American Healthways Reports 60% Growth in Second-Quarter Earnings to $0.24 Per Diluted Share; Lives Under Management Expand 41% to 1,487,000.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. -- Ben R. Leedle, Jr., president 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:
in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :AMHC AMHC Association of Mental Health Clergy AMHC Aviation Structural Mechanic Hydraulics Chief ), today announced financial results for the second quarter of fiscal 2005. Revenues increased 32% to $75,337,000 for the second quarter, which ended February February: see month. 28, 2005, from $57,122,000 for the second quarter of fiscal 2004. Net income grew 59% to $8,441,000 from $5,324,000. 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 were $0.24 for the latest quarter, up 60% from $0.15 for the second quarter of fiscal 2004. Leedle commented, "American Healthways continued to produce strong profitable growth for the second quarter of fiscal 2005, meeting the high end of our earnings guidance. The principal components of our growth remain in place, with a substantial increase in actual lives under management from the second quarter of fiscal 2004 resulting primarily from contracts with new health plan customers, contract expansions with existing health plan customers and significant growth in contracts with self-insured self-insured Self fund Health insurance adjective Referring to the practice of carrying an individual health insurance policy for oneself; self insurance is usually more expensive than group insurance employers on behalf of our health plan customers. In addition, during the second quarter, we again demonstrated our ability to expand our market through new services, even as we strengthened our foundation for future growth through our innovative collaboration Working together on a project. See collaborative software. with the industry's thought leaders. As previously discussed, we also took a critical step toward a large new potential market through our participation in two of the nine pilots awarded by the Centers for 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. & Medicaid Medicaid, national health insurance program in the United States for low-income persons; established in 1965 with passage of the Social Security Amendments and now run by the Centers for Medicare and Medicaid Services. Services (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. ) under the Chronic Care Improvement Program (CCIP CCIP Chambre de Commerce et d'Industrie de Paris (Paris Chamber of Commerce, France) CCIP Cisco Certified Internetwork Professional CCIP Centre for Critical Infrastructure Protection (New Zealand) )." The highlights of the Company's performance for the second quarter of fiscal 2005 include:
-- Strong Growth in Actual Lives Under Management - Actual lives
under management increased to 1,487,000 at the end of the
second quarter of fiscal 2005, up 41% from 1,054,000 at the
end of the second quarter of fiscal 2004. The substantial
number of lives added for new contracts and self-insured
employers during the quarter more than offset the normal
seasonal disenrollment experienced during the second quarter
as employees selected their health plans for 2005 at the start
of the calendar year. As a result, and for the second
consecutive year, the Company produced a sequential-quarter
increase in actual lives under management in its second fiscal
quarter, which grew a net 5% from 1,419,000 at the end of the
first quarter of fiscal 2005. Annualized revenues in backlog
were $14,360,000 at the end of the second quarter.
-- High Demand from Self-Insured Employers - Due to the large
backlog at the end of the first quarter, American Healthways
produced rapid growth in self-insured lives under management,
which increased 131% to 488,000 at the end of the second
quarter from the same time in fiscal 2004. This performance
marks the eighth consecutive quarter for which these lives
have increased at a rate in excess of 100% on a
comparable-quarter basis. Self-insured lives also increased
21% sequentially, over the first quarter of fiscal 2005. This
growth reflects the expansion of contracts to provide disease
management and care enhancement services on behalf of the
Company's health plan customers to 320 specifically
identifiable employers compared to 127 at the same time in
fiscal 2004 and 265 at the end of the first quarter of fiscal
2005. American Healthways' continued growth in this market,
which it believes is significantly stronger than its
competitors, validates both the value of its proven and
comprehensive array of services and the substantial benefit of
its strategic decision to pursue this market in partnership
with its health plan customers.
