Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2016 | Apr. 30, 2016 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | Healthways, Inc. | |
Entity Central Index Key | 704,415 | |
Current Fiscal Year End Date | --12-31 | |
Entity Well-known Seasoned Issuer | No | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 36,140,003 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q1 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2016 |
CONSOLIDATED BALANCE SHEETS (Un
CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 3,094 | $ 1,870 |
Accounts receivable, net | 101,233 | 108,195 |
Prepaid expenses | 10,057 | 10,207 |
Other current assets | 4,314 | 5,230 |
Income taxes receivable | 1,293 | 1,076 |
Deferred tax asset | 0 | 8,209 |
Total current assets | 119,991 | 134,787 |
Property and equipment: | ||
Leasehold improvements | 37,627 | 37,565 |
Computer equipment and related software | 317,918 | 315,890 |
Furniture and office equipment | 19,812 | 19,776 |
Capital projects in process | 16,939 | 13,676 |
Property and equipment, gross | 392,296 | 386,907 |
Less accumulated depreciation | (242,546) | (230,907) |
Property and equipment, net | 149,750 | 156,000 |
Other assets | 17,255 | 23,846 |
Intangible assets, net | 60,480 | 61,317 |
Goodwill, net | 336,974 | 336,974 |
Total assets | 684,450 | 712,924 |
Current liabilities: | ||
Accounts payable | 44,703 | 41,035 |
Accrued salaries and benefits | 21,268 | 21,620 |
Accrued liabilities | 47,695 | 50,074 |
Deferred revenue | 6,810 | 7,056 |
Contract billings in excess of earned revenue | 13,967 | 12,893 |
Current portion of long-term debt | 23,007 | 23,308 |
Current portion of long-term liabilities | 6,722 | 6,204 |
Total current liabilities | 164,172 | 162,190 |
Long-term debt | 206,386 | 208,289 |
Long-term deferred tax liability | 16,328 | 23,617 |
Other long-term liabilities | 28,192 | 38,238 |
Stockholders' equity: | ||
Preferred stock $.001 par value, 5,000,000 shares authorized, none outstanding | 0 | 0 |
Common stock $.001 par value, 120,000,000 shares authorized, 36,137,666 and 36,079,446 shares outstanding, respectively | 36 | 36 |
Additional paid-in capital | 304,121 | 302,488 |
Retained earnings (deficit) | (4,550) | 9,659 |
Treasury stock, at cost, 2,254,953 shares in treasury | (28,182) | (28,182) |
Accumulated other comprehensive loss | (3,139) | (4,087) |
Total Healthways, Inc. stockholders' equity | 268,286 | 279,914 |
Non-controlling interest | 1,086 | 676 |
Total stockholders' equity | 269,372 | 280,590 |
Total liabilities and stockholders' equity | $ 684,450 | $ 712,924 |
CONSOLIDATED BALANCE SHEETS (U3
CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares | Mar. 31, 2016 | Dec. 31, 2015 |
Stockholders' equity: | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized (in shares) | 5,000,000 | 5,000,000 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 120,000,000 | 120,000,000 |
Common stock, shares outstanding (in shares) | 36,137,666 | 36,079,446 |
Treasury stock (in shares) | 2,254,953 | 2,254,953 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | ||
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Unaudited) [Abstract] | |||
Revenues | $ 189,217 | $ 189,862 | |
Cost of services (exclusive of depreciation and amortization of $10,418 and $9,526, respectively, included below) | 164,002 | 161,453 | |
Selling, general and administrative expenses | 16,195 | 15,982 | |
Depreciation and amortization | 12,746 | 12,643 | |
Restructuring and related charges | 5,741 | 0 | |
Operating loss | (9,467) | (216) | |
Interest expense | 4,382 | 4,490 | |
Equity in income from joint ventures | 132 | 0 | |
Loss before income taxes | (13,717) | (4,706) | |
Income tax expense (benefit) | 180 | (1,793) | |
Net loss | (13,897) | (2,913) | |
Less: net income attributable to non-controlling interest | 312 | 0 | |
Net loss attributable to Healthways, Inc. | $ (14,209) | $ (2,913) | |
Loss per share attributable to Healthways, Inc. | |||
Basic (in dollars per share) | $ (0.39) | $ (0.08) | |
Diluted (in dollars per share) | [1] | $ (0.39) | $ (0.08) |
Comprehensive loss | $ (12,851) | $ (4,590) | |
Comprehensive loss attributable to non-controlling interest | 410 | 0 | |
Comprehensive loss attributable to Healthways, Inc. | $ (13,261) | $ (4,590) | |
Weighted average common shares and equivalents: | |||
Basic (in shares) | 36,109 | 35,595 | |
Diluted (in shares) | [1] | 36,109 | 35,595 |
[1] | The impact of potentially dilutive securities for the three months ended March 31, 2016 and 2015 was not considered because the effect would be anti-dilutive in each of those periods. |
CONSOLIDATED STATEMENTS OF COM5
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Unaudited) [Abstract] | ||
Cost of services, depreciation and amortization | $ 10,418 | $ 9,526 |
CONSOLIDATED STATEMENT OF CHANG
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (Unaudited) - 3 months ended Mar. 31, 2016 - USD ($) $ in Thousands | Preferred Stock [Member] | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Treasury Stock [Member] | Accumulated Other Comprehensive Income (Loss) [Member] | Noncontrolling Interest [Member] | Total |
Balance at Dec. 31, 2015 | $ 0 | $ 36 | $ 302,488 | $ 9,659 | $ (28,182) | $ (4,087) | $ 676 | $ 280,590 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net loss attributable to Healthways, Inc. | 0 | 0 | 0 | (14,209) | 0 | 0 | 0 | (14,209) |
Net income attributable to non-controlling interest | 0 | 0 | 0 | 0 | 0 | 0 | 312 | 312 |
Net change in fair value of interest rate swaps, net of income tax benefit of $16 | 0 | 0 | 0 | 0 | 0 | 24 | 0 | 24 |
Foreign currency translation adjustment | 0 | 0 | 0 | 0 | 0 | 924 | 98 | 1,022 |
Total other comprehensive income | 0 | 0 | 0 | 0 | 0 | 948 | 98 | 1,046 |
Total comprehensive loss | 0 | 0 | 0 | (14,209) | 0 | 948 | 410 | (12,851) |
Tax effect of stock options and restricted stock units | 0 | 0 | (794) | 0 | 0 | 0 | 0 | (794) |
Share-based employee compensation expense | 0 | 0 | 2,427 | 0 | 0 | 0 | 0 | 2,427 |
Balance at Mar. 31, 2016 | $ 0 | $ 36 | $ 304,121 | $ (4,550) | $ (28,182) | $ (3,139) | $ 1,086 | $ 269,372 |
CONSOLIDATED STATEMENTS OF COM7
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Parenthetical) $ in Thousands | 3 Months Ended |
Mar. 31, 2016USD ($) | |
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Unaudited) [Abstract] | |
Net change in fair value of interest rate swaps, net of income tax benefit of $16 | $ 16 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Cash flows from operating activities: | ||
Net loss | $ (13,897) | $ (2,913) |
Adjustments to reconcile net loss to net cash flows provided by (used in) operating activities: | ||
Depreciation and amortization | 12,746 | 12,643 |
Amortization of deferred loan costs | 554 | 492 |
Amortization of debt discount | 1,826 | 1,726 |
Share-based employee compensation expense | 2,427 | 2,380 |
Equity in income from joint ventures | (132) | 0 |
Deferred income taxes | (191) | 6,067 |
Excess tax benefits from share-based payment arrangements | 0 | (368) |
Decrease in accounts receivable, net | 7,471 | 4,962 |
Decrease in other current assets | 1,955 | 236 |
(Decrease) increase in accounts payable | (1,175) | 4,791 |
Decrease in accrued salaries and benefits | (440) | (9,937) |
Decrease in other current liabilities | (2,013) | (19,545) |
Other | (1,734) | 1,297 |
Net cash flows provided by operating activities | 7,397 | 1,831 |
Cash flows from investing activities: | ||
Acquisition of property and equipment | (6,450) | (8,609) |
