF COMPONENTS OF REVENUES FOR THE YEAR ENDING DECEMBER 31, 2010 (GUIDANCE) AND
THE YEAR ENDED DECEMBER 31, 2009
(Dollars
in millions)
|
Twelve
Months
|
|||||||||||
|
Ending
|
Ended
|
||||||||||
|
Dec.
31, 2010
|
Dec.
31, 2009
|
||||||||||
|
(Guidance)
|
(Actual)
|
||||||||||
|
Domestic
|
$
|
650.0
– 685.0
|
$
|
699.0
|
|||||||
|
International
|
27.0
– 33.0
|
18.4
|
|||||||||
|
Total
Company
|
$
|
677.0
– 718.0
|
$
|
717.4
|
|||||||
-MORE-
Healthways
also established its guidance for 2010 net income per diluted share in a range
of $1.05 to $1.18. This 2010 guidance consists of a range for net
income per diluted share from domestic operations of $1.05 to $1.15 and from
international operations of $0.00 to $0.03.
The
Company’s guidance for net income per diluted share for the first quarter of
2010 is in a range of $0.26 to $0.29. Domestic operations are
expected to produce net income per diluted share of $0.26 to $0.28 and
international operations are expected to be in a range of $0.00 to
$0.01.
COMPARISON OF COMPONENTS
OF NET INCOME PER DILUTED SHARE
See
pages 9 and 10 for a reconciliation of GAAP and non-GAAP results
|
Twelve
Months
|
Three
Months
|
||||||||||||
|
Ending
|
Ended
|
Ending
|
|||||||||||
|
Dec.
31, 2010
|
Dec.
31, 2009
|
Mar.
31, 2010
|
|||||||||||
|
(Guidance)
|
(Actual)
|
(Guidance)
|
|||||||||||
|
Domestic,
excluding lawsuit settlement costs
|
$
|
1.05
– 1.15
|
$
|
1.15
|
$
|
0.26
– 0.28
|
|||||||
|
International
|
0.00
– 0.03
|
(0.11
|
)
|
0.00
– 0.01
|
|||||||||
|
Adjusted
net income per diluted share
|
1.05
– 1.18
|
1.04
|
0.26
– 0.29
|
||||||||||
|
Lawsuit
settlement costs
|
-
|
(0.73
|
)
|
-
|
|||||||||
|
Net
income per diluted share
|
$
|
1.05
– 1.18
|
$
|
0.30
|
(1)
|
$
|
0.26
– 0.29
|
||||||
(1) Figures do not add due to
rounding.
Summary
Mr.
Leedle concluded, “Despite the extraordinary challenges we faced during the
year, we are encouraged by Healthways’ performance for 2009. Although
revenues and earnings declined for the year, we controlled costs and produced
significant profits and record cash flow. We continued to invest in
our future through substantial capital expenditures, including a promising
acquisition, while reducing our total debt and strengthening our financial
position.
“We also
continued to lay the foundations for future growth through tangible
accomplishments, such as signing our first WholeHealth contract, launching our
first contract in Australia and acquiring HealthHonors. Our RFP
volume stabilized during the last three quarters of the year and our pipeline of
potential business from unsolicited calls increased. As our guidance
demonstrates, we view the continuing economic weakness and high unemployment
with appropriate caution, but we expect to increase earnings for
2010.
“Longer-term,
we are confident of Healthways’ sustainable growth potential. We
believe we are very well positioned to meet increasing market demand for
comprehensive, integrated wellness, prevention and chronic care
solutions. As with the expansion of our value proposition through the
introduction of WholeHealth, we have continued to differentiate Healthways
competitively by expanding the ability of our solutions to improve well-being
and reduce costs. With market leading solutions capable of addressing
a central problem for businesses, governments and consumers around the world, we
expect to continue managing well through this period of economic weakness and to
produce stronger growth as the economic cycle strengthens.”