-- 13 New, Extended or Expanded Health Plan Contracts Since End
of Fiscal 2004 - From the end of fiscal 2004 through the
first-quarter news release on Dec. 20, 2004, the Company
announced four new, extended or expanded health plan
contracts, including, as discussed in the first-quarter news
release, the second contract expansion for Blue Cross Blue
Shield of Massachusetts; a contract expansion with Wellmark,
Inc.; a contract with a new customer, Blue Shield of
California; and a contract extension with The Regence Group.
Since the first-quarter news release, American Healthways has
announced eight additional contract expansions with existing
health plan customers and one contract with a new health plan
customer.
1. During the second quarter, the Company expanded its
contract with Blue Cross and Blue Shield of Kansas City,
under which it has been providing diabetes and cardiac
disease management services to the health plan's HMO
members since June 2000. Effective Jan. 1, 2005, American
Healthways began providing diabetes and cardiac disease
management services to the health plan's eligible PPO
members. The contract, which was renewed in 2003, also has
been extended through the end of calendar 2006.
2. American Healthways expanded its agreement with CIGNA
HealthCare during the second quarter, effective Jan. 1,
2006, to include the Company's care enhancement programs
for 10 impact conditions, including acid-related stomach
disorders, atrial fibrillation, decubitus ulcer,
fibromyalgia, hepatitis C, inflammatory bowel disease,
irritable bowel syndrome, osteoarthritis, osteoporosis and
urinary incontinence. The agreement also extends the CIGNA
HealthCare and American Healthways relationship to 2010.
3. Also in the second quarter, the Company announced an
expansion and extension of its contract with Saint Mary's
Health Plans, adding programs for chronic obstructive
pulmonary disease, asthma, 11 impact conditions and
StatusOne's high-risk health management to the diabetes
and cardiac programs it already provides the health plan's
fully insured members. American Healthways will also
provide this full suite of disease management and care
enhancement services to the health plan's self-insured
employer groups for the first time. The contract was
originated for diabetes in 2000, the cardiac program was
added in 2002 and the expanded contract has now been
extended for four additional years.
4. The final second-quarter contract expansion was the
addition of the Company's new depression and tobacco
cessation programs to its contract with Blue Cross Blue
Shield of Minnesota. Already the nation's most extensive
disease management and care enhancement program, this
innovative, 10-year contract also includes the Company's
five chronic disease management programs, 11 impact
conditions, StatusOne's high-risk health management and
new programs for oncology and chronic kidney disease
(CKD).
5. Subsequent to the end of the second quarter, the Company
expanded its relationship for the second time with Harvard
Pilgrim Health Care. From the original contract in June
2001 for the provision of StatusOne's high risk health
management program to Harvard Pilgrim's fully insured
members, American Healthways added its cardiac disease
management program in March 2004, representing the first
cross-sell of an existing StatusOne customer. As a result
of the latest contract, Harvard Pilgrim's self-insured
employer groups will have the option of purchasing
American Healthways' disease management programs for five
chronic diseases and 11 impact conditions. The contract
was also extended until 2010.
6. The Company recently announced its third contract expansion
with NewQuest, LLC, parent of the HealthSpring companies
of Tennessee, Alabama, Texas and Illinois, adding its
total population management program of five chronic
diseases and 11 impact conditions for HealthSpring's plan
in the Chicago market. The contract originally began in
2002 with the Company providing its total population
management program to the commercial and Medicare
Advantage populations of HeathSpring of Tennessee. It was
expanded in early 2004 to add diabetes and heart disease
programs for these populations in HealthSpring's Texas and
Alabama markets and, subsequently, expanded again for the
full population management program in those markets.
7. American Healthways also expanded its contract with
WellChoice, Inc., parent company of Empire Blue Cross Blue
Shield, New York's largest health insurer based on HMO and
PPO membership. Under the original five-year contract
announced in October 2003, the Company's disease
management programs for five chronic diseases and 11
impact conditions are available for Empire's self insured
employers, and disease management programs for five
chronic diseases are provided to a portion of Empire's
fully insured members. Through the contract expansion, the
Company will provide Empire's fully insured PPO members,
who already receive the asthma and heart failure programs,
with programs for diabetes, coronary artery disease and
chronic obstructive pulmonary disease.
