Healthways sees improved Q3 results, lags for year-to-date

Disease-management company Healthways, Franklin, Tenn., ended the third quarter with higher revenue and income compared with the same three months a year ago, but performance for the first nine months of the year continues to lag behind 2013.

The company this summer reached a settlement with activist investors over its board composition. Its second-largest investor, North Tide Capital, put forward its own list of board candidates but withdrew them in a deal that allowed North Tide to nominate three directors and created a strategic review committee on the board.

Healthways' revenue in the third quarter increased 11.4% from the prior year to $185.7 million. Expenses climbed 11% to $178.1 million, giving the company operating income of $7.6 million. That's up sharply—24%—from operating income of $6.1 million the same quarter a year ago.

Net income for the quarter was $2 million, up 9.6% from $1.8 million the prior year.

Healthways last week reported operating income of $774,000 for the nine months that ended Sept. 30. That's an 84% decline from the $4.9 million in operating income for the first nine months last year. Net losses grew to $8.1 million for the first nine months of the year from $3.3 million for the same period a year ago.

The company affirmed its financial guidance for the year. It closed 23 contracts during the third quarter, Ben Leedle Jr., the company's CEO and president, said in a release. Of those contracts, five were new and five expanded prior deals. He cited health systems' efforts to prepare for shifting delivery and financing models as the reason for three third-quarter and two pending health system contracts.

“Without exception, these health systems are focused on positioning themselves for the clinical outcomes and financial risks inherent in population health management,” Leedle said.

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