Healthways Extends HCSC Contract (ESRX) (HWAY)

Well-being enhancement company, Healthways Inc. (HWAY) announced that it has extended its partnership with customer-owned health insurance company, Health Care Service Corporation (“HCSC”) till 2015, effective immediately. The extension of this long-term agreement reflects Healthways’ commitment toward its members.

As per the agreement, Healthways will offer its Prime Fitness program to roughly 8 million HCSC commercial plan members. The program provides convenient and flexible physical activities to enhance the well-being of working individuals.

According to a research by Managed Care, medical expenses for an individual fall by $2,202 every year with the increase of physical activities to 3 times a week from none or once in a week. The partnership will allow eligible HCSC members to access 8,000 fitness centers across the U.S. Members can log onto the program website to locate participating venues. Moreover, employers with an onsite corporate fitness center will be able to keep a tab of its employees’ performance.

The Healthways model encourages people to make favorable lifestyle changes that lead to enhanced well-being, reduced healthcare costs, improved performance and economic value for customers. The company has invested in technology platforms that provide scalable support with large populations. It has tie-ups with a large proportion of U.S. health plans and counts millions of lives in its customer base.

The company had inked 30 new, expanded or extended contracts in the last reported quarter. This count included 12 fresh contracts, 8 expanded and extended contracts and 10 extended contracts. These contracts are spread across domestic as well as overseas markets.

Healthways is the leader in a strategically critical and rapidly evolving part of the health care services market. Due to its unique scalable business model, Healthways shares may present a long-term investment opportunity, although it faces many challenges in the short term. One of the primary competitors of the company includes Express Scripts Holding Company (ESRX).

Currently, Healthways retains a Zacks #3 Rank (Hold) for the short term, which supports its Neutral recommendation for the long-term.