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Healthways Deal Collapses

The LifeMasters merger can't be completed.



called off its merger with LifeMasters Supported SelfCare, citing a third-party reporting error on a LifeMasters contract.

Nashville, Tenn., disease manager Healthways said last month that the LifeMasters deal wouldn't close on time due to the discovery of the error. The deal, announced May 30, had been set to close Sept. 1. But the companies said Aug. 25 they would try to close the transaction.

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On Monday, they said they couldn't agree to revised terms and that no further talks are planned.

"While we are naturally disappointed that we are unable to complete the merger, our focus continues to be on the future," Healthways CEO Ben R. Leedle Jr. said. "The commercial and government global market demand for health and care support services is strong and growing. We remain committed to satisfying that demand."

The termination follows a data and reporting error made by a third party actuarial firm with regard to a LifeMasters' contract that had recently been reported to LifeMasters. The error was unknown to LifeMasters at the time the parties entered into the merger agreement. The correction of the data and reporting error made by the third party materially impacted prior period revenues and the financial projections which were relied upon by Healthways. As a result, a material adverse effect occurred and prevented LifeMasters from satisfying its conditions to closing under the merger agreement.