American Healthways Exceeds Expectations With Fourth-Quarter Earnings of $0.24 Per Diluted Share.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)--Oct. 8, 2002 Earns $0.64 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 Fiscal 2002 Compared with $0.22 for Fiscal 2001 Increases EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. Guidance for Fiscal 2003 to a Range of $1.01 to $1.05 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 fourth quarter and fiscal year ended August 31, 2002. Revenues for the fourth quarter increased 71% to $38,279,000 from $22,427,000 for the fourth quarter of fiscal 2001. Net income increased 277% to $3,826,000 from $1,015,000. Earnings per diluted share for the quarter rose 243% to $0.24 versus $0.07 for the same quarter in the prior fiscal year and compared with a targeted range for the quarter of $0.16 to $0.17. Revenues for the full 2002 fiscal year increased 63% to $122,762,000 from $75,121,000 for fiscal 2001. Net income more than tripled to $10,355,000 for fiscal 2002 from $3,157,000 for fiscal 2001, while earnings per diluted share rose 191% to $0.64 from $0.22. Mr. Cigarran remarked, "We are very pleased to have completed fiscal 2002 on such a strong note. By significantly exceeding our fourth-quarter earnings expectations, we achieved fiscal 2002 earnings per diluted share of $0.64, compared with both our latest targeted range of $0.57 to $0.58 and our targeted range at the start of fiscal 2002 of $0.52 to $0.54. "For the fourth quarter, our financial results primarily reflected 90% growth in the average number of health plan lives under management and continued improvement in operating leverage Operating Leverage A measurement of the degree to which a firm or project relies on fixed rather than variable costs. Notes: The higher the degree of operating leverage, the greater the potential danger from forecasting risk. . In addition, health plan incentive bonuses in the fourth quarter contributed approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $.05 per diluted share, providing further evidence of our continuing ability to meet and exceed our customers' financial expectations." Growth in Lives Under Contract and Management "American Healthways' total health plan equivalent lives under contract increased 97% for fiscal 2002 to 715,000 at year end from 363,000 at the end of fiscal 2001, up from 639,000 as of the end of the previous quarter," continued Mr. Cigarran. "The total at the end of fiscal 2002 was comprised of 600,000 equivalent lives under management and 115,000 equivalent lives 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. , compared with 349,000 and 14,000, respectively, at the end of fiscal 2001. The increase in lives under contract for the quarter resulted from additional sales to existing customers and increased penetration The successful unauthorized breach of a security perimeter. See penetration test. of the PPO PPO abbr. preferred provider organization PPO Managed care Preferred provider organization, see there Infectious disease Pleuropneumonia-like organism, see there market. "During the fourth quarter, American Healthways expanded its existing relationship 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 Massachusetts Massachusetts (măsəch  `sĭts), most populous of the New England states of the NE United States. through the signing of a three-year contract to provide its 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 care enhancement services. Under this contract, we initiated services
for approximately 15,000 new equivalent lives on September September: see month. 1, 2002.
"Our penetration of the PPO market segment accelerated in terms of both the quantity of equivalent lives added and the speed with which they have come under contract. With total equivalent lives under contract from the PPO segment increasing to approximately 50,000 at the end of fiscal 2002, we have increased our internal estimates for the contribution expected from the PPO segment in fiscal 2003. However, our policy continues to be that no PPO lives will be added to our backlog until our health plan customers actually contract with their employer customers. "Since the beginning of fiscal 2003, we have signed a contract with The Principal Financial Group to provide our disease management programs to The Principal's PPO/ASO business, which represents more than one million people nationwide participating in more than 270 self-funded employee benefit plans. Demonstrating the increasing customer demand for disease management, Jim Charling, vice president of Group National Accounts, the Principal Financial Group, said, `Our experience illustrates employers now view disease management as an integral part of their health plan coverage, providing a valuable benefit to employees, helping lower health care costs and improving the overall health of their work force.'" EPS Guidance Increased....Revenue Guidance Given Based primarily on the Company's current health plan equivalent lives under management and in backlog, as well as its contracting momentum, American Healthways currently targets revenues for fiscal 2003 in a range of $180 