American Healthways' Third-Quarter Earnings Grow 75% to $0.28 Per Diluted Share; Increases Fiscal 2003 EPS Guidance to a Range of $1.08 to $1.10.Business Editors/Health/Medical Writers NASHVILLE Nashville, city (1990 pop. 487,969), state capital, coextensive with Davidson co., central Tenn., on the Cumberland River, in a fertile farm area; inc. as a city 1806, merged with Davidson co. 1963. , Tenn.--(BUSINESS WIRE)--June 19, 2003 Thomas (language) Thomas - A language compatible with the language Dylan(TM). Thomas is NOT Dylan(TM). The first public release of a translator to Scheme by Matt Birkholz, Jim Miller, and Ron Weiss, written at Digital Equipment Corporation's Cambridge Research Laboratory runs G. Cigarran, Chairman and Chief Executive Officer of American American, river, 30 mi (48 km) long, rising in N central Calif. in the Sierra Nevada and flowing SW into the Sacramento River at Sacramento. The discovery of gold at Sutter's Mill (see Sutter, John Augustus) along the river in 1848 led to the California gold rush of Healthways Healthways can mean:
AMHC Aviation Structural Mechanic Hydraulics Chief ), today announced financial results for the Company's third quarter of fiscal 2003. Revenues for the quarter, which ended May 31, 2003, increased 33% to $41,822,000 from $31,561,000 for the third quarter of fiscal 2002; net income rose 76% to $4,550,000 from $2,587,000. Earnings per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share for the quarter increased 75% to $0.28 from $0.16 for the third quarter of fiscal 2002. "For the 11th consecutive quarter, American Healthways again produced strong profitable comparable-quarter growth," Mr. Cigarran said. "Our earnings per diluted share for the quarter, which included incentive bonus revenue of $0.01 per share, exceeded the consensus analyst estimate of $0.26 for the quarter. In addition, after capital expenditures of $4,000,000 in the quarter, our cash balance increased to $40,602,000, up from $29,980,000 at the end of the second quarter of fiscal 2003 and $16,407,000 at the end of the third quarter of fiscal 2002. "The Company's growth primarily reflects the continuing expansion of our health plan business. Total equivalent lives under contract at the end of the third quarter increased 33% to 847,000 compared with 639,000 at the end of the third quarter of fiscal 2002. Of those 847,000 total lives under contract, 757,000 were under management and 90,000 were in backlog Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. . The increase in total lives under contract of 84,000 over the second quarter of fiscal 2003 is attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to contracts signed with three new customers and the expansion of three contracts with current customers. In addition to our previously announced contracts with Health Plus, Principal Financial Group, Staywell and CIGNA CIGNA CG (Connecticut General Life Insurance Company) INA (Insurance Company of North America) , we are announcing today a new contract with Blue Cross Blue Shield Blue Shield A US not-for-profit health care insurer that is a reimbursement intermediary for physicians. Cf Blue Cross. of Nebraska Nebraska (nəbrăs`kə), Great Plains state of the central United States. It is bordered by Iowa and Missouri, across the Missouri R. (E), Kansas (S), Colorado (SW), Wyoming (NW), and South Dakota (N). for their ASO ASO arteriosclerosis obliterans. ASO 1 Administrative services organization, see there 2 Allele-specific–oligonucleotide hybridization 3 Anti-streptolysin O, see there business and the expansion of our contract with Community Health Plan. As a result of increased demand, our ASO/PPO equivalent lives at the end of the third quarter had grown to approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 113,000 from 13,000 at the end of the third quarter of fiscal 2002. Based on the high level of satisfaction of our current customers and the strong momentum of American Healthways' business development efforts, we remain confident of our ability to produce further profitable growth. "We expect to enter into additional new contracts and contract expansions during the current fiscal year, as well as to continue to increase the volume of our ASO/PPO business. In addition, we are actively pursuing a number of Medicare Medicare, national health insurance program in the United States for persons aged 65 and over and the disabled. It was established in 1965 with passage of the Social Security Amendments and is now run by the Centers for Medicare and Medicaid Services. demonstration project contracts related to the federal government's growing interest in incorporating disease management programs into Medicare as a method of bridging healthcare gaps and reducing costs. While we do not include any potential business from the Medicare market in our financial