Investment in joint ventures | (453) | (2,825) |
Other | (275) | (286) |
Net cash flows used in investing activities | (7,178) | (11,720) |
Cash flows from financing activities: | ||
Proceeds from issuance of long-term debt | 131,500 | 150,850 |
Payments of long-term debt | (136,084) | (141,086) |
Excess tax benefits from share-based payment arrangements | 0 | 368 |
Exercise of stock options | 0 | 1,138 |
Proceeds from non-controlling interest | 0 | 1,377 |
Change in cash overdraft and other | 4,600 | 481 |
Net cash flows provided by financing activities | 16 | 13,128 |
Effect of exchange rate changes on cash | 989 | (1,252) |
Net increase in cash and cash equivalents | 1,224 | 1,987 |
Cash and cash equivalents, beginning of period | 1,870 | 1,765 |
Cash and cash equivalents, end of period | $ 3,094 | $ 3,752 |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Mar. 31, 2016 | |
Basis of Presentation [Abstract] | |
Basis of Presentation | (1) Basis of Presentation Our financial statements and accompanying notes are prepared in accordance with generally accepted accounting principles in the United States ("U.S. GAAP"). In our opinion, the accompanying consolidated financial statements of Healthways, Inc. and its wholly-owned subsidiaries (collectively, "Healthways," the "Company," or such terms as "we," "us," or "our") reflect all adjustments consisting of normal, recurring accruals necessary for a fair statement. We have reclassified certain items in prior periods to conform to current classifications. We have omitted certain financial information that is normally included in financial statements prepared in accordance with U.S. GAAP but that is not required for interim reporting purposes. You should read the accompanying consolidated financial statements in conjunction with the financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2015. On March 11, 2015, we formed a joint venture with SulAmérica, one of the largest independent insurers in Brazil, to sell total population health services to the Brazilian market. With its contribution, SulAmérica acquired a 49% interest in the joint venture, Healthways Brasil Servicos De Consultoria LTDA ("Healthways Brazil"). We have determined that our interest in Healthways Brazil represents a controlling financial interest and, therefore, have consolidated the financial statements of Healthways Brazil and have presented a noncontrolling interest for the portion owned by SulAmérica. |
Recent Accounting Standards
Recent Accounting Standards | 3 Months Ended |
Mar. 31, 2016 | |
Recent Accounting Standards | |
Recent Accounting Standards | (2) Recent Accounting Standards In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") 2014-09, which creates Accounting Standards Codification ("ASC") Topic 606, "Revenue from Contracts with Customers" ("ASC Topic 606") and supersedes ASC Topic 605, "Revenue Recognition." The provisions of ASC Topic 606 provide for a single comprehensive principles-based standard for the recognition of revenue across all industries and expanded disclosure about the nature, amount, timing and uncertainty of revenue, as well as certain additional quantitative and qualitative disclosures. The standard is effective for annual periods beginning after December 15, 2017, including interim periods within those years. We are currently evaluating the impact of adopting ASC Topic 606. In April 2015, the FASB issued ASU 2015-03, "Simplifying the Presentation of Debt Issuance Costs " In November 2015, the FASB issued ASU 2015-17, "Income Taxes: Balance Sheet Classification of Deferred Taxes" ("ASU 2015-17"), which simplifies the presentation of deferred income taxes by eliminating the separate classification of deferred income tax liabilities and assets into current and noncurrent amounts in the consolidated balance sheet. The amendments in ASU 2015-17 require that all deferred tax liabilities and assets be classified as noncurrent in the consolidated balance sheet. This ASU was adopted in the first quarter of 2016 and presented prospectively for the three months ended March 31, 2016. In February 2016, the FASB issued ASU No. 2016-02, "Leases" In March 2016, the FASB Issued ASU No. 2016-09, "Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting" ("ASU 2016-09"). ASU 2016-09 changes how companies account for certain aspects of share-based payment awards to employees, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. The standard is effective for interim and annual reporting periods beginning after December 15, 2016, although early adoption is permitted. We are currently assessing how the adoption of ASU 2016-09 will impact our our financial position, results of operations and cash flows. |
Share-Based Compensation
Share-Based Compensation | 3 Months Ended |
Mar. 31, 2016 | |
Share-Based Compensation [Abstract] | |
Share-Based Compensation | (3) Share-Based Compensation We currently have four types of share-based awards outstanding to our employees and directors: stock options, restricted stock units, restricted stock and market stock units. We believe that our share-based awards align the interests of our employees and directors with those of our stockholders. We estimate share-based compensation expense based on the number of awards expected to vest, after consideration of expected forfeitures and estimated vesting of performance-based stock units. We recognize share-based compensation expense for the market stock units if the requisite service period is rendered, even if the market condition is never satisfied. For the three months ended March 31, 2016, we recognized share-based compensation costs of $2.4 million. For the three months ended March 31, 2015, we recognized share-based compensation costs of $2.4 million. A summary of our stock options as of March 31, 2016 and changes during the three months then ended is presented below: Shares (000s) Weighted-Average Exercise Price Weighted-Average Remaining Contractual Term (years) Aggregate Intrinsic Value ($000s) Options Outstanding at January 1, 2016 2,122 $ 13.34 Granted — — Exercised — — Forfeited (2 ) 17.12 Expired (96 ) 21.63 Outstanding at March 31, 2016 2,024 12.95 5.38 $ 985 Exercisable at March 31, 2016 1,629 $ 13.02 5.09 $ 869 There were no stock options granted during the three months ended March 31, 2016. The following table shows a summary of our restricted stock and restricted stock units as of March 31, 2016, as well as activity during the three months then ended: Restricted Stock and Restricted Stock Units Shares (000s) Weighted- Average Grant Date Fair Value Nonvested at January 1, 2016 1,618 $ 12.35 Granted 727 10.24 Vested (81 ) 10.24 Forfeited (41 ) 13.16 Nonvested at March 31, 2016 2,223 $ 11.72 Market stock units granted during the three months ended March 31, 2016 have a multi-year performance period ending in 2019 and vest three years from the grant date. The following table shows a summary of our market stock units as of March 31, 2016, as well as activity during the three months then ended: Market Stock Units Shares (000s) Weighted- Average Grant Date Fair Value Nonvested at January 1, 2016 474 $ 6.53 Granted 204 7.15 Vested — — Forfeited — — Nonvested at March 31, 2016 678 $ 6.72 |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2016 | |
Income Taxes [Abstract] | |
