Dec 21, 2011 -- Wellness program administrator Healthways Inc. said Tuesday it will cut 275 jobs, close two call centers and take a $184 million write-down in the fourth quarter in the wake of the loss of a major contract.
Healthways also said a deal with the French government health insurance agency is being delayed until early next year. The company had expected payments linked to that contract to start in the fourth quarter of this year.
Healthways will take a charge related to the call center closings and job cuts.
"While the growth in almost all of our business channels has been strong leading into 2012, it is not sufficient to offset the size of the impact from the wind-down of our current business with Cigna," said Ben R. Leedle Jr., chief executive of Healthways.
The contract, which Cigna disclosed in October it plans to start winding down next month in advance of its February 2013 expiration, accounts for roughly 17 percent of Healthways’ revenues.
That led to Healthways’ decision to close two Cigna-dedicated call centers in Phoenix and Pittsburgh by the middle of next month.
Local jobs at risk
Among the employees losing jobs are roughly 50 employees at Healthways’ Franklin headquarters.
Healthways would expect to report an annual profit, down from its previous estimates.
On average, analysts polled by Thomson Reuters had forecast 93 cents a share for the current year on revenues. Such estimates generally exclude one-time items like impairment charges.
Brooks O’Neil, an analyst with Dougherty & Co. in Minneapolis, didn’t find any surprises in Healthways’ disclosure of the charges and revision of its guidance. "Realistically, most of this was about as expected with the possible exception of the delay in the implementation of the contract in France," O’Neil said.
Posted by Veronica Silva Cusi, news correspondent
Date Posted: Thursday, December 22, 2011