guidance, we are encouraged by the growing recognition in Congress, as well as CMS (1) See content management system and color management system. (2) (Conversational Monitor System) Software that provides interactive communications for IBM's VM operating system. , of the validity and potential of disease management. As the acknowledged leader in the disease management industry and with clearly differentiated dif·fer·en·ti·ate v. dif·fer·en·ti·at·ed, dif·fer·en·ti·at·ing, dif·fer·en·ti·ates v.tr. 1. To constitute the distinction between: disease management care enhancement programs, we believe we are positioned to produce the same outstanding results at scale in potential government contracts as we do in private sector contracts and to achieve a leadership position in this market segment as well." Fiscal 2003 Guidance Based on the Company's prospects and its performance through the third quarter of fiscal 2003, American Healthways is today increasing its guidance for fiscal 2003 earnings per diluted share to a range of $1.08 to $1.10, compared with its previous guidance of $1.04 to $1.08. The Company currently expects its revenues for fiscal 2003 to be in a range of $165 million to $180 million, depending on the timing of contract signings and the timing and extent of the conversion to revenues by the end of the fiscal year from the contract billings Billings, city (1990 pop. 81,151), seat of Yellowstone co., S Mont., on the Yellowstone River, in a valley surrounded by seven mountain ranges; inc. as a city 1885. in excess of earned revenue account. Previous revenue guidance was in a range of $180 million to $195 million. Mr. Cigarran added, "As witnessed with the recent CIGNA Healthcare contract, our discussions on potential contracts have become more complex in response to the growing commitment of our customers to multiple disease management programs over longer-term contract periods. While this trend has somewhat lengthened length·en tr. & intr.v. length·ened, length·en·ing, length·ens To make or become longer. length  en·er n. the sales cycle, we believe the resulting contracts add substantial
visibility to our long-term Long-termThree or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. growth prospects." Summary Mr. Cigarran concluded, "In an era of heightened concern over rising health-care costs, we estimate that our disease management programs have returned over $750 million in healthcare cost savings to our customers. Our ability to accomplish these savings, not by denying care, but by improving the quality of care and the overall health status of the populations we serve, speaks directly to this Company's potential for further growth. No other company has produced comparable results in the field of disease management, and we believe American Healthways has the resources in hand to maintain and strengthen its leadership position in the years ahead." Conference Call American Healthways will hold a conference call to discuss this release today at 5:15 p.m. Eastern time. Investors will have the opportunity to listen to the conference call live over the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the by going to www.americanhealthways.com and clicking Investor Relations Investor relations The process by which the corporation communicates with its investors. or by going to the following Web site - www.streetevents.com - at least 15 minutes early to register, download To receive a file transmitted over a network. In any communications session, "download" means receive, and "upload" means send. The download/upload often implies a big/little scenario, in which data is being downloaded from the "big" server into the "little" user's computer. and install any necessary audio software. For those who cannot listen to the live broadcast, a replay will be available on the Company's Web site for the next 12 months. Any material information disclosed dis·close tr.v. dis·closed, dis·clos·ing, dis·clos·es 1. To expose to view, as by removing a cover; uncover. 2. To make known (something heretofore kept secret). on the quarterly conference call that has not been previously disclosed publicly will be available on the Company's website at www.americanhealthways.com. Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. Provisions This press release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. that are based upon current expectations and involve a number of risks and uncertainties. In order for the Company to utilize the "safe harbor" provisions of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995, investors are hereby cautioned that these statements may be affected by the important factors, among others, set forth below, and consequently, actual operations and results may differ materially from those expressed in these forward-looking statements. The important factors include: the Company's ability to sign and execute new contracts for health plan disease management services and care enhancement services and to sign and execute new contracts for hospital-based diabetes diabetes or diabetes mellitus (məlī`təs), chronic disorder of glucose (sugar) metabolism caused by inadequate production or use of insulin, a hormone produced in specialized cells (beta cells in the islets of services; the risks associated with a significant concentration of the Company's revenues with a limited number of health plan customers; the Company's ability to effect cost savings and clinical outcomes improvements under health plan disease management and care enhancement contracts and reach mutual agreement with customers with respect to cost savings, or to effect such savings and improvements within the time frames contemplated by the Company; the Company's ability to accurately forecast performance under the terms of its health plan contracts ahead of data collection and reconciliation; the ability of the Company to collect contractually earned incentive performance bonuses; the ability of the Company's health plan customers to provide timely and accurate data that is essential to the operation and measurement of the Company's performance under the terms of its health plan contracts; the Company's ability to resolve favorably fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. contract billing and interpretation issues with its health plan customers; the ability of the Company to effectively integrate new technologies such as those encompassed in its care enhancement initiatives into the Company's care management information technology platform; the Company's ability to renew and/or and/or conj. Used to indicate that either or both of the items connected by it are involved. Usage Note: And/or is widely used in legal and business writing. maintain contracts with its customers under existing terms or restructure these contracts on terms that would not have a material negative impact on the Company's results of operations; the ability of the Company to implement its care enhancement strategy within expected cost estimates; the ability of the Company to obtain adequate financing to provide the capital that may be needed to support the growth of the Company's health plan operations and to support or guarantee the Company's performance under new health plan contracts; unusual and unforeseen patterns of health care utilization utilization, n 1. the extent to which a given group uses a particular service in a specified period. Although usually expressed as the number of services used per year per 100 or per 1000 persons eligible for the service, utilization rates may be by individuals with diabetes, cardiac cardiac /car·di·ac/ (-ak) 1. pertaining to the heart. 2. pertaining to the cardia. car·di·ac adj. 1. Of, near, or relating to the heart. 2. , respiratory respiratory /res·pi·ra·to·ry/ (res´pi-rah-tor?e) pertaining to respiration. res·pi·ra·to·ry adj. Of, relating to, used in, or affecting respiration. and/or other diseases or conditions for which the Company provides services, in the health plans with which the Company has executed a disease management contract; the ability of the health plans to maintain the number of covered lives enrolled in the plans during the terms of the agreements between the health plans and the Company; the Company's ability to attract and/or retain and effectively manage the employees required to implement its agreements with hospitals and health plan organizations; the impact of litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. involving the Company; the impact of future state and federal health care legislation and regulations on the ability of the Company to deliver its services and on the financial health of the Company's customers and their willingness to purchase the Company's services; and general economic conditions. The Company undertakes no obligation to update or revise any such forward-looking statements. American Healthways (AMHC) is the nation's leading and largest provider of specialized spe·cial·ize v. spe·cial·ized, spe·cial·iz·ing, spe·cial·iz·es v.intr. 1. To pursue a special activity, occupation, or field of study. 