Income Taxes | (4) Income Taxes For the three months ended March 31, 2016, we had an effective income tax rate of 1.3%, compared to an effective tax benefit rate of 38.1% for the three months ended March 31, 2015 primarily due to the Company's inability to recognize a tax benefit on the pretax loss for the three months ended March 31, 2016. During the three months ended March 31, 2016, an increase of $5.1 million was recorded to the valuation allowance on certain deferred tax assets in the U.S. Federal and state jurisdictions, as well as in certain foreign jurisdictions. We file income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. Tax years remaining subject to examination in these major jurisdictions include 2012 to present. |
Long-Term Debt
Long-Term Debt | 3 Months Ended |
Mar. 31, 2016 | |
Long-Term Debt [Abstract] | |
Long-Term Debt | (5) Long-Term Debt The Company's long-term debt, net of unamortized deferred loan costs, consists of the following at March 31, 2016 and December 31, 2015: (In thousands) March 31, 2016 December 31, 2015 Cash Convertible Notes, net of unamortized discount $ 132,121 $ 130,296 CareFirst Convertible Note 20,000 20,000 Fifth Amended Credit Agreement: Term Loan 75,000 80,000 Revolver 1,100 — Capital lease obligations and other 4,691 5,374 232,912 235,670 Less: deferred loan costs (3,519 ) (4,073 ) 229,393 231,597 Less: current portion (23,007 ) (23,308 ) $ 206,386 $ 208,289 1.50% Cash Convertible Senior Notes Due 2018 On July 16, 2013, we completed the issuance of $150.0 million aggregate principal amount of cash convertible senior notes due 2018 (the "Cash Convertible Notes"), which bear interest at a rate of 1.50% per year, payable semiannually in arrears on January 1 and July 1 of each year, beginning on January 1, 2014. The Cash Convertible Notes will mature on July 1, 2018, unless earlier repurchased or converted into cash in accordance with their terms prior to such date. At the option of the holders, the Cash Convertible Notes are convertible into cash based on the conversion rate set forth below only upon occurrence of certain triggering events as defined in the Indenture dated as of July 8, 2013 by and between the Company and U.S. Bank National Association, none of which had occurred as of March 31, 2016. Accordingly, we have classified the Cash Convertible Notes as long-term debt at March 31, 2016 and December 31, 2015. The Cash Convertible Notes are not convertible into our common stock or any other securities under any circumstances. The initial cash conversion rate is approximately 51.38 shares of our common stock per $1,000 principal amount of Cash Convertible Notes (equivalent to an initial conversion price of approximately $19.46 per share of common stock). The Cash Convertible Notes are our senior unsecured obligations and rank senior in right of payment to any of our indebtedness that is expressly subordinated in right of payment to the Cash Convertible Notes. As a result of this transaction, we recognized deferred loan costs of approximately $3.9 million, which are being amortized over the term of the Cash Convertible Notes using the effective interest method. The cash conversion feature of the Cash Convertible Notes (the "Cash Conversion Derivative") requires bifurcation from the Cash Convertible Notes in accordance with FASB ASC Topic 815, "Derivatives and Hedging", and is recorded in other long-term liabilities as a derivative liability and carried at fair value. The fair value of the Cash Conversion Derivative at the time of issuance of the Cash Convertible Notes was $36.8 million, which was recorded as a debt discount for purposes of accounting for the debt component of the Cash Convertible Notes. The debt discount is being amortized over the term of the Cash Convertible Notes using the effective interest method. For the three months ended March 31, 2016, we recorded $1.8 million of interest expense related to the amortization of the debt discount based upon an effective interest rate of 5.7%. The net carrying amount of the Cash Convertible Notes at March 31, 2016 and December 31, 2015 was $132.1 million and $130.3 million, respectively, net of the unamortized discount of $17.9 million and $19.7 million, respectively. In connection with the issuance of the Cash Convertible Notes, we entered into privately negotiated convertible note hedge transactions (the "Cash Convertible Notes Hedges"), which are cash-settled and are intended to reduce our exposure to potential cash payments that we would be required to make if holders elect to convert the Cash Convertible Notes at a time when our stock price exceeds the conversion price. The initial cost of the Cash Convertible Notes Hedges was $36.8 million. The Cash Convertible Notes Hedges are recorded in other assets as a derivative asset under FASB ASC Topic 815 and are carried at fair value. See Note 8 for additional information In July 2013, we also sold separate privately negotiated warrants (the "Warrants") initially relating, in the aggregate, to a notional number of shares of our common stock underlying the Cash Convertible Notes Hedges. The Warrants have an initial strike price of approximately $25.95 per share, which effectively increases the conversion price of the Cash Convertible Notes to a 60% premium to our stock price on July 1, 2013. The Warrants will be net share settled by issuing a number of shares of our common stock per Warrant corresponding to the excess of the market price per share of our common stock (as measured on each warrant exercise date under the terms of the Warrants) over the applicable strike price of the Warrants. The Warrants meet the definition of derivatives under the guidance in ASC Topic 815; however, because these instruments have been determined to be indexed to our own stock and meet the criteria for equity classification under ASC Topic 815-40, the Warrants have been accounted for as an adjustment to our additional paid-in-capital. If the market value per share of our common stock exceeds the strike price of the Warrants, the Warrants will have a dilutive effect on net income per share, and the "treasury stock" method will be used in calculating the dilutive effect on earnings per share. CareFirst Convertible Note On October 1, 2013, we entered into an Investment Agreement (the "Investment Agreement") with CareFirst Holdings, LLC ("CareFirst"), which is in addition to certain existing commercial agreements between us and CareFirst relating to, among other things, disease management and care coordination services (the "Commercial Agreements"). Pursuant to the Investment Agreement, we issued to CareFirst a convertible subordinated promissory note in the aggregate original principal amount of $20 million (the "CareFirst Convertible Note") for a purchase price of $20 million. The CareFirst Convertible Note bears interest at a rate of 4.75% per year, payable quarterly in arrears on March 31, June 30, September 30 and December 31 of each calendar year, beginning on December 31, 2013. The CareFirst Convertible Note may be prepaid only under limited circumstances and upon the terms and conditions specified therein. If the CareFirst Convertible Note has not been fully converted or redeemed in accordance with its terms, it will mature on October 1, 2019. The CareFirst Convertible Note is subordinate in right of payment to the prior payment in full of (a) all of our indebtedness under the Fifth Amended Credit Agreement (as defined below) and (b) any other of our senior debt, which currently includes only the Cash Convertible Notes. The CareFirst Convertible Note is convertible into shares of our common stock at the conversion rate determined by dividing (a) the sum of the portion of the principal to be converted and accrued and unpaid interest with respect to such principal by (b) the