-MORE-
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 1291248, 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, including our guidance and
financial expectations for future periods, which 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
Company’s ability to sign and implement new
contracts;
|
|
·
|
the
Company’s ability to accurately forecast performance in order to provide
forward-looking guidance;
|
|
·
|
the
Company’s ability to reach mutual agreement with the Centers for Medicare
and Medicaid Services (CMS) with respect to the Company’s results under
Phase I of Medicare Health Support;
|
|
·
|
the
Company’s ability to accurately forecast the costs necessary to establish
a presence in international
markets;
|
|
·
|
the
risks associated with foreign currency exchange rate
fluctuations;
|
|
·
|
the
Company’s ability to achieve estimated annualized revenue in
backlog;
|
|
·
|
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
risks associated with changes in macroeconomic
conditions;
|
|
·
|
the
Company’s ability to integrate 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
Company’s ability to obtain adequate financing to provide the capital that
may be necessary to support the Company’s operations and to support or
guarantee the Company’s performance under new
contracts;
|
|
·
|
the
impact of litigation involving the Company and/or its
subsidiaries;
|
|
·
|
the
impact of future state, federal, and international health care and other
applicable legislation and regulations, including health care reform, on
the Company’s ability to deliver its services and on the financial health
of the Company’s customers and their willingness to purchase the Company’s
services; and
|
|
·
|
other
risks detailed in the Company’s Annual Report on Form 10-K for the fiscal
year ended August 31, 2008, Item 1A of the Company’s Quarterly Report on
Form 10-Q for the quarter ended September 30, 2009, and other filings with
the Securities and Exchange
Commission.
|
The
Company undertakes no obligation to update or revise any such forward-looking
statements.
-MORE-
About
Healthways
Healthways
is the leading provider of specialized, comprehensive solutions to help millions
of people maintain or improve their health and well-being and, as a result,
reduce overall 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 and a national Fitness Center 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.
-MORE-
HEALTHWAYS,
INC.
CONSOLIDATED
STATEMENTS OF OPERATIONS
(Unaudited)
(In
thousands, except per share data)
|
Three
Months Ended
|
Twelve
Months Ended
|
||||||||||||
|
December
31,
|
December
31,
|
||||||||||||
|
2009
|
2008
|
2009
|
2008
|
||||||||||
|
Revenues
|
$
|
175,212
|
$
|
185,272
|
$
|
717,426
|
$
|
746,704
|
|||||
|
Cost
of services (exclusive of depreciation and amortization of $9,590, $8,872,
$35,433, and $35,988, respectively, included below)
|
129,902
|
135,962
|
522,999
|
517,846
|
|||||||||
|
Selling,
general & administrative expenses
|
16,485
|
22,236
|
71,535
|
77,393
|
|||||||||
|
Depreciation
and amortization
|
13,134
|
12,173
|
49,289
|
49,986
|
|||||||||
|
Impairment
loss
|
—
|
4,344
|
—
|
4,344
|
|||||||||
|
Restructuring
and related charges
|
—
|
10,264
|
—
|
10,264
|
|||||||||
|
Operating
income
|
15,691
|
293
|
73,603
|
86,871
|
|||||||||
|
Gain
on sale of investment
|
—
|
—
|
(2,581
|
)
|
—
|
||||||||
|
Interest
expense
|
3,626
|
5,037
|
15,717
|
20,565
|
|||||||||
|
Legal
settlement and related costs
|
—
|
—
|
39,956
|
—
|
|||||||||
|
Income
(loss) before income taxes
|
12,065
|
(4,744
|
)
|
20,511
|
66,306
|
||||||||
|
Income
tax expense (benefit)
|
4,556
|
(1,657
|
)
|
10,137
|
27,243
|
||||||||
|
Net
income (loss)
|
$
|
7,509
|
$
|
(3,087
|
)
|
$
|
10,374
|
$
|
39,063
|
||||
|
Earnings
(loss) per share:
|
|||||||||||||
|
Basic
|
$
|
0.22
|
$
|
(0.09
|
)
|
$
|
0.31
|
$
|
1.14
|
||||
|
Diluted
|
$
|
0.22
|
$
|
(0.09
|
)
|
$
|
0.30
|
$
|
1.10
|
||||
|
Weighted
average common shares
|
|||||||||||||
|
and
equivalents:
|
|||||||||||||
|
Basic
|
33,819
|
33,619
|
33,730
|
34,259
|
|||||||||
|
Diluted
(1)
|
34,758
|
33,619
|
34,359
|
35,508
|
|||||||||
(1) The
assumed exercise of stock-based compensation awards for the three months ended
December 31, 2008 was not considered because the impact would be
anti-dilutive.
-MORE-
Healthways,
Inc.
Statistical
Information
(Unaudited)
|
December
31,
|
December
31,
|
||||
|
2009
|
2008
|
||||
|
Operating
Statistics
|
|||||
|
Domestic
commercial available lives
|
196,700,000
|
195,000,000
|
|||
|
Domestic
commercial billed lives
|
36,000,000
|
32,900,000
|
-MORE-
Healthways,
Inc.