2. , comprehensive disease management and care enhancement services to health plans, physicians, medical management organizations and hospitals. The Company's programs have been reviewed and approved for clinical excellence by Johns Hopkins Noun 1. Johns Hopkins - United States financier and philanthropist who left money to found the university and hospital that bear his name in Baltimore (1795-1873) Hopkins 2. and have been certified See certification. or accredited accredited recognition by an appropriate authority that the performance of a particular institution has satisfied a prestated set of criteria. accredited herds cattle herds which have achieved a low level of reactors to, e.g. by the National Committee on Quality Assurance (NCQA NCQA National Committee on Quality Assurance, see there ), the Joint Commission on Accreditation accreditation, n a process of formal recognition of a school or institution attesting to the required ability and performance in an area of education, training, or practice. of Health Care Organizations (JCAHO JCAHO Joint Commission on Accreditation of Healthcare Organizations, see there ), and the American Accreditation Healthcare Commission The Healthcare Commission is an independent body, set up to promote and drive improvement in the quality of healthcare and public health in England and Wales. It aims to achieve this by becoming an authoritative and trusted source of information and by ensuring that this (URAC URAC Utilization Review Accreditation Commission (health care accreditation & certification) URAC University Recreation & Aquatic Centre Ltd (Australia) URAC Union Regional de Apoyo Campesino ). American Healthways has contracts to provide disease and care management programs to 844,000 equivalent lives in all 50 states, the District of Columbia District of Columbia, federal district (2000 pop. 572,059, a 5.7% decrease in population since the 1990 census), 69 sq mi (179 sq km), on the east bank of the Potomac River, coextensive with the city of Washington, D.C. (the capital of the United States). , Puerto Rico Puerto Rico (pwār`tō rē`kō), island (2005 est. pop. 3,917,000), 3,508 sq mi (9,086 sq km), West Indies, c.1,000 mi (1,610 km) SE of Miami, Fla. and Guam Guam (gwäm), Chamorro Guåhan, the largest, most populous, and southernmost of the Mariana Islands (see also Northern Mariana Islands, an unincorporated territory of the United States (2005 est. pop. . The Company also operates diabetes management This article is about the management of diabetes mellitus. For more on the disease itself see diabetes mellitus. Diabetes is a chronic disease with no cure as of 2007. It is associated with an impaired glucose cycle, altering metabolism. programs in hospitals nationwide. For more information visit www.americanhealthways.com.
AMERICAN HEALTHWAYS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
(Dollars in thousands, except per share data)
Three Months Ended Nine Months Ended
May 31, May 31,
----------------------- -----------------------
2003 2002 2003 2002
----------- ----------- ----------- -----------
Revenues $41,822 $31,561 $119,461 $84,483
Cost of services 26,738 21,968 76,170 59,513
----------- ----------- ----------- -----------
Gross margin 15,084 9,593 43,291 24,970
Selling, general &
administrative
expenses 4,519 3,284 12,230 8,688
Depreciation and
amortization 2,722 1,834 7,923 5,007
Interest 132 90 438 209
----------- ----------- ----------- -----------
Income before income
taxes 7,711 4,385 22,700 11,066
Income tax expense 3,161 1,798 9,307 4,537
----------- ----------- ----------- -----------
Net income $4,550 $2,587 $13,393 $6,529
=========== =========== =========== ===========
Basic income per
share: $0.29 $0.17 $0.87 $0.44
=========== =========== =========== ===========
Diluted income per
share: $0.28 $0.16 $0.82 $0.41
=========== =========== =========== ===========
Weighted average
common shares
and equivalents:
Basic 15,541,000 15,246,000 15,460,000 14,857,000
Diluted 16,487,000 16,314,000 16,405,000 16,039,000
American Healthways, Inc.
Segment and Statistical Information
(Dollars in Thousands)
Three Months Ended Nine Months Ended
May 31, May 31,
------------------------------------
2003 2002 2003 2002
------------------------------------
Segment Operating Information
Revenues:
Health plan contracts $38,341 $26,932 $107,617 $70,386
Hospital contracts 3,403 4,557 11,622 13,850
Other revenue 78 72 222 247
-------- -------- --------- --------
$41,822 $31,561 $119,461 $84,483
======== ======== ========= ========
Income before income taxes:
Health plan contracts $14,897 $8,231 $40,978 $20,596
Hospital contracts 402 1,072 2,373 3,082
Shared support services (5,726) (3,916) (16,245) (9,938)
-------- -------- --------- --------
Total segments 9,573 5,387 27,106 13,740
General corporate (1,862) (1,002) (4,406) (2,674)
-------- -------- --------- --------
$7,711 $4,385 $22,700 $11,066
======== ======== ========= ========
Operating Statistics
Health Plan Segment
-------------------
Health plan equivalent lives
under management at end of
period(1) 756,679 485,037 756,679 485,037
Health plan equivalent lives in
backlog at end of period (2) 90,000 154,000 90,000 154,000
Total health plan equivalent
lives at end of period (2) 846,679 639,037 846,679 639,037
Average # health plan diabetes
lives under management during
period 735,332 430,625 688,890 375,861
(1) Equivalent lives converts cardiac and respiratory lives to the
revenue equivalent of diabetes lives.
