Healthways: The Implosion of the Day (HWAY, CI)
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What does one do when 65% sequential earnings growth is not enough? That is what investors can ask, although a contract loss is the biggest culprit for today’s implosion. Cigna Corporation (NYSE: CI) recently informed the company that it will wind down its current contract in 2012 ahead of the contract’s Feb-2013 expiration and that contract is expected to produce revenues of $110 to $115 million. Healthways expects a reduction in revenues from Cigna for 2012 compared with 2011 in a range of $60 million to $65 million. Ouch.
The company noted that its net operating cash flow was down from the prior two quarters to $9.4 million. The company did note that it continues to expect full-year net operating cash flow in a range of $80 million to $100 million. The company also affirmed its guidance for 2011 revenues of $672 to $710 million ($650 to $680 million domestic and $22 to $30 million international). The company also sees 2011 net income in a range of $0.90 to $1.00 EPS versus a previous range of $0.90 to $1.08 EPS.
Shares are down almost 35% around $7.40 in the pre-market and the prior 52-week trading range was $8.63 to $17.62.
JON C. OGG
Contact [email protected] for any questions or corrections.
Jon Ogg has been a financial news analyst since 1997. Mr. Ogg set up one of the first audio squawk box services for traders called TTN, which he sold in 2003. He has previously worked as a licensed broker to some of the top U.S. and E.U. financial institutions, managed capital, and has raised private capital at the seed and venture stage. He has lived in Copenhagen, Denmark, as well as New York and Chicago, and he now lives in Houston, Texas. Jon received a Bachelor of Business Administration in finance at University of Houston in 1992. www.247wallst.com.