8. In addition, the Company expanded its existing contract
with HealthPlus of Michigan. The original three-year
contract began in May 2003 and included diabetes and heart
failure programs. The contract has now been expanded to
include the Company's coronary artery disease management
program.
9. American Healthways today announces the signing of a new
contract with Health Plan of Nevada, a wholly owned
subsidiary of Sierra Health Plans, for a two-year disease
management program for five chronic diseases and 11 impact
conditions. The Company will provide these programs to
fully insured commercial and Medicare Advantage members in
the Reno market.
-- Service Line Expansion through the Introduction of New
Management Programs - Since the beginning of fiscal 2004,
American Healthways has steadily expanded its array of
services, consistent with its strategy of building critical
mass by increasing the number of its customers' members and
overall health care spending that it reaches. As discussed
above, this strategy produced two additional programs -
depression and tobacco cessation - that were introduced during
the second quarter of fiscal 2005. These new programs follow
the first-quarter introduction of the Company's programs for
CKD and end stage renal disease. In fiscal 2004, American
Healthways also launched its oncology disease management
program and its StatusOne high-risk health management program.
American Healthways intends to continue expanding its health
support capabilities to address entire populations for which
it can employ the principles of evidence-based medicine and
recognized standards of care to improve the quality of care
and, thereby, lower its cost.
-- Continued Progress Toward Finalization of CCIP Agreements with
CMS - The Company has participated in a continuing series of
meetings with CMS to finalize its cooperative agreement
related to the pilot awarded the Company under the CCIP and
with CIGNA regarding its participation in the CCIP pilot
awarded CIGNA. As a result of these meetings, American
Healthways remains confident of its ability to meet its
performance goals for the pilots, which it continues to
believe will be operationally similar to its successful
programs for both commercial and Medicare Advantage health
plan populations.
-- Further Developments as Industry's Market Leader - American
Healthways' position of industry leadership is strongly
supported by its commitment to wide collaboration with the
industry's thought leaders. For example, last week the Company
announced the release of a consensus document on physician
pay-for-performance, which is a hotly debated topic in the
health care industry as a method to improve health outcomes.
To give the physicians a clear voice in the debate, American
Healthways and Johns Hopkins convened a summit of more than
200 physicians and industry experts, and the document details
their perspective on the issue. This consensus document
follows a national poll of consumer attitudes towards
pay-for-performance commissioned by Johns Hopkins and the
Company, which was issued in the first quarter.
During the second quarter, American Healthways also announced
that Dr. Marie Savard had joined the Company in a strategic
consulting arrangement and that the Company acquired The
Savard System(TM). Through this system, Dr. Savard has
empowered over 45,000 consumers to take greater control of
their health by equipping them to create and maintain their
health records. American Healthways is working with Dr. Savard
to incorporate the system into its disease management and care
enhancement programs to help bridge the gaps in health care by
giving consumers the tools to optimally manage their health in
collaboration with their physicians.
-- Strengthened Financial Position - American Healthways'
substantial second-quarter growth, which generated net cash
flow from operations of $10,121,000, enabled the Company to
strengthen its balance sheet through further debt reduction.
The Company's total long-term debt was reduced to $18,655,000
at the end of the second quarter from $25,696,000 at the end
of the first quarter of fiscal 2005 and $55,038,000 at the end
of the second quarter of fiscal 2004. Cash and cash
equivalents and short term investments were $35,556,000 at the
end of the latest quarter. Stockholders' equity increased to
$176,476,000 at the end of the second quarter of fiscal 2005
from $165,675,000 at the end of the first quarter and
$129,628,000 at the end of the second quarter of fiscal 2004.