million to $195 million, a 47% to 59% increase over revenues of $123 million for fiscal 2002. In addition, as a result of its stronger-than-expected fourth-quarter performance, the Company also today increased its targeted range for earnings per diluted share for fiscal 2003 to $1.01 to $1.05 from its original target of $1.00 to $1.04, representing anticipated growth of 58% to 64% over $0.64 for fiscal 2002. Included in the assumptions for this guidance are Company plans for continued substantial investment in infrastructure and future programs and also in additional capacity, with the sixth care enhancement center scheduled to open during the first quarter of fiscal 2003 and two additional centers planned for later in the fiscal year. American Healthways also currently anticipates earnings per diluted share for the first quarter of fiscal 2003 will double to a range of $0.20 to $0.21, compared with $0.10 for the first quarter of fiscal 2002. Conclusion "Our Company's performance reflects both the growing health insurance industry and employer recognition of the potential for disease management to have a major positive impact on cost and quality issues that affect their bottom lines," Mr. Cigarran stated. "With each passing quarter, we further demonstrate the scalability How much a system can be expanded. See scalable. scalability - How well a solution to some problem will work when the size of the problem increases. For example, a central server of some kind with ten clients may perform adequately but with a thousand clients it of our business model. Despite rapid growth and substantial investment, our cash and cash equivalents increased to $23.9 million at the end of fiscal 2002 from $16.4 million at the end of the third quarter of fiscal 2002, and we remained debt free. We are confident that we have the scale, the momentum and the expertise to capitalize on Cap´i`tal`ize on` v. t. 1. To turn (an opportunity) to one's advantage; to take advantage of (a situation); to profit from; as, to capitalize on an opponent's mistakes s>. our leadership position in the years to come." All prior-period data have been adjusted for the Company's three-for-two stock split, effected November November: see month. 23, 2001. Pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma net income for the fourth quarter of fiscal 2001 was $1,291,000, or $0.08 per diluted share, which reflects the elimination of goodwill amortization as if we had adopted Statement of Financial Accounting Standards ("SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System ") 142, "Goodwill and Other Intangible Assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. ," as of the start of fiscal 2001 rather than the start of fiscal 2002. Pro forma earnings pro forma earnings Income not necessarily calculated in accordance with generally accepted accounting principles. For example, a company might report pro forma earnings that exclude depreciation expense and nonrecurring expenses such as restructuring costs. per diluted share for fiscal 2001 were $0.26. See "Fiscal 2001 Pro Forma EPS Calculation" table on page 5 of this release. Conference Call American Healthways will hold a conference call to discuss this release today at 5:00 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 at these Web sites shortly after the call through the end of business on November 8, 2002. 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 execute new contracts for health plan disease management services and care enhancement services and to execute new contracts for hospital-based diabetes 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 con·trac·tu·al adj. Of, relating to, or having the nature of a contract. con·trac  tu·al·ly adv.Adv. 1. 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 the 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 healthcare 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. and respiratory disease Noun 1. respiratory disease - a disease affecting the respiratory system respiratory disorder, respiratory illness adult respiratory distress syndrome, ARDS, wet lung, white lung - acute lung injury characterized by coughing and rales; inflammation of the 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 healthcare 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, Inc. 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 care enhancement services to hospitals, physicians and health plans. The first and only care enhancement provider in the nation to be 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 both the National Committee on Quality Assurance (NCQA NCQA National Committee on Quality Assurance, see there ) and the American 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. 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 health plans with members 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). and 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. . 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 nearly 80 hospitals nationwide. Further information about American Healthways and its programs can be found at www.americanhealthways.com.
AMERICAN HEALTHWAYS, INC.
