Healthways Trips Over Revised Guidance

By Chris Lange Published Jun 19, 9:45AM EDT

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Healthways Inc. (NASDAQ: HWAY) announced that it will be revising its guidance for 2015. The reasoning behind this revision stems from lower than expected revenue from a single health plan contract and slower than expected business development for a couple projects. The projects in question are Dr. Ornish’s Program for Reversing Heart Disease and the Blue Zones project.

As a result, Healthways expects revenue to be in the range of $770 million to $785 million, down from the previous range of $800 million to $825 million. Thomson Reuters has a consensus estimate for the 2015 year of $808.85 million in revenue, compared to the revenue from 2014 of $742 million.

In terms of the Ornish reversal program, the company has realized that health system customers need longer time frames for facility upgrades, program deployment and initial cohort enrollment. So as Healthways continues to sign new contracts, it expects a slower pace than previously anticipated.

Also, Healthways has experienced a slower pace than originally anticipated for 2015 for the near-term business development of Blue Zones. There has been steady annual revenue growth in the Blue Zones project since 2011.

Comprehensive financial guidance will be provided when Healthways announces its second-quarter financial results on July 23.

Alfred Lumsdaine, interim CEO, explained the announcement:

We feel it is prudent to revise 2015 guidance now, based on the three factors that have emerged since announcing our first quarter results and the CEO transition.

In early trading Friday, shares fell about 22% to $12.10, a new 52-week low. The stock has a consensus analyst price target of $22.71 and a 52-week high of $23.30.

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About the Author Chris Lange →

Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics.

Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications.

A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.