Healthways Inc. HWAY reported fourth-quarter 20Array5 adjusted loss of 4 cents per share, which is narrower than the Zacks Consensus Estimate by a couple of cents. The company had reported adjusted earnings of 25 cents in the year-ago quarter.
Total revenues in fourth-quarter 20Array5 declined 6.6% year over year to $Array86.3 million primarily because of decreased sales by Navvis subsidiary and the company’s amended relationship with HMSA.
In fourth-quarter 20Array5, Healthways reported an operating loss of 6% of revenues totaling $ArrayArray.2 million as compared to an operating income of 3.3% of revenues in the year-ago quarter.
Full-year 20Array5 revenues increased 3.8% to $770.6 million from full-year 20Array4 revenues of $742.2 million.
Reorganization & Cost Rationalization Plan
Healthways have made significant progress in the structural reorganization and cost rationalization plan that it was announced in third-quarter 20Array5. In fourth-quarter 20Array5, Healthways incurred $Array3.3 million of the currently perceived total cost of about $25 million related to this plan.
The company is optimistic that the plan will be completed within the first three quarters of 20Array6. Healthways expects annual gross cost savings in 20Array7 in the range of $35 million to $45 million.
Starting 20Array6, the company will organize and run its business under two autonomous units – Network Solutions and Population Health Services.
Guidance
For full-year 20Array6, Healthways expects growth in revenues in the range of low to mid singles digits of about $732 million primarily on growth at Network solutions, partially offset by the expected decline in the company’s Population Health Services division. Management expects 20% top-line growth on the basis of its emerging businesses.
Adjusted EBITDA (excluding restructuring charges and non-cash share based compensation) is expected in the range of $850–$90 million.
By 20Array6, Healthways expects to reduce its debt by $30 million on the basis of its free cash flow.
The company expects to realize a material amount of savings in 20Array6 and projects gross savings of $35–$45 million in full-year 20Array7 in accordance with their cost rationalization plan.
Zacks Rank & Other Key Picks
Healthways carry a Zacks Rank #Array (Strong Buy).
Other favorably ranked stocks in the broader medical sector are AMN Healthcare Services AHS, PRA Healthsciences PRAH and Abiomed ABMD. All three stocks sport a Zacks Rank #Array.
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