conversion price equal to $22.41 per share of our common stock. The conversion price is subject to adjustment for stock splits, stock dividends, recapitalizations, reorganizations, reclassifications and similar events. CareFirst has an opportunity to earn warrants to purchase shares of our common stock ("CareFirst Warrants") based on achievement of certain quarterly thresholds (the "Revenue Thresholds") for revenue derived from both the Commercial Agreements and from new business to us from third parties as a result of an introduction or referral to us by CareFirst (collectively, the "Quarterly Revenue"). If the Quarterly Revenue is greater than or equal to the applicable Revenue Threshold for any quarter ending on or prior to September 30, 2017, then we will issue to CareFirst a certain number of warrants exercisable for the number of shares of our common stock ("CareFirst Warrant Shares") determined in accordance with the terms of the Investment Agreement unless (i) CareFirst elects to receive a cash payment in accordance with the terms of the Investment Agreement or (ii) there is a change of control. The aggregate number of CareFirst Warrant Shares in any single 12-month period beginning on October 1, 2013 cannot exceed 400,000, and the aggregate number of CareFirst Warrant Shares issuable pursuant to the Investment Agreement cannot exceed 1,600,000. As of March 31, 2016, we had issued CareFirst Warrant Shares totaling 590,683 at a weighted average exercise price of $15.83, none of which were issued in 2016. These CareFirst Warrants may have a dilutive effect on net income per share, and the "treasury stock" method is used in calculating the dilutive effect on earnings per share. Also on October 1, 2013, in connection with the execution of the Investment Agreement, we entered into a Registration Rights Agreement with CareFirst, pursuant to which we agreed to use commercially reasonable efforts to cause any registration statement covering an underwritten offering of our common stock for our own account or for the account of any holder of our common stock (other than a registration statement on Form S-4 or Form S-8 or any successor thereto) to include those registrable common shares that any holder of such registrable common shares has requested to be registered. The term of the Investment Agreement expires on the earlier of (a) December 31, 2017 and (b) the first date on which no Commercial Agreement is in effect. Credit Facility On June 8, 2012, we entered into the Fifth Amended and Restated Revolving Credit and Term Loan Agreement (as amended, the "Fifth Amended Credit Agreement") Borrowings under the Fifth Amended Credit Agreement generally bear interest at variable rates based on a margin or spread in excess of either (1) the one-month, two-month, three-month or six-month rate (or with the approval of affected lenders, nine-month or twelve-month rate) for Eurodollar deposits ("LIBOR") or (2) the greatest of (a) the SunTrust Bank prime lending rate, (b) the federal funds rate plus 0.50% and (c) one-month LIBOR plus 1.00% (the "Base Rate"), as selected by the Company. The LIBOR margin varies between 1.75% and 3.00%, and the Base Rate margin varies between 0.75% and 2.00%, depending on our leverage ratio. The Fifth Amended Credit Agreement also provides for an annual fee ranging between 0.30% and 0.50% of the unused commitments under the revolving credit facility. Extensions of credit under the Fifth Amended Credit Agreement are secured by guarantees from all of the Company's active domestic subsidiaries and by security interests in substantially all of the Company's and such subsidiaries' assets. On July 1, 2013, we entered into an amendment to the Fifth Amended Credit Agreement, which provided for, among other things, the amendment of certain negative covenants to permit the issuance of and payments related to the Cash Convertible Notes described above as well as increases in the maximum required levels of total funded debt to EBITDA beginning with the quarter ended June 30, 2013. On April 14, 2014 and December 29, 2014, we entered into additional amendments to the Fifth Amended Credit Agreement, which, among other things, (1) amended the calculation of consolidated EBITDA to exclude the Blue Cross Blue Shield of Minnesota legal settlement in 2014 and, for any period that includes a fiscal quarter that ended on or before December 31, 2015, On October 27, 2015, we entered into a Seventh Amendment to the Fifth Amended Credit Agreement (the "Seventh Amendment"), which provides that the expense incurred by us in the following matters will be excluded from the calculation of consolidated EBITDA for purposes of the Fifth Amended Credit Agreement: (1) operational improvement and restructuring charges incurred from July 1, 2015 through March 31, 2017, not to exceed $27.5 million in the aggregate; (2) cash severance charges in connection with the departure of our former Chief Executive Officer during the quarter ended June 30, 2015 not to exceed $2.2 million in the aggregate; and (3) expense incurred in connection with the grant of certain cash inducement awards to our new Chief Executive Officer in an aggregate amount not to exceed approximately $1.3 million. The Seventh Amendment also reduced the amount available for borrowing under the revolving credit facility from $200.0 million to $125.0 million. As of March 31, 2016, availability under the revolving credit facility totaled $61.7 million as calculated under the most restrictive covenant. We are required to repay outstanding revolving loans under the revolving credit facility in full on June 8, 2017. We are required to repay term loans in quarterly principal installments aggregating (1) 1.875% of the original aggregate principal amount of the term loans during each of the four quarters beginning with the quarter ending September 30, 2014, and (2) 2.500% of the original aggregate principal amount of the term loans during each of the remaining quarters prior to maturity on June 8, 2017, at which time the entire unpaid principal balance of the term loans is due and payable. The Fifth Amended Credit Agreement contains financial covenants that require us to maintain, as defined, specified ratios or levels of (1) total funded debt to EBITDA and (2) fixed charge coverage. The Fifth Amended Credit Agreement contains various other affirmative and negative covenants that are typical for financings of this type. Among other things, the Fifth Amended Credit Agreement limits repurchases of our common stock and the amount of dividends that we can pay to holders of our common stock. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2016 | |
Commitments and Contingencies [Abstract] | |
