Healthways (HWAY) reported fourth-quarter fiscal 2010 adjusted (excluding one-time items) earnings per share of 25 cents, missing the Zacks Consensus Estimate of 26 cents while exceeding the year-ago earnings of 22 cents per share. For fiscal 2010, adjusted earnings per share were $1.11, falling short of the Zacks Consensus Estimate by a penny and surpassing the previous-year earnings of $1.04.
Net income roughly doubled year over year to $15.6 million (or 45 cents per share) in the reported quarter, helped by one-time revenue recognition, among other factors.
Revenues came in at $195.3 million in the fourth quarter, up 11.5% year over year, beating the Zacks Consensus Estimate of $186 million. For fiscal 2010, sales rose marginally to $720.3 million exceeding the Zacks Consensus Estimate of $718 million.
Adjusted sales were $173 million in the fourth quarter, which excludes revenues of $22.3 million emanating from the final settlement with the Centers for Medicare and Medicaid Services (“CMS”).
Margins
Healthways’ operating income increased sharply 86.9% year over year to $29.3 million in the reported quarter. Operating margin improved to 15% from 9% in the year-ago quarter.
Balance Sheet and Cash Flow
The company had cash and cash equivalents of only $1.1 million as of December 31, 2010, down 54.8% year over year. Long-term debt stood at $243.4 million, down 4.3% year over year.
Outlook
Healthways set revenue guidance for 2011 between $672 million and $710 million. It assumes revenues from domestic operations of about $650 million to $680 million. International sales are expected in the range of $22 million to $30 million.
The company provided fiscal 2011 adjusted earnings guidance of 90 cents to $1.08 per share. It forecasts net income of 94 cents to $1.04 a share from domestic operations and a loss of 4 cents to an income of 4 cents from international ventures.
Healthways is a prominent vendor of specialized and composite solutions, enabling recipients to maintain or improve their wellbeing and, consequently, reduce systemic healthcare costs. The company’s solutions are intended to keep people healthy and mitigate lifestyle risk factors that can cause disease and optimize care for those with chronic illness. Healthways competes, in niches, with Express Scripts (ESRX) among others.
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