Healthways’ second quarter financial results landed above expectations Thursday — and the wellness and disease management firm lifted its annual earnings guidance on the promise that the trend will continue.
Healthways earned $11.8 million, or 34 cents per diluted share, in the quarter, up from $8.9 million, or 26 cents per share in the second quarter of 2009.
Boosting results was a 5 cents per share adjustment to an estimated earn-out liability and an investment gain. But even without the adjustment, the company’s 29 cents per diluted share income was a penny above the high end of its guidance and 2 cents above The Street’s expectations.
“Healthways achieved solid financial results, producing revenues consistent with expectations, expanded margins, strong cash flow, a strengthened financial position and a return to comparable-quarter earnings growth,” said CEO Ben Leedle in a statement. “As anticipated, revenues declined versus the comparable and sequential quarters primarily due to the impact of previously discussed renegotiated or terminated contracts.”
Revenues fell from $177.8 million in the year-ago quarter to land at $175.5 million. But the company said its RFP volume for the second quarter increased over comparable and sequential quarters, and its sales pipeline is strengthening.
Looking ahead, the Franklin-based firm raised the lower end of its revenue guidance from $677 million to $695 million, leaving the high end untouched at $718 million. The improvement should come from the domestic side of its business — Healthways left its revenue projection for its international book unchanged, at $27 million to $33 million.
Though the company announced several new international contracts during Q2, that side of the business remained at break-even, as expected. For the full year it’s projecting international operations to land between a penny loss and a 2 cent per share gain.
In total, the company raised its earnings projections for the year. Healthways is now planning on per diluted share income of $1.12 to $1.23 instead of $1.05 to $1.18.
“Recent contracting momentum provides evidence that the market understands and is positively responding to our value proposition,” Leedle said. “We continue to be cautious in our outlook for the balance of 2010 due to ongoing uncertainty about the strength of the economy and the ongoing implementation of the recently enacted health care legislation. However, with the global economy increasingly focused on the unsustainable growth in health care costs, we believe demand is growing worldwide for our proven, scaled and comprehensive solutions that help healthy individuals stay healthy, reduce health risks and optimize care for those with chronic conditions.”
Healthways shares (Ticker: HWAY) traded up about 4 percent Thursday, closing at $12.44 per share. Year to date the stock is off about 32 percent.
Surgery center chain AmSurg posted net earnings of $13.1 million in the second quarter, down slightly from its year-ago number. Per diluted share, the company earned 43 cents, a penny more than analysts had expected. Revenues came in at $180 million, up 6.5 percent from a year ago.
Operating profits at the Nashville-based company rose just 1.2 percent to $59.1 million as operating expenses continued to rise steadily. Salary and benefit costs rose 6 percent during the quarter and the company spent 12 percent more on supplies.
President and CEO Chris Holden said the economy continues to keep many consumers from using his company. The number of procedures performed at AmSurg centers rose 3 percent in the quarter primarily because of 13 acquired or newly built centers.
“This procedure growth, together with a procedure mix-driven increase in average revenue per procedure, accounted for the 7 percent growth in second-quarter revenues from the second quarter last year,” Holden said. “We continue to be cautious in our outlook.”
Holden and his team are sticking to their full-year revenue and EPS guidance – analysts are looking for $1.71 for the latter – but lowered their cash flow forecast to a range of $90 million to $100 million. Previously, it had been $100 million to $105 million.
Shares of AmSurg (Ticker: AMSG) are up slightly to $17.89 in after-hours trading. Year to date, they’ve fallen almost 20 percent.
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