Commitments and Contingencies | (6) Commitments and Contingencies Junk Fax Prevention Act Lawsuits On September 16, 2014, Healthways and its wholly owned subsidiary, Healthways Wholehealth Networks, Inc ("HWHN"), were named in a putative class action lawsuit filed by Edward Simon, DC in the Superior Court of California, County of Los Angeles, seeking damages and other relief relating to alleged violations of the Telephone Consumer Protection Act ("TCPA"), as amended by the Junk Fax Prevention Act ("JFPA"), in connection with faxes allegedly transmitted to members of HWHN's network of complementary and alternative care practitioners. The JFPA prohibits sending an "unsolicited advertisement" to a fax machine and requires the sender to provide a notice to allow a recipient to "opt out" of future fax transmissions (including, pursuant to rules promulgated by the Federal Communications Commission ("FCC"), those sent with the prior express invitation or permission of the recipient). The complaint seeks damages in excess of $5 million. The case has been removed to the United States District Court for the Central District of California, Eastern Division ("California Matter"). On December 22, 2014, HWHN was also named in a putative class action lawsuit filed by Affiliated Health Care Associates, P.C. in the United States District Court for the Northern District of Illinois, Eastern Division ("Illinois Matter"), seeking damages and other relief relating to alleged violations of the TCPA, the Illinois Consumer Fraud and Deceptive Business Practices Act, and Illinois common law in connection with faxes allegedly sent to members of HWHN's network of complementary and alternative care practitioners. The complaint seeks damages in an unstated amount. On May 29, 2015, the plaintiff in the Illinois Matter voluntarily dismissed its lawsuit without prejudice; that plaintiff has been joined as a party in the California Matter. In connection with these actions, on March 2, 2015, Healthways and HWHN filed with the FCC a Petition for Retroactive Waiver ("Waiver Petition") of the FCC's regulation that requires advertising faxes sent with the prior express invitation or permission of the recipient to include an "opt-out" notice. On August 28, 2015, the FCC granted the Company relief requested in the Waiver Petition. We cannot predict the impact on the California Matter of the FCC's grant of relief pursuant to the Waiver Petition. On December 17, 2015, the court in the California Matter denied a class certification motion by the plaintiff and on February 1, 2016, denied the plaintiff's motion to stay proceedings. On May 3, 2016, the court in the California Matter granted an order dismissing the California Matter with prejudice as to the individual claims of the plaintiff and without prejudice as to the other potential members of the class. Summary We are also subject to other contractual disputes, claims and legal proceedings that arise from time to time in the ordinary course of our business. While we are unable to estimate a range of potential losses, we do not believe that any of the legal proceedings pending against us as of the date of this report, some of which are expected to be covered by insurance policies, will have a material adverse effect on our financial statements. As these matters are subject to inherent uncertainties, our view of these matters may change in the future. Contractual Commitments In January 2008, we entered into a 25-year strategic relationship agreement with Gallup, and in October 2012 we entered into a joint venture agreement with Gallup (the "Gallup Joint Venture") that requires us to make payments over a 5-year period beginning January 2013. As of March 31, 2016, we have minimum remaining contractual cash obligations of $25.5 million related to these agreements. In May 2011, we entered into a ten-year applications and technology services outsourcing agreement with HP Enterprise Services, LLC that contains minimum fee requirements. Total payments over the remaining term, including an estimate for future contractual cost of living adjustments, must equal or exceed a minimum level of approximately $84.7 million; however, based on current required service and equipment level assumptions, we estimate that the remaining payments will be approximately $176.7 million. The agreement allows us to terminate all or a portion of the services provided we pay certain termination fees, which could be material to the Company. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2016 | |
Fair Value Measurements [Abstract] | |
Fair Value Measurements | (7) Fair Value Measurements We account for certain assets and liabilities at fair value. Fair value is defined as the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date, assuming the transaction occurs in the principal or most advantageous market for that asset or liability. Fair Value Hierarchy The hierarchy below lists three levels of fair value based on the extent to which inputs used in measuring fair value are observable in the market. We categorize each of our fair value measurements in one of these three levels based on the lowest level input that is significant to the fair value measurement in its entirety. These levels are: Level 1: Quoted prices in active markets for identical assets or liabilities; Level 2: Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-based valuation techniques in which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and Level 3: Unobservable inputs that are supported by little or no market activity and typically reflect management's estimates of assumptions that market participants would use in pricing the asset or liability. Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis We account for our investment in the Gallup Joint Venture using the equity method under ASC Topic 323. In the third quarter of 2015, we observed factors causing a decline in future revenue projections as an indicator of an other than temporary impairment of the investment. Accordingly, we estimated the fair value of our investment using a discounted cash flow model. Estimating fair value requires significant judgments, including management's estimate of future cash flows, which is dependent on internal forecasts, estimation of the long-term growth rate for the joint venture, the useful life over which cash flows will occur, and determination of the weighted average cost of capital. Changes in these estimates and assumptions could materially affect the estimate of fair value. Based on our estimate of fair value, we determined that the present value of our remaining contractual cash obligations in the Gallup Joint Venture exceeded the estimated fair value, resulting in the recognition of a liability associated with the forward option to acquire additional membership interest (the "Gallup Derivative"). The Gallup Derivative was recorded as a derivative liability at March 31, 2016 in accordance with FASB ASC Topic 815 and will be carried at fair value. Assets and Liabilities Measured at Fair Value on a Recurring Basis The following tables present our assets and liabilities measured at fair value on a recurring basis at March 31, 2016 and December 31, 2015: (In $000s) March 31, 2016 Level 2 Level 3 Gross Fair Value Netting (1) Net Fair Value Assets: Foreign currency exchange contracts $ 375 $ — $ 375 $ (213 ) $ 162 Cash Convertible Notes Hedges — 5,029 5,029 — 5,029 Liabilities: Foreign currency exchange contracts $ 246 $ — $ 246 $ (213 ) $ 33 Interest rate swap agreements 357 — 357 — 357 Cash Conversion Derivative — 5,029 5,029 — 5,029 Gallup Derivative — 5,589 5,589 — 5,589 (In $000s) December 31, 2015 Level 2 Level 3 Gross Fair Value Netting (1) Net Fair Value Assets: Foreign currency exchange contracts $ 284 $ — $ 284 $ (26 ) $ 258 Cash Convertible Notes Hedges — 12,632 12,632 — 12,632 Liabilities: Foreign currency exchange contracts $ 48 $ — $ 48 $ (26 ) $ 22 Interest rate swap agreements 397 — 397 — 397 Cash Conversion Derivative — 12,632 12,632 — 12,632 Gallup Derivative — 6,339 6,339 — 6,339 (1) The fair values of forward foreign currency exchange contracts are valued using broker quotations of similar assets or liabilities in active markets. The fair values of interest rate swap agreements are primarily determined based on the present value of future cash flows using internal models and third-party pricing services