Financial Highlights (unaudited, except for fiscal year 2001)
(In thousands, except per share data)
Three Months Ended
August 31,
-------------------
Consolidated Statements 2002 2001(1)
of Operations: -------- --------
Revenues $38,279 $22,427
Cost of services 25,332 16,500
-------- --------
Gross margin 12,947 5,927
Selling, general and
administrative expenses 4,038 2,230
Depreciation and amortization 2,264 1,768
Interest 161 53
-------- --------
Income before income taxes 6,484 1,876
Income tax expense 2,658 861
-------- --------
Net income $3,826 $1,015
======== ========
Basic income per share(2) $0.25 $0.07
======== ========
Diluted income per share(2) $0.24 $0.07
======== ========
Weighted average common shares and equivalents(2):
Basic 15,321 14,088
Diluted 16,260 15,445
Twelve Months Ended
August 31,
--------------------
Consolidated Statements 2002 2001(1)
of Operations: -------- --------
Revenues $122,762 $75,121
Cost of services 84,845 55,466
-------- --------
Gross margin 37,917 19,655
Selling, general and
administrative expenses 12,726 8,217
Depreciation and amortization 7,271 5,656
Interest 370 115
-------- --------
Income before income taxes 17,550 5,667
Income tax expense 7,195 2,510
-------- --------
Net income $10,355 $3,157
======== ========
Basic income per share(2) $0.69 $0.24
======== ========
Diluted income per share(2) $0.64 $0.22
======== ========
Weighted average common shares and equivalents(2):
Basic 14,973 12,936
Diluted 16,094 14,059
Fiscal 2001 Pro Forma EPS Calculation:
Q1 Q2 Q3 Q4(3) Total(3)
-------- -------- ------- -------- --------
EPS as reported $ 0.08 $ 0.07 $ 0.09 $ 0.10 $ 0.34
FAS 142 adjustment(2) 0.01 0.01 0.01 0.02 0.04
Stock split
adjustment (0.03) (0.03) (0.03) (0.03) (0.12)
------- ------- ------- -------- ---------
Pro forma EPS(3) $ 0.06 $ 0.05 $ 0.07 $ 0.08 $ 0.26
======= ======= ======= ======== =========
August 31, May 31,
Financial Position: 2002 2002
-------------- -------------
Cash and cash equivalents $ 23,924 $ 16,407
Current assets 49,421 38,470
Property and equipment (net) 21,805 18,892
Total assets $ 118,017 $ 105,159
Contract billings in
excess of earnings $ 5,726 $ 3,082
Current liabilities 25,126 16,519
Long-term liabilities 4,082 4,156
Stockholders' equity 88,809 84,483
Total liabilities and
stockholders' equity $ 118,017 $ 105,159
(1) Certain items have been reclassified to conform to current
reporting classifications.
(2) Restated to reflect effect of November 2001 3-for-2 stock split.
(3) Income (loss) per share calculations for each of the quarters is
based on the weighted average number of shares and dilutive
options outstanding. Accordingly, the sum of the components may
not necessarily be equal to the total due to rounding.
AMERICAN HEALTHWAYS, INC.
Financial Highlights (unaudited, except for fiscal year 2001)
(Dollars in thousands)
Three Months Ended
August 31,
----------------------
2002 2001
--------- ---------
Segment Operating Information:
Revenues:
Health plan contracts $33,864 $17,366
Hospital contracts 4,345 4,964
Other revenue 70 97
--------- ---------
$38,279 $22,427
========= =========
Income (loss) before income taxes:
Health plan contracts $12,241 $4,042
Hospital contracts 554 1,417
Shared support services (4,686) (2,671)
--------- ---------
Total segments 8,109 2,788
General corporate (1,625) (912)
--------- ---------
$6,484 $1,876
========= =========
Operating Statistics:
Health Plan Segment -
Equivalent Lives(1)
Lives under management at
end of period 599,523 349,196
Lives in backlog at end of period 115,000 14,000
Total lives at end of period 714,523 363,196
Average number of lives under
management during period 551,462 290,742
Hospital Segment
Contracts at end of period 55 55
Hospital sites at end of period 75 78
New contracts signed during period 3 2
Contracts discontinued during period 4 3
Contracts renewed during period 6 5
Average number of contracts
in operation during period 55.6 56.3
Twelve Months Ended
August 31,
----------------------
2002 2001
--------- ---------
Segment Operating Information:
Revenues:
Health plan contracts $104,250 $55,051
Hospital contracts 18,195 19,636
Other revenue 317 434
--------- ---------
$122,762 $75,121
========= =========
Income (loss) before income taxes:
Health plan contracts $32,837 $12,728
Hospital contracts 3,636 5,242
Shared support services (14,624) (8,895)
--------- ---------
Total segments 21,849 9,075
General corporate (4,299) (3,408)
--------- ---------
$17,550 $5,667
========= =========
Operating Statistics:
Health Plan Segment - Equivalent Lives(1)
Lives under management at
end of period 599,523 349,196
Lives in backlog at end of period 115,000 14,000
Total lives at end of period 714,523 363,196
Average number of lives under
management during period 419,761 233,785
Hospital Segment
Contracts at end of period 55 55
Hospital sites at end of period 75 78
New contracts signed during period 7 11
Contracts discontinued during period 7 7
Contracts renewed during period 10 13
Average number of contracts
in operation during period 54.9 54.5
(1) Equivalent lives converts cardiac and respiratory lives to the
approximate revenue equivalent of diabetes lives.
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