Third-Quarter Earnings Guidance American Healthways today established its guidance for earnings per diluted share for the third quarter of fiscal 2005 in a range of $0.25 to $0.26 compared with $0.19, excluding the impact of incentive bonus revenues of $0.03, for the third quarter of fiscal 2004. The Company also affirmed af·firm v. af·firmed, af·firm·ing, af·firms v.tr. 1. To declare positively or firmly; maintain to be true. 2. To support or uphold the validity of; confirm. v.intr. its established earnings guidance for fiscal 2005 in a range of $1.00 to $1.02 per diluted share, on total revenues in a range of $319 million to $331 million. The Company's guidance does not include any impact of future incentive bonus revenues. In addition, while the Company expects to incur To become subject to and liable for; to have liabilities imposed by act or operation of law. Expenses are incurred, for example, when the legal obligation to pay them arises. An individual incurs a liability when a money judgment is rendered against him or her by a court. and record costs in the second half of fiscal 2005 related to finalizing, implementing 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. operating the agreements associated with pilot programs under CMS's CCIP, the Company's guidance does not include these costs. The Company will provide further guidance for fiscal 2005 associated with finalizing, implementing and/or operating these CMS pilots once details of the agreements have been finalized See finalization. . Summary Leedle concluded, "As outlined in this news release, the growth in our lives under management and the substantial activity in both our business development and product development pipelines reflect the accelerating momentum in the disease management industry. Simply put, as the leading provider of disease management and care enhancement services, we are well positioned to leverage this momentum to achieve further profitable growth and increased shareholder value." 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 www.streetevents.com or www.fulldisclosure.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 telephonic replay will be available for one week at 719/457-0820, code 4620564, and the replay will also 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 timing and costs of implementation, and the effect of regulations and interpretations relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the Medicare Prescription Drug, Improvement, and Modernization Act The Medicare Prescription Drug, Improvement, and Modernization Act (Pub.L. 108-173, 117 Stat. 2066, also called Medicare Modernization Act or MMA) is a law of the United States which was enacted in 2003. of 2003; the Company's ability to finalize fi·nal·ize tr.v. fi·nal·ized, fi·nal·iz·ing, fi·nal·iz·es To put into final form; complete or conclude: "They have jointly agreed ... and execute To run a program, which causes the computer to carry out its instructions. See executable code, instruction and EXE file. execute - execution agreements with CMS and/or a partner for disease management services under the CCIP; the Company's ability to accurately forecast performance and the timing of revenue recognition under any potential agreement for disease management services under the CCIP and its other contracts ahead of data collection and reconciliation in order to provide forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. guidance; the Company's ability to sign and implement new contracts for disease management services and care enhancement services; the risks associated with a significant concentration of the Company's revenues with a limited number of customers; the Company's ability to effect cost savings and clinical outcomes improvements under disease management and care enhancement contracts and reach mutual agreement with customers and/or CMS with respect to cost savings, or to effect such savings and improvements within the time frames contemplated by the Company; 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 performance incentive bonuses; the ability of the Company's customers and/or CMS 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 customers; the Company's ability to integrate acquired businesses or technologies into the Company's business; the Company's ability to service its debt and make principal and interest payments as those payments become due; the ability of the Company to develop new products and deliver outcomes on those products; the ability of the Company to effectively integrate new technologies and approaches, such as those encompassed in its care enhancement initiatives or otherwise licensed or acquired by the Company, into the Company's care enhancement platform; the Company's ability to renew and/or 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 necessary to support the growth of the Company's operations and to support or guarantee the Company's performance under new 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 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 , 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 executed 1) adj. to have been completed. (Example: "it is an executed contract") 2) v. to have completed or fully performed. (Example: "he executed all the promises made in the contract") 3) v. 