with observable inputs, including interest rates, yield curves and applicable credit spreads. The fair values of the Cash Convertible Notes Hedges, the Cash Conversion Derivative and the Gallup Derivative are measured using Level 3 inputs because these instruments are not actively traded. The Cash Convertible Notes Hedges and the Cash Conversion Derivative are valued using an option pricing model that uses observable and unobservable market data for inputs, such as expected time to maturity of the derivative instruments, the risk-free interest rate, the expected volatility of our common stock and other factors. The Gallup Derivative is valued as the difference in the present value of our remaining cash commitments and the fair value of such commitments. The Cash Convertible Notes Hedges and the Cash Conversion Derivative were designed such that changes in their fair values would offset one another, with minimal impact to the consolidated statements of comprehensive income (loss). Therefore, the sensitivity of changes in the unobservable inputs to the option pricing model for such instruments is mitigated. The following table presents our financial instruments measured at fair value on a recurring basis using unobservable inputs (Level 3): (In $000s) Balance at December 31, 2015 Purchases of Level 3 Instruments Settlements of Level 3 Instruments Gains/(Losses) Included in Earnings Balance at March 31, 2016 Cash Convertible Notes Hedges $ 12,632 $ — $ — $ (7,603 ) $ 5,029 Cash Conversion Derivative (12,632 ) — — 7,603 (5,029 ) Gallup Derivative (6,339 ) — 750 — (5,589 ) The gains and losses included in earnings noted above represent the change in the fair value of these financial instruments and are recorded each period in the consolidated statements of comprehensive income (loss). The gains and losses on the Cash Convertible Notes Hedges and Cash Conversion Derivative are recorded as selling, general and administrative expenses, and the gain or loss on the Gallup Derivative would be recorded as equity in income on joint ventures. Fair Value of Other Financial Instruments In addition to foreign currency exchange contracts, interest rate swap agreements, the Cash Convertible Notes Hedges, the Cash Conversion Derivative, and the Gallup Derivative, the estimated fair values of which are disclosed above, the estimated fair value of each class of financial instruments at March 31, 2016 was as follows: Cash and cash equivalents – The carrying amount of $3.1 million approximates fair value because of the short maturity of those instruments (less than three months). Long-term debt – The estimated fair value of outstanding borrowings under the Fifth Amended Credit Agreement, which includes a revolving credit facility and a term loan facility (see Note 5), and the Cash Convertible Notes are determined based on the fair value hierarchy as discussed above. The revolving credit facility and the term loan facility are not actively traded and therefore are classified as Level 2 valuations based on the market for similar instruments. The estimated fair value is based on the average of the prices set by the issuing bank given current market conditions and is not necessarily indicative of the amount we could realize in a current market exchange. The estimated fair value and carrying amount of outstanding borrowings under the Fifth Amended Credit Agreement at March 31, 2016 are $75.5 million and $76.1 million, respectively. The Cash Convertible Notes are actively traded and therefore are classified as Level 1 valuations. The estimated fair value at March 31, 2016 was $137.1 million, which is based on the last traded price of the Cash Convertible Notes on March 31, 2016, and the par value was $150.0 million. The carrying amount of the Cash Convertible Notes at March 31, 2016 was $132.1 million, which is net of the debt discount discussed in Note 5. The CareFirst Convertible Note was issued at its fair value of $20.0 million on October 1, 2013. It is not actively traded and is not based upon either an observable market, other than the market for our common stock, or on an observable index and is therefore classified as a Level 3 valuation. At March 31, 2016, the carrying amount of the CareFirst Convertible Note of $20.0 million approximates fair value. |
Derivative Instruments and Hedg
Derivative Instruments and Hedging Activities | 3 Months Ended |
Mar. 31, 2016 | |
Derivative Instruments and Hedging Activities [Abstract] | |
Derivative Instruments and Hedging Activities | (8) Derivative Investments and Hedging Activities We use derivative instruments to manage risks related to interest, foreign currencies, the Cash Convertible Notes, and the fair value of the Gallup Derivative. We account for derivatives in accordance with FASB ASC Topic 815, which establishes accounting and reporting standards requiring that certain derivative instruments be recorded on the balance sheet as either an asset or liability measured at fair value. Additionally, changes in the derivative's fair value will be recognized currently in earnings unless specific hedge accounting criteria are met. As permitted under our master netting arrangements, the fair value amounts of our interest rate swaps and foreign currency options and/or forward contracts are presented on a net basis by counterparty in the consolidated balance sheets. Derivative Instruments Designated as Hedging Instruments Cash Flow Hedges Derivative instruments that are designated and qualify as cash flow hedges are recorded at estimated fair value in the consolidated balance sheets, with the effective portion of the gains and losses being reported in accumulated other comprehensive income or loss ("accumulated OCI"). Cash flow hedges for all periods presented consist solely of interest rate swap agreements, which effectively modify our exposure to interest rate risk by converting a portion of our floating rate debt to fixed rate obligations, thus reducing the impact of interest rate changes on future interest expense. Under these agreements, we receive a variable rate of interest based on LIBOR (as defined in Note 5), and we pay a fixed rate of interest with an interest rate of 1.480% plus a spread (see Note 5). We maintain an interest rate swap agreement with a current notional amount of $50.0 million and a termination date of December 30, 2016. Gains and losses on these interest rate swap agreements are reclassified to interest expense in the same period during which the hedged transaction affects earnings or the period in which all or a portion of the hedge becomes ineffective. As of March 31, 2016, we expected to reclassify $0.1 million of net losses on interest rate swap agreements from accumulated OCI to interest expense within the next twelve months due to the scheduled payment of interest associated with our debt. The following table shows the effect of our cash flow hedges on the consolidated balance sheets during the three months ended March 31, 2016 and 2015: (In $000s) For the Three Months Ended Derivatives in Cash Flow Hedging Relationships March 31, 2016 March 31, 2015 Loss related to effective portion of derivatives recognized in accumulated OCI, gross of tax effect $ 92 $ 201 Loss related to effective portion of derivatives reclassified from accumulated OCI to interest expense, gross of tax effect $ (133 ) $ (98 ) Gains and losses representing either hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are recognized in current earnings. During the three months ended March 31, 2016 and 2015, there were no gains or