American Healthways Sees No Change in Fiscal 2001 Earnings Estimates After Expiration of Highmark Contract.

Business Editors

NASHVILLE, Tenn.--(BUSINESS WIRE)--Feb. 21, 2001

Thomas G. Cigarran, chairman and chief executive officer of American Healthways, Inc. (Nasdaq/NM:AMHC) announced today that the decision by Highmark Blue Cross Blue Shield not to extend the Company's contract beyond its March 31, 2001 expiration date will have no impact on estimates of earnings or lives under contract or management by year-end previously provided by the Company for fiscal 2001, as well as our expectations for the future.

Cigarran explained that Highmark's decision came after a lengthy request for proposal (RFP) process that began last summer. "In August, Highmark requested proposals from 13 disease management organizations as part of a two-prong plan-wide strategy which would consolidate the management of their disease management programs and vendors and which would also allow them to have a significant equity position in the successful bidder," said Cigarran. "As a publicly traded company, we did not see a possible structure that made sense for us and which would allow Highmark to achieve its desired equity ownership structure, which was a primary factor in their decision.

"We were aware of this obstacle to consummating an on-going agreement with Highmark, but believed that our unmatched capabilities might cause Highmark to reconsider its equity-based structure objectives. Our choice as one of the two final vendors confirmed the strength of our relationship and value to Highmark."

Cigarran added, "We are pleased to have had the opportunity to work with Highmark and are also pleased with the success of our program with their enrollees with diabetes and the physicians who care for them. We recognized the odds against renewal for the reasons described above, and planned for the potential non-renewal of this contract, both financially and operationally. As a result, our previous EPS forecast of between $.38 and $.42 for Fiscal 2001 remains unchanged, as do our expectations beyond 2001."

Cigarran concluded, "American Healthways continues to actively serve more patients and physicians than any other disease management provider. This fiscal year, the Company has already signed four new health plan contracts, including the industry's largest nationwide contract for a cardiac disease management program. In addition, the Company has begun implementation, under a letter of intent while the contract is being finalized, of a new cardiac disease management program contract which is expected to replace at least all the equivalent lives lost as a result of the expiration of the Highmark agreement. We expect to announce the execution of this contract as well as an additional significant contract with another new customer shortly. This continued growth is a direct result of the clinical, financial and participant satisfaction outcomes we've achieved for our customers. Our comprehensive care and disease management programs continue to demonstrate that our comprehensive approach to supporting both the patient and the physician improves health outcomes and consequently reduces health care costs."

This press release contains forward-looking statements 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 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 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 Company's ability to execute new contracts for health plan diabetes, cardiac and respiratory disease management services, myhealthways(SM) 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 small number of health plan customers; the Company's ability to effect estimated cost savings and clinical outcome improvements under health plan 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 ability of the Company's health plan customers to provide timely and accurate data that is essential to the operation and measurement of its performance under the terms of its health plan contracts; the ability of the Company to negotiate favorable fee structures with health plans; the Company's ability to resolve favorably contract billing and interpretation issues with its health plan customers; the ability of the Company to obtain adequate financing to support the Company's performance under new health plan contracts; unusual and unforeseen patterns of healthcare utilization by individuals with diabetes, cardiac and respiratory disease 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 implement its backlog of contracted lives within anticipated time frames contemplated by 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 existing litigation involving the Company; and the impact of future state and federal healthcare legislation and regulations on the ability of the Company to deliver its services or on the financial health of the Company's customers and their willingness to purchase the Company's services. The Company undertakes no obligation to update or revise any such forward-looking statements.

Nashville-based American Healthways (www.americanhealthways.com) is the nation's leading and largest provider of specialized, comprehensive care and disease management services to health plans, physicians, and hospitals. Through its four product lines - diabetes healthways(SM), cardiac healthways(SM), respiratory healthways(SM), and myhealthways(SM) - the Company has contracts to provide its programs to health plan lives in all 50 states, the District of Columbia and Puerto Rico. The Company also operates diabetes management programs in hospitals nationwide.