(2) Includes equivalent lives added for contracts signed in June
2003.
Hospital Segment
----------------
Contracts at end of period 50 56 50 56
Hospital sites at end of period 68 77 68 77
New contracts signed during
period - 3 1 4
Contracts discontinued during
period 1 1 6 3
Contracts renewed during period 3 - 10 4
Average number of contracts in
operation during period 50.2 54.7 52.1 54.6
American Healthways, Inc.
Consolidated Balance Sheets
(Dollars in Thousands)
(Unaudited)
May 31, August 31,
2003 2002
---------- ----------
Assets
Current assets:
Cash and cash equivalents $34,602 $23,924
Restricted cash and cash equivalents 6,000 -
Accounts receivable, net
Billed 19,091 15,146
Unbilled 5,207 5,543
Other current assets 3,825 3,495
Deferred tax assets 1,313 1,313
---------- ----------
Total current assets 70,038 49,421
Property and equipment
Leasehold improvements 4,721 3,459
Equipment 44,019 35,148
---------- ----------
48,740 38,607
Less accumulated depreciation (22,607) (16,802)
---------- ----------
Net property and equipment 26,133 21,805
Long-term deferred tax assets 942 942
Other assets, net 687 1,411
Goodwill, net 44,438 44,438
---------- ----------
Total assets $142,238 $118,017
========== ==========
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $2,074 $4,268
Accrued salaries and benefits 7,042 11,726
Accrued liabilities 2,913 2,372
Contract billings in excess of earned revenue 16,767 5,726
Income taxes payable 3,777 235
Current portion of other long-term
debt/liabilities 853 799
---------- ----------
Total current liabilities 33,426 25,126
Long-term debt 213 514
Other long-term liabilities 3,977 3,568
Commitments and contingencies
Stockholders' equity
Preferred stock
$.001 par value, 5,000,000 shares
authorized, none outstanding - -
Common stock
$.001 par value, 40,000,000 shares
authorized, 15,616,996 and 15,366,232
shares outstanding 16 15
Additional paid-in capital 71,358 68,939
Retained earnings 33,248 19,855
---------- ----------
Total stockholders' equity 104,622 88,809
---------- ----------
Total liabilities and stockholders' equity $142,238 $118,017
========== ==========
American Healthways, Inc.
Consolidated Statement of Cash Flows
(Unaudited)
(in Thousands)
Nine Months Ended
May 31,
-----------------
2003 2002
-------- --------
Cash flows from operating activities:
Net income $13,393 $6,529
Income tax expense 9,307 4,537
-------- --------
Income before income taxes 22,700 11,066
Depreciation and amortization 7,923 5,007
Income taxes (net paid) (4,238) (336)
Decrease (increase) in working capital items 766 (4,640)
Other, net 750 705
-------- --------
Net cash flows provided by operating
activities 27,901 11,802
Cash flows from investing activities:
Acquisition of property and equipment (11,760) (8,840)
Business acquisitions - (431)
-------- --------
Net cash flows used in investing activities (11,760) (9,271)
Cash flows from financing activities:
Increase in restricted cash and cash equivalents (6,000) -
Exercise of stock options 823 1,683
Payments of long-term debt (286) (183)
-------- --------
Net cash flows (used in) provided by
financing activities (5,463) 1,500
Net increase in cash and cash equivalents 10,678 4,031
Cash and cash equivalents, beginning of period 23,924 12,376
-------- --------
Cash and cash equivalents, end of period $34,602 $16,407
======== ========
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