losses on cash flow hedges recognized in our consolidated statements of comprehensive income (loss) resulting from hedge ineffectiveness. Derivative Instruments Not Designated as Hedging Instruments Our Cash Conversion Derivative, Cash Convertible Notes Hedges, Gallup Derivative and foreign currency options and/or forward contracts do not qualify for hedge accounting treatment under U.S. GAAP and are measured at fair value with gains and losses recognized immediately in the consolidated statements of comprehensive income (loss). Other than the Gallup Derivative described in Note 7, these derivative instruments not designated as hedging instruments did not have a material impact on our consolidated statements of comprehensive income (loss) for the three months ended March 31, 2016 and 2015. Cash Conversion Derivative and Cash Convertible Notes Hedges The Cash Conversion Derivative is accounted for as a derivative liability and carried at fair value. In order to offset the risk associated with the Cash Conversion Derivative, we entered into Cash Convertible Notes Hedges, which are cash-settled and are intended to reduce our exposure to potential cash payments that we would be required to make if holders elect to convert the Cash Convertible Notes at a time when our stock price exceeds the conversion price. The Cash Convertible Notes Hedges are accounted for as a derivative asset and carried at fair value. Gallup Derivative The Gallup Derivative is accounted for as a derivative liability and carried at fair value. The gains and losses resulting from a change in fair values of the Cash Conversion Derivative, the Cash Convertible Notes Hedges and the Gallup Derivative are reported in the consolidated statements of comprehensive income (loss) as follows: (In $000s) Three Months Ended March 31, 2016 Statements of Comprehensive Income (Loss) Classification Cash Convertible Notes Hedges: Net unrealized loss $ (7,603 ) Selling, general and administrative expenses Cash Conversion Derivative: Net unrealized gain $ 7,603 Selling, general and administrative expenses Gallup Derivative: Net loss $ — Equity in income from joint ventures Foreign Currency Exchange Contracts We also enter into foreign currency options and/or forward contracts in order to minimize our earnings exposure to fluctuations in foreign currency exchange rates. Our foreign currency exchange contracts require current period mark-to-market accounting, with any change in fair value being recorded each period in the consolidated statements of comprehensive income (loss) in selling, general and administrative expenses. At March 31, 2016, we had forward contracts with notional amounts of $33.4 million to exchange foreign currencies, primarily the Australian dollar and the Euro, that were entered into to hedge forecasted foreign net income (loss) and intercompany debt. We routinely monitor our foreign currency exposures to maximize the overall effectiveness of our foreign currency hedge positions. We do not execute transactions or hold derivative financial instruments for trading or other purposes. The estimated gross fair values of derivative instruments at March 31, 2016 and December 31, 2015, excluding the impact of netting derivative assets and liabilities when a legally enforceable master netting agreement exists, were as follows: March 31, 2016 December 31, 2015 (In $000s) Foreign currency exchange contracts Interest rate swap agreements Cash Convertible Notes Hedges and Cash Conversion Derivative Gallup Derivative Foreign currency exchange contracts Interest rate swap agreements Cash Convertible Notes Hedges and Cash Conversion Derivative Gallup Derivative Assets: Derivatives not designated as hedging instruments: Other current assets $ 375 $ — $ — $ — $ 284 $ — $ — $ — Other assets — — 5,029 — — — 12,632 — Total assets $ 375 $ — $ 5,029 $ — $ 284 $ — $ 12,632 $ — Liabilities: Derivatives not designated as hedging instruments: Accrued liabilities $ 246 $ — $ — $ 3,366 $ 48 $ — $ — $ 3,323 Other long-term liabilities — — 5,029 2,223 — — 12,632 3,016 Derivatives designated as hedging instruments: Accrued liabilities — 357 — — — 397 — — Other long-term liabilities — — — — — — — — Total liabilities $ 246 $ 357 $ 5,029 $ 5,589 $ 48 $ 397 $ 12,632 $ 6,339 See also Note 7 for more information on fair value measurements. |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Mar. 31, 2016 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | (9) Earnings Per Share The following is a reconciliation of the numerator and denominator of basic and diluted earnings per share for the three months ended March 31, 2016 and 2015: (In 000s, except per share data) Three Months Ended March 31, March 31, 2016 2015 Numerator: Net loss attributable to Healthways, Inc. - numerator for basic loss per share $ (14,209 ) $ (2,913 ) Denominator: Shares used for basic loss per share 36,109 35,595 Effect of dilutive securities outstanding: Non-qualified stock options (1) — — Restricted stock units (1) — — Market stock units (1) — — Performance-based stock units (1) — — CareFirst Warrants (1) — — Shares used for diluted income per share (1) $ 36,109 $ 35,595 Loss per share: Basic $ (0.39 ) $ (0.08 ) Diluted (1) $ (0.39 ) $ (0.08 ) Dilutive securities outstanding not included in the computation of loss per share because their effect is antidilutive: Non-qualified stock options 1,651 1,243 Restricted stock units 1,105 404 Market stock units 161 — Performance-based stock units — 98 Warrants related to Cash Convertible Notes 7,707 7,707 CareFirst Convertible Note 892 892 CareFirst Warrants 591 36 (1) |
Accumulated OCI
Accumulated OCI | 3 Months Ended |
Mar. 31, 2016 | |
Accumulated OCI [Abstract] | |
Accumulated OCI | (10) Accumulated OCI The following tables summarize the changes in accumulated OCI, net of tax, for the three months ended March 31, 2016 and 2015: (In $000s) Net Change in Fair Value of Interest Rate Swaps Foreign Currency Translation Adjustments Total Accumulated OCI, net of tax, as of January 1, 2016 $ (239 ) $ (3,848 ) $ (4,087 ) Other comprehensive income (loss) before reclassifications, net of tax (56 ) 924 868 Amounts reclassified from accumulated OCI, net of tax 80 — 80 Net increase in other comprehensive income (loss), net of tax 24 924 948 Accumulated OCI, net of tax, as of March 31, 2016 $ (215 ) $ (2,924 ) $ (3,139 ) (In $000s) Net Change in Fair Value of Interest Rate Swaps Foreign Currency Translation Adjustments Total Accumulated OCI, net of tax, as of January 1, 2015 $ (342 ) $ (1,706 ) $ (2,048 ) Other comprehensive loss before reclassifications, net of tax (111 ) (1,625 ) (1,736 ) Amounts reclassified from accumulated OCI, net of tax 59 — 59 Net decrease in other comprehensive income (loss), net of tax (52 ) (1,625 ) (1,677 ) Accumulated OCI, net of tax, as of March 31, 2015 $ (394 ) $ (3,331 ) $ (3,725 ) The following table provides details about reclassifications out of accumulated OCI for the three months ended March 31, 2016 and 2015: Three Months Ended March 31, Statement of Comprehensive (In $000s) 2016 2015 Loss Classification Interest rate swaps $ 133 $ 98 Interest expense (53 ) (39 ) Income tax benefit $ 80 $ 59 Net of tax See Note 8 for further discussion of our interest rate swaps. |
Restructuring and Related Charg
Restructuring and Related Charges and Impairment Loss | 3 Months Ended |
Mar. 31, 2016 | |
Restructuring and Related Charges and Impairment Loss [Abstract] | |