Reconciliation
of Non-GAAP Measures to GAAP Measures
(Unaudited)
Reconciliation
of Domestic EPS Excluding Lawsuit Settlement Costs and Reconciliation of
Adjusted EPS to Diluted EPS, GAAP Basis
|
Twelve
Months Ended
|
|||||||
|
December
31, 2009
|
|||||||
|
Domestic
EPS excluding lawsuit settlement costs (1)
|
$
|
1.15
|
|||||
|
International
EPS (loss)
|
(0.11
|
)
|
|||||
|
Adjusted
EPS (2)
|
$
|
1.04
|
|||||
|
EPS
(loss) attributable to lawsuit settlement costs (3)
|
(0.73
|
)
|
|||||
|
EPS,
GAAP basis (4)
|
$
|
0.30
|
|||||
(1)
Domestic EPS excluding lawsuit settlement costs is a non-GAAP financial
measure. The Company excludes EPS (loss) attributable to lawsuit
settlement costs from this measure 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 on the same basis as
that used by management. You should not consider Domestic EPS
excluding lawsuit settlement costs in isolation or as a substitute for EPS
determined in accordance with accounting principles generally accepted in the
United States.
(2)
Adjusted EPS is a non-GAAP financial measure. The Company excludes
EPS (loss) attributable to lawsuit settlement costs from this measure 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 on the same basis as that used by management. You
should not consider Adjusted EPS in isolation or as a substitute for EPS
determined in accordance with accounting principles generally accepted in the
United States.
(3) EPS
(loss) attributable to lawsuit settlement costs consists of pre-tax charges of
$40.0 million related to the Company’s settlement of a qui tam
lawsuit.
(4)
Figures do not add due to rounding.
Reconciliation
of Domestic EPS Excluding Restructuring Initiative and Stock Option Tender Offer
and Reconciliation of Adjusted EPS to Diluted EPS (Loss), GAAP
Basis
|
Three
Months Ended
|
Twelve
Months Ended
|
||||||||
|
December
31, 2008
|
December
31, 2008
|
||||||||
|
Domestic
EPS excluding restructuring initiative and stock option tender offer (5)
|
$
|
0.41
|
$
|
1.67
|
|||||
|
International
EPS (loss)
|
(0.03
|
)
|
(0.10
|
)
|
|||||
|
Adjusted
EPS (6)
|
$
|
0.38
|
$
|
1.57
|
|||||
|
EPS
(loss) attributable to restructuring initiative and stock option tender
offer (7)
|
(0.47
|
)
|
(0.47
|
)
|
|||||
|
EPS
(loss), GAAP basis
|
$
|
(0.09
|
)
|
$
|
1.10
|
||||
(5)
Domestic EPS excluding restructuring initiative and stock option tender offer is
a non-GAAP financial measure. The Company excludes EPS (loss)
attributable to the restructuring initiative and stock option tender offer from
this measure 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 on the same basis as that used by
management. You should not consider Domestic EPS excluding
restructuring initiative and stock option tender offer in isolation or as a
substitute for EPS determined in accordance with accounting principles generally
accepted in the United States.
-MORE-
(6)
Adjusted EPS is a non-GAAP financial measure. The Company excludes
EPS (loss) attributable to restructuring initiative and stock option tender
offer from this measure 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 on the same basis as that used by
management. You should not consider Adjusted EPS in isolation or as a
substitute for EPS determined in accordance with accounting principles generally
accepted in the United States.
(7) EPS
(loss) attributable to restructuring initiative and stock option tender offer
consists of charges related to the Company’s restructuring initiative, which
includes severance costs less employee equity forfeitures, costs related to
capacity consolidation and the write-off of an intangible asset, as well as
stock-based compensation costs related to a stock option tender offer completed
on December 30, 2008.
Reconciliation
of Domestic EPS Guidance Excluding Lawsuit Settlement Costs and Reconciliation
of Adjusted EPS Guidance to Diluted EPS Guidance, GAAP Basis
|
Twelve
Months Ending
|
|||||||
|
December
31, 2009
|
|||||||
|
Domestic
EPS guidance excluding lawsuit settlement costs (8)
|
$
|
1.13
– 1.15
|
|||||
|
International
EPS (loss) guidance
|
(0.12)
– (0.10
|
)
|
|||||
|
Adjusted
EPS guidance
(9)
|
$
|
1.01–
1.05
|
|||||
|
EPS
(loss) attributable to lawsuit settlement costs (10)
|
(0.73
|
)
|
|||||
|
EPS
guidance, GAAP basis
|
$
|
0.28
– 0.32
|
|||||
(8)
Domestic EPS guidance excluding lawsuit settlement costs is a non-GAAP financial
measure. The Company excludes EPS (loss) attributable to lawsuit
settlement costs from this measure 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 excluding lawsuit settlement costs in isolation or as a
substitute for EPS guidance determined in accordance with accounting principles
generally accepted in the United States.
