[April 17, 2014] |
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Healthways and Blue Cross Blue Shield of Minnesota Reach Settlement Agreement
NASHVILLE, Tenn. --(Business Wire)--
Healthways (NASDAQ: HWAY) today announced an agreement with Blue Cross
Blue Shield of Minnesota ("BCBSMN") resolving a former contractual
dispute.
Under the terms of the settlement agreement, Healthways will pay BCBSMN
in two separate installments: $4 million by the end of April 2014 and
$5.5 million in January 2015. BCBSMN has an option to receive discounts
on Healthways well-being improvement services in lieu of the January
2015 payment.
As a result of the settlement agreement, Healthways will incur a charge
of $9.4 million, or approximately $0.17 per share after tax, in the
Company's first-quarter 2014 financial results. Healthways' lenders have
agreed to exclude the $9.4 million charge from debt covenant
calculations under the Company's Senior Credit Facilities.
The $9.4 million charge was not a component of the Company's 2014
financial guidance provided as part of its February 2014 earnings
release and conference call. The Company is today affirming its 2014
financial guidance as issued and discussed on February 13, 2014,
excluding the impact of the $9.4 million settlement charge.
The dispute was related to a contract between BCBSMN and Healthways that
was in effect from 2001 to 2008. Healthways and BCBSMN engaged in a
contractually specified binding arbitration process leading to a hearing
in October 2013 and the companies then jointly requested that the
arbitrator not issue any award or decision, after which the companies
engaged in settlement and business discussions.
Safe Harbor Provisions
This press release contains forward-looking statements, including our
guidance and financial expectations for future periods, which are based
upon current expectations, involve a number of risks and uncertainties
and are subject to the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995. Those forward-looking
statements include all statements that are not historical statements of
fact and those regarding the intent, belief or expectations of the
Company, including, without limitation, all statements regarding the
Company's future earnings and results of operations. Those
forward-looking statements are subject to the finalization of the
Company's quarterly and year-end financial accounting procedures and may
be affected by certain risks and uncertainties, including, but not
limited to:
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the effectiveness of management's strategies and decisions;
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the Company's ability to sign and implement new contracts for our
solutions;
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the Company's ability to accurately forecast the costs required to
successfully implement new contracts;
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the Company's ability to accurately forecast the costs necessary to
integrate new or acquired businesses, services (including outsourced
services) or technologies into the Company's business;
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the Company's ability to achieve estimated annualized revenue in
backlog in the manner and within the timeframe we expect, which is
based on certain estimates regarding the implementation of our
services;
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the Company's ability to anticipate change and respond to emerging
trends in the domestic and international markets for healthcare and
the impact of the same on demand for the Company's services;
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the Company's ability to implement its integrated data and technology
solutions platform within the required time frame and expected cost
estimates and to develop and enhance this platform and/or other
technologies to meet evolving customer and market needs;
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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;
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the Company's ability to accurately forecast the Company's revenues,
margins, earnings and net income, as well as any potential charges
that the Company may incur as a result of changes in its business;
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the Company's ability to accurately forecast performance and the
timing of revenue recognition under the terms of its customer
contracts ahead of data collection and reconciliation;
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the Company's ability to accurately forecast enrollment and
participation rates in services and programs offered within the
Company's contracts;
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the costs and management distraction related to a proxy contest;
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the risks associated with deriving a significant concentration of
revenues from a limited number of customers;
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the risks associated with foreign currency exchange rate fluctuations;
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the ability of the Company's customers to provide timely and accurate
data that is essential to the operation and measurement of the
Company's performance;
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the Company's ability to achieve the contractually required cost
savings and clinical outcomes improvements and reach mutual agreement
with customers with respect to cost savings, or to achieve such
savings and improvements within the time frames it contemplates;
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the risks associated with changes in macroeconomic conditions;
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the risks associated with data privacy or security breaches, computer
hacking, network penetration and other illegal intrusions;
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the Company's ability to effectively compete against other entities,
whose financial, research, staff, and marketing resources may exceed
our resources;
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the Company's ability to service its debt and remain in compliance
with its debt covenants;
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counterparty risk associated with our interest rate swap agreements
and foreign currency exchanged contracts;
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the impact of litigation involving the Company and/or its subsidiaries;
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the impact of future state, federal and international legislation and
regulations applicable to the Company's business, including the
Patient Protection and Affordable Care Act, as amended by the Health
Care and Education Reconciliation Act of 2010 on the Company's
operations and/or demand for its services; and
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other risks detailed in the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 2013, and other filings with the
Securities and Exchange Commission.
The Company undertakes no obligation to update or revise any such
forward-looking statements.
About Healthways
Healthways is the largest independent global provider of well-being
improvement solutions. Dedicated to creating a healthier world one
person at a time, the Company uses the science of behavior change to
produce and measure positive change in well-being for our customers,
which include employers, integrated health systems, hospitals,
physicians, health plans, communities and government entities. We
provide highly specific and personalized support for each individual and
their team of experts to optimize each participant's health and
productivity and to reduce health-related costs. Results are achieved by
addressing longitudinal health risks and care needs of everyone in a
given population. The Company has scaled its proprietary technology
infrastructure and delivery capabilities developed over 30 years and now
serves approximately 45 million people on four continents. Learn more at www.healthways.com.
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