Healthways (HWAY) Stock Sinks on Lower Full Year Revenue Guidance

NEW YORK (TheStreet) -- Shares of Healthways (HWAY) were falling 19.6% to $12.50 on heavy trading volume Friday after the health services company cut its guidance for the full year 2015.

Healthways lowered its 2015 revenue guidance to a range of $770 million to $785 million from its previous range of $800 million to $825 million. Analysts surveyed by Thomson Reuters expect the company to report revenue of $804.48 million for the year.

The company said the lower full year guidance came as a result of lower than expected growth in one significant contract with a commercial health plan, slower implementation and sales cycle for the Ornish Reversal Program, and a slower pace of near-terms business development business development for Blue Zones project opportunities.

About 3 million shares of Healthways were traded by 9:59 a.m. on Friday, above the company's average trading volume of about 462,000 shares a day.

TheStreet Ratings team rates HEALTHWAYS INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate HEALTHWAYS INC (HWAY) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income and revenue growth. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, poor profit margins and weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • HEALTHWAYS INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, HEALTHWAYS INC continued to lose money by earning -$0.16 versus -$0.25 in the prior year. This year, the market expects an improvement in earnings ($0.41 versus -$0.16).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Health Care Providers & Services industry. The net income increased by 69.6% when compared to the same quarter one year prior, rising from -$9.60 million to -$2.91 million.
  • The debt-to-equity ratio is somewhat low, currently at 0.87, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.87 is somewhat weak and could be cause for future problems.
  • Net operating cash flow has significantly decreased to $1.83 million or 79.89% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • HWAY has underperformed the S&P 500 Index, declining 7.62% from its price level of one year ago. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.
  • You can view the full analysis from the report here: HWAY Ratings Report

More from Markets

Stocks Trade Lower as Amazon Rises, Apple and P&G Slump

Stocks Trade Lower as Amazon Rises, Apple and P&G Slump

Soaring Nickel Prices Could Be Bad News for Electric Carmakers Like Tesla

Soaring Nickel Prices Could Be Bad News for Electric Carmakers Like Tesla

Video: The Road to S&P 500 2,800 Is 'Slow and Choppy'

Video: The Road to S&P 500 2,800 Is 'Slow and Choppy'

Let the Najarian Brothers Help You Generate Income With Options

Let the Najarian Brothers Help You Generate Income With Options

Oil Stocks Jump as Global Crude Oil Rally Gains Steam

Oil Stocks Jump as Global Crude Oil Rally Gains Steam