(9)
Adjusted EPS guidance is a non-GAAP financial measure. The Company
excludes EPS (loss) attributable to lawsuit settlement costs from this measure
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 Adjusted EPS guidance in
isolation or as a substitute for EPS guidance determined in accordance with
accounting principles generally accepted in the United States.
(10) EPS
(loss) attributable to lawsuit settlement costs consists of pre-tax charges of
$40.0 million related to the Company’s settlement of a qui tam
lawsuit.
-MORE-
HEALTHWAYS,
INC.
CONSOLIDATED
BALANCE SHEETS
(Unaudited)
(In
thousands)
ASSETS
|
December
31,
|
December
31,
|
||||||||||
|
2009
|
2008
|
||||||||||
|
Current
assets:
|
|||||||||||
|
Cash
and cash equivalents
|
$
|
2,356
|
$
|
5,157
|
|||||||
|
Accounts
receivable, net
|
100,833
|
115,108
|
|||||||||
|
Prepaid
expenses
|
10,433
|
13,479
|
|||||||||
|
Other
current assets
|
4,945
|
3,810
|
|||||||||
|
Income
taxes receivable
|
6,452
|
—
|
|||||||||
|
Deferred
tax asset
|
24,197
|
30,488
|
|||||||||
|
Total
current assets
|
149,216
|
168,042
|
|||||||||
|
Property
and equipment:
|
|||||||||||
|
Leasehold
improvements
|
40,609
|
34,635
|
|||||||||
|
Computer
equipment and related software
|
166,448
|
138,369
|
|||||||||
|
Furniture
and office equipment
|
28,096
|
29,610
|
|||||||||
|
Capital
projects in process
|
23,052
|
17,462
|
|||||||||
|
258,205
|
220,076
|
||||||||||
|
Less
accumulated depreciation
|
(134,046
|
)
|
(108,635
|
)
|
|||||||
|
124,159
|
111,441
|
||||||||||
|
Other
assets
|
11,498
|
18,089
|
|||||||||
|
Customer
contracts, net
|
29,343
|
32,715
|
|||||||||
|
Other
intangible assets, net
|
71,704
|
68,207
|
|||||||||
|
Goodwill,
net
|
496,446
|
484,596
|
|||||||||
|
Total
assets
|
$
|
882,366
|
$
|
883,090
|
|||||||
-MORE-
HEALTHWAYS,
INC.
CONSOLIDATED
BALANCE SHEETS
(In
thousands, except share and per share data)
(Unaudited)
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
December
31,
|
December
31,
|
||||||||
|
2009
|
2008
|
||||||||
|
Current
liabilities:
|
|||||||||
|
Accounts
payable
|
$
|
29,171
|
$
|
21,633
|
|||||
|
Accrued
salaries and benefits
|
61,120
|
33,161
|
|||||||
|
Accrued
liabilities
|
25,004
|
26,294
|
|||||||
|
Deferred
revenue
|
4,639
|
6,904
|
|||||||
|
Contract
billings in excess of earned revenue
|
70,440
|
71,406
|
|||||||
|
Income
taxes payable
|
—
|
8,034
|
|||||||
|
Current
portion of long-term debt
|
2,192
|
2,035
|
|||||||
|
Current
portion of long-term liabilities
|
3,854
|
4,609
|
|||||||
|
Total
current liabilities
|
196,420
|
174,076
|
|||||||
|
Long-term
debt
|
254,345
|
304,372
|
|||||||
|
Long-term
deferred tax liability
|
14,617
|
8,073
|
|||||||
|
Other
long-term liabilities
|
39,707
|
39,533
|
|||||||
|
Stockholders’
equity:
|
|||||||||
|
Preferred
stock
|
|||||||||
|
$.001
par value, 5,000,000 shares
|
|||||||||
|
authorized,
none outstanding
|
—
|
—
|
|||||||
|
Common
stock
|
|||||||||
|
$.001
par value, 120,000,000 shares authorized,
|
|||||||||
|
33,858,917
and 33,648,976 shares outstanding
|
34
|
34
|
|||||||
|
Additional
paid-in capital
|
222,472
|
213,461
|
|||||||
|
Retained
earnings
|
158,880
|
148,506
|
|||||||
|
Accumulated
other comprehensive loss
|
(4,109
|
)
|
(4,965
|
)
|
|||||
|
Total
stockholders’ equity
|
377,277
|
357,036
|
|||||||
|
Total
liabilities and stockholders’ equity
|
$
|
882,366
|
$
|
883,090
|
|||||
-MORE-
HEALTHWAYS,
INC.