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; 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 and/or its subsidiaries; the impact of future state and federal health care and other applicable 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; the Company's ability to have its internal controls positively attested at·test v. at·test·ed, at·test·ing, at·tests v.tr. 1. To affirm to be correct, true, or genuine: The date of the painting was attested by the appraiser. 2. to by its independent auditors Independent Auditor An external auditor with a certified public accounting designation that qualifies him or her to provide an auditor's report. Notes: These auditors aren't affiliated with the company being audited. as required by Section 404 of the Sarbanes-Oxley Act See SOX. of 2002; current geopolitical ge·o·pol·i·tics n. (used with a sing. verb) 1. The study of the relationship among politics and geography, demography, and economics, especially with respect to the foreign policy of a nation. 2. a. turmoil and the continuing threat of domestic or international terrorism Noun 1. international terrorism - terrorism practiced in a foreign country by terrorists who are not native to that country act of terrorism, terrorism, terrorist act - the calculated use of violence (or the threat of violence) against civilians in order to attain ; general worldwide and domestic economic conditions and stock market volatility Volatility 1. A statistical measure of the tendency of a market or security to rise or fall sharply within a period of time. 2. A variable in option pricing formulas that denotes the extent to which the return of the underlying asset will fluctuate between now and the ; and other risks detailed in the Company's annual, quarterly, or other filings with the Securities and Exchange Commission. The Company undertakes no obligation to update or revise any such forward-looking statements. Company Profile 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 disease management, care enhancement and high-risk high-risk adjective Referring to an ↑ risk of suffering from a particular condition Infectious disease Referring to an ↑ risk for exposure to blood-borne pathogens, which occurs with blood bank technicians, dental professionals, dialysis unit health management services proven to improve the quality of health care and lower costs. As of February 28, 2005, the Company had 1,487,000 actual lives under management nationwide. For more information visit www.americanhealthways.com.
AMERICAN HEALTHWAYS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)
Three Months Ended Six Months Ended
February 28/29, February 28/29,
------------------ -------------------
2005 2004 2005 2004
--------- -------- --------- ---------
Revenues $75,337 $57,122 $146,523 $108,200
Cost of services 48,132 37,020 94,103 71,164
--------- -------- --------- ---------
Gross margin 27,205 20,102 52,420 37,036
Selling, general &
administrative expenses 7,287 6,022 13,460 11,164
Depreciation and
amortization 5,493 4,429 10,955 8,570
Interest 472 890 1,114 1,834
--------- -------- --------- ---------
Income before income taxes 13,953 8,761 26,891 15,468
Income tax expense 5,512 3,437 10,687 6,187
--------- -------- --------- ---------
Net income $8,441 $5,324 $16,204 $9,281
========= ======== ========= =========
Basic income per share: $0.26 $0.17 $0.49 $0.29
========= ======== ========= =========
Diluted income per share: $0.24 $0.15 $0.46 $0.27
========= ======== ========= =========
Weighted average common shares
and equivalents:
Basic 33,073 32,039 32,997 31,915
Diluted 35,490 34,746 35,390 34,507
American Healthways, Inc.
Statistical Information
(Dollars in thousands)
(Unaudited)
February 28, February 29,
2005 2004
------------ ------------
Operating Statistics
Actual lives under
management at end of period 1,487,000 1,054,000
Annualized revenue in backlog $14,360 $18,833
Reconciliation of Diluted Earnings Per Share Excluding Incentive Bonus
Revenues to Diluted Earnings Per Share (EPS), GAAP Basis
Three Months Ended
May 31, 2004
------------------
EPS excluding incentive bonus revenues(2) $0.19
EPS attributable to incentive bonus revenues 0.03
------------------
EPS, GAAP basis $0.22
==================
(2) EPS excluding incentive bonus revenues is a non-GAAP financial
measure. The Company excludes incentive bonuses from this measure
primarily because of their unpredictability and relies on EPS
excluding incentive bonus revenues as a primary measure to review
and assess the ongoing operating performance of contracts. The
Company believes it is useful to investors to provide disclosures
of its operating results on the same basis as that used by
management. You should not consider EPS excluding incentive bonus
revenues in isolation or as a substitute for EPS determined in
accordance with accounting principles generally accepted in the
United States.
