Healthways, a Franklin, Tenn.-based developer of wellness and population-health management programs, has hired an investment bank to advise it on a long-term strategy. The move could lead to a sale of the company, among other alternatives.
The decision comes nearly eight months after one of its largest investors, North Tide Capital, reached a compromise with Healthways that led to the installation of three new board of directors members and replacing its chairman. North Tide had been dissatisfied with Healthways' financial performance and signaled its intention to take an activist role in the company.
The newly installed board then created a strategic review committee June 9.
Healthways, whose customers include employers, providers and insurers, on Sunday said it hired J.P. Morgan Securities as its financial adviser.
Activist investors, previously uncommon in the healthcare provider sector, have been increasingly willing to agitate for change as more money and interest flows into the space. Glenview Capital Management in 2013 was able to successfully replace the board at Health Management Associates in the lead-up to the chain's takeover by Community Health Systems.
Healthways' struggles in 2013 led its co-founder and former CEO, Thomas Cigarran, to resign from the board last February. His resignation letter said he could no longer watch the company “fail to meet its potential and the reasonable expectations of its shareholders.”
For the first nine months of 2014, Healthways reported a net loss of $8.1 million on $543 million in revenue compared with the prior-year period's net loss of $3.3 million on $494 million in revenue. However, most of the loss came from the first quarter, and its performance has improved sequentially.
Healthways will report its full-year 2014 results Feb. 24.
The company's shares were trading more than 10% higher, above $21, as of mid-morning Monday. Healthways has a market capitalization of $689.4 million.
Follow Beth Kutscher on Twitter: @MHbkutscher