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited)
(In
thousands)
|
Twelve
Months Ended
December
31,
|
|||||||||
|
2009
|
2008
|
||||||||
|
Cash
flows from operating activities:
|
|||||||||
|
Net
income
|
$
|
10,374
|
$
|
39,063
|
|||||
|
Adjustments
to reconcile net income to net cash provided by
|
|||||||||
|
operating
activities, net of business acquisitions:
|
|||||||||
|
Depreciation
and amortization
|
49,289
|
49,986
|
|||||||
|
Loss
on impairment of intangible asset
|
—
|
4,344
|
|||||||
|
Amortization
of deferred loan costs
|
1,518
|
1,194
|
|||||||
|
Gain
on sale of investment
|
(2,581
|
)
|
—
|
||||||
|
Loss
on disposal of property and equipment
|
1,584
|
2,914
|
|||||||
|
Share-based
employee compensation expense
|
10,213
|
26,388
|
|||||||
|
Excess
tax benefits from share-based payment arrangements
|
(381
|
)
|
(3,490
|
)
|
|||||
|
Decrease
(increase) in accounts receivable, net
|
14,352
|
(22,843
|
)
|
||||||
|
Increase
in other current assets
|
(1,972
|
)
|
(2,395
|
)
|
|||||
|
Increase
in accounts payable
|
6,565
|
1,315
|
|||||||
|
Increase
in accrued salaries and benefits
|
27,899
|
12,349
|
|||||||
|
(Decrease)
increase in other current liabilities
|
(11,067
|
)
|
4,602
|
||||||
|
Deferred
income taxes
|
8,076
|
(21,860
|
)
|
||||||
|
Other
|
3,141
|
9,594
|
|||||||
|
Increase
in other assets
|
(172
|
)
|
(1,130
|
)
|
|||||
|
Payments
on other long-term liabilities
|
(3,970
|
)
|
(2,602
|
)
|
|||||
|
Net
cash flows provided by operating activities
|
112,868
|
97,429
|
|||||||
|
Cash
flows from investing activities:
|
|||||||||
|
Acquisition
of property and equipment
|
(49,110
|
)
|
(72,885
|
)
|
|||||
|
Sale
of investment
|
11,626
|
—
|
|||||||
|
Business
acquisitions, net of cash acquired, and equity investments
|
(19,486
|
)
|
(886
|
)
|
|||||
|
Change
in restricted cash
|
(538
|
)
|
—
|
||||||
|
Other
|
(4,918
|
)
|
(5,897
|
)
|
|||||
|
Net
cash flows used in investing activities
|
(62,426
|
)
|
(79,668
|
)
|
|||||
|
Cash
flows from financing activities:
|
|||||||||
|
Proceeds
from issuance of long-term debt
|
405,400
|
142,287
|
|||||||
|
Payments
of long-term debt
|
(457,303
|
)
|
(114,081
|
)
|
|||||
|
Deferred
loan costs
|
(784
|
)
|
(290
|
)
|
|||||
|
Exercise
of stock options
|
727
|
3,696
|
|||||||
|
Excess
tax benefits from share-based payment arrangements
|
381
|
3,490
|
|||||||
|
Repurchases
of common stock
|
—
|
(94,208
|
)
|
||||||
|
Repurchase
of stock options
|
(736
|
)
|
—
|
||||||
|
Change
in outstanding checks and other
|
(1,113
|
)
|
6,149
|
||||||
|
Net
cash flows used in financing activities
|
(53,428
|
)
|
(52,957
|
)
|
|||||
|
Effect
of exchange rate changes on cash
|
185
|
(162
|
)
|
||||||
|
Net
decrease in cash and cash equivalents
|
(2,801
|
)
|
(35,358
|
)
|
|||||
|
Cash
and cash equivalents, beginning of period
|
5,157
|
40,515
|
|||||||
|
Cash
and cash equivalents, end of period
|
$
|
2,356
|
$
|
5,157
|
|||||
-END-