AMERICAN HEALTHWAYS, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except share and per share data)
February 28, August 31,
2005 2004 (1)
------------ ----------
Assets
Current assets:
Cash and cash equivalents $28,516 $45,147
Restricted cash 3,454 1,524
Investments 7,040 7,040
Accounts receivable, net
Billed 40,723 33,235
Unbilled 451 866
Other current assets 5,927 5,976
Income taxes receivable 2,483 -
Deferred tax asset 2,271 2,248
------------ ----------
Total current assets 90,865 96,036
Property and equipment
Leasehold improvements 9,015 8,730
Computer equipment and related software 57,393 53,379
Furniture and office equipment 15,133 14,514
------------ ----------
81,541 76,623
Less accumulated depreciation (45,770) (36,796)
------------ ----------
Net property and equipment 35,771 39,827
Other assets 2,595 2,456
Intangible assets, net 18,090 19,854
Goodwill, net 92,398 93,574
------------ ----------
Total assets $239,719 $251,747
------------ ----------
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $5,000 $10,343
Accrued salaries and benefits 10,357 4,616
Accrued liabilities 4,245 4,688
Contract billings in excess of earned
revenue 4,916 4,898
Income taxes payable - 3,294
Current portion of long-term debt 155 12,243
Current portion of long-term liabilities 1,696 1,018
------------ ----------
Total current liabilities 26,369 41,100
Long-term debt 18,500 36,562
Long-term deferred tax liability 12,658 12,658
Other long-term liabilities 5,716 5,992
Stockholders' equity
Preferred stock
$.001 par value, 5,000,000 shares
authorized, none outstanding - -
Common stock
$.001 par value, 75,000,000 shares
authorized, 33,146,305 and 32,857,041
shares outstanding 33 33
Additional paid-in capital 95,852 90,980
Retained earnings 80,591 64,387
Accumulated other comprehensive income - 35
------------ ----------
Total stockholders' equity 176,476 155,435
------------ ----------
Total liabilities and stockholders' equity $239,719 $251,747
------------ ----------
(1) Certain items have been reclassified to conform to current
classifications.
AMERICAN HEALTHWAYS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
Six Months Ended
February 28/29,
-----------------
2005 2004 (1)
Cash flows from operating activities:
Net income $16,204 $9,281
Adjustments to reconcile net income to net cash
provided by operating activities, net of business
acquisitions:
Depreciation and amortization 10,955 8,570
Amortization of deferred loan costs 272 384
Tax benefit of stock option exercises 2,878 3,781
Increase in accounts receivable, net (7,073) (11,574)
Increase in other current assets (2,490) (232)
(Decrease) increase in accounts payable (5,343) 294
Increase (decrease) in accrued salaries and
benefits 5,741 (6,179)
(Decrease) increase in other current liabilities (3,719) 2,947
Other 1,343 1,488
Decrease in other assets 319 170
Payments on other long-term liabilities (650) (300)
-------- --------
Net cash flows provided by operating activities 18,437 8,630
-------- --------
Cash flows from investing activities:
Acquisition of property and equipment (5,035) (8,538)
Business acquisitions, net of cash acquired 1,176 (60,223)
-------- --------
Net cash flows used in investing activities (3,859) (68,761)
-------- --------
Cash flows from financing activities:
Increase in restricted cash (1,930) -
Proceeds from issuance of long-term debt 48,000 60,000
Deferred loan costs (730) (2,315)
Payments of long-term debt (78,150) (6,214)
Exercise of stock options 1,601 1,964
-------- --------
Net cash flows (used in) provided by financing
activities (31,209) 53,435
-------- --------
Net decrease in cash and cash equivalents (16,631) (6,696)
Cash and cash equivalents, beginning of period 45,147 34,846
-------- --------
Cash and cash equivalents, end of period $28,516 $28,150
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(1) Certain items have been reclassified to conform to current
classifications.
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