Restructuring and Related Charges and Impairment Loss | (11) Restructuring and Related Charges In the third quarter of 2015, we began developing our reorganization and cost rationalization plan (the "2015 Restructuring Plan") that the Company committed to in October 2015, which is intended to improve efficiency and deliver greater value to our customers and stakeholders. The 2015 Restructuring Plan is expected to be complete by the end of the third quarter of 2016. We expect to incur a total of approximately $25 million in restructuring charges related to the 2015 Restructuring Plan, substantially all of which are expected to result in cash expenditures. We expect that the total charges will consist of approximately $10.5 million to $11.5 million of severance and other employee-related costs; approximately $8 million to $9 million of lease termination costs; and approximately $5.5 million to $6 million in consulting and other costs. The following table shows the costs incurred for the three months ended March 31, 2016 directly related to our 2015 Restructuring Plan and other restructuring costs: (In $000s) Severance and Other Employee-Related Costs Consulting and Other Costs (1) Total Accrued restructuring and related charges liability as of January 1, 2016 $ 7,093 $ 2,900 $ 9,993 2015 Restructuring Plan charges 3,073 2,668 5,741 Cash payments (2,541 ) (2,428 ) (4,969 ) Non-cash charges (2) (127 ) — (127 ) Accrued restructuring and related charges liability as of March 31, 2016 $ 7,498 $ 3,140 $ 10,638 (1) (2) |
Share-Based Compensation (Table
Share-Based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Share-Based Compensation [Abstract] | |
Summary of option activity | A summary of our stock options as of March 31, 2016 and changes during the three months then ended is presented below: Shares (000s) Weighted-Average Exercise Price Weighted-Average Remaining Contractual Term (years) Aggregate Intrinsic Value ($000s) Options Outstanding at January 1, 2016 2,122 $ 13.34 Granted — — Exercised — — Forfeited (2 ) 17.12 Expired (96 ) 21.63 Outstanding at March 31, 2016 2,024 12.95 5.38 $ 985 Exercisable at March 31, 2016 1,629 $ 13.02 5.09 $ 869 |
Summary of nonvested shares | The following table shows a summary of our restricted stock and restricted stock units as of March 31, 2016, as well as activity during the three months then ended: Restricted Stock and Restricted Stock Units Shares (000s) Weighted- Average Grant Date Fair Value Nonvested at January 1, 2016 1,618 $ 12.35 Granted 727 10.24 Vested (81 ) 10.24 Forfeited (41 ) 13.16 Nonvested at March 31, 2016 2,223 $ 11.72 |
Schedule of Market Stock Units [Table Text Block] | The following table shows a summary of our market stock units as of March 31, 2016, as well as activity during the three months then ended: Market Stock Units Shares (000s) Weighted- Average Grant Date Fair Value Nonvested at January 1, 2016 474 $ 6.53 Granted 204 7.15 Vested — — Forfeited — — Nonvested at March 31, 2016 678 $ 6.72 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Long-Term Debt [Abstract] | |
Schedule of Debt [Table Text Block] | The Company's long-term debt, net of unamortized deferred loan costs, consists of the following at March 31, 2016 and December 31, 2015: (In thousands) March 31, 2016 December 31, 2015 Cash Convertible Notes, net of unamortized discount $ 132,121 $ 130,296 CareFirst Convertible Note 20,000 20,000 Fifth Amended Credit Agreement: Term Loan 75,000 80,000 Revolver 1,100 — Capital lease obligations and other 4,691 5,374 232,912 235,670 Less: deferred loan costs (3,519 ) (4,073 ) 229,393 231,597 Less: current portion (23,007 ) (23,308 ) $ 206,386 $ 208,289 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Fair Value Measurements [Abstract] | |
Assets and liabilities measured at fair value on a recurring basis | The following tables present our assets and liabilities measured at fair value on a recurring basis at March 31, 2016 and December 31, 2015: (In $000s) March 31, 2016 Level 2 Level 3 Gross Fair Value Netting (1) Net Fair Value Assets: Foreign currency exchange contracts $ 375 $ — $ 375 $ (213 ) $ 162 Cash Convertible Notes Hedges — 5,029 5,029 — 5,029 Liabilities: Foreign currency exchange contracts $ 246 $ — $ 246 $ (213 ) $ 33 Interest rate swap agreements 357 — 357 — 357 Cash Conversion Derivative — 5,029 5,029 — 5,029 Gallup Derivative — 5,589 5,589 — 5,589 (In $000s) December 31, 2015 Level 2 Level 3 Gross Fair Value Netting (1) Net Fair Value Assets: Foreign currency exchange contracts $ 284 $ — $ 284 $ (26 ) $ 258 Cash Convertible Notes Hedges — 12,632 12,632 — 12,632 Liabilities: Foreign currency exchange contracts $ 48 $ — $ 48 $ (26 ) $ 22 Interest rate swap agreements 397 — 397 — 397 Cash Conversion Derivative — 12,632 12,632 — 12,632 Gallup Derivative — 6,339 6,339 — 6,339 (1) |
Level 3 Financial Instruments | The following table presents our financial instruments measured at fair value on a recurring basis using unobservable inputs (Level 3): (In $000s) Balance at December 31, 2015 Purchases of Level 3 Instruments Settlements of Level 3 Instruments Gains/(Losses) Included in Earnings Balance at March 31, 2016 Cash Convertible Notes Hedges $ 12,632 $ — $ — $ (7,603 ) $ 5,029 Cash Conversion Derivative (12,632 ) — — 7,603 (5,029 ) Gallup Derivative (6,339 ) — 750 — (5,589 ) |
Derivative Instruments and He23
Derivative Instruments and Hedging Activities (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Derivative Instruments and Hedging Activities [Abstract] | |
Effect of cash flow hedges on the consolidated balance sheets | The following table shows the effect of our cash flow hedges on the consolidated balance sheets during the three months ended March 31, 2016 and 2015: (In $000s) For the Three Months Ended Derivatives in Cash Flow Hedging Relationships March 31, 2016 March 31, 2015 Loss related to effective portion of derivatives recognized in accumulated OCI, gross of tax effect $ 92 $ 201 Loss related to effective portion of derivatives reclassified from accumulated OCI to interest expense, gross of tax effect $ (133 ) $ (98 ) |
Schedule of Other Derivatives Not Designated as Hedging Instruments, Statements of Financial Performance and Financial Position, Location [Table Text Block] | The gains and losses resulting from a change in fair values of the Cash Conversion Derivative, the Cash Convertible Notes Hedges and the Gallup Derivative are reported in the consolidated statements of comprehensive income (loss) as follows: (In $000s) Three Months Ended March 31, 2016 Statements of Comprehensive Income (Loss) Classification Cash Convertible Notes Hedges: Net unrealized loss $ (7,603 ) Selling, general and administrative expenses Cash Conversion Derivative: Net unrealized gain $ 7,603 Selling, general and administrative expenses Gallup Derivative: Net loss $ — Equity in income from joint ventures |
Fair values of derivative instruments | The estimated gross fair values of derivative instruments at March 31, 2016 and December 31, 2015, excluding the impact of netting derivative assets and liabilities when a legally enforceable master netting agreement exists, were as follows: March 31, 2016 December 31, 2015 (In $000s) Foreign currency exchange contracts Interest rate swap agreements Cash Convertible Notes Hedges and Cash Conversion Derivative Gallup Derivative Foreign currency exchange contracts Interest rate swap agreements Cash Convertible Notes Hedges and Cash Conversion Derivative Gallup Derivative Assets: Derivatives not designated as hedging instruments: Other current assets $ 375 $ — $ — $ — $ 284 $ — $ — $ — Other assets — — 5,029 — — — 12,632 — Total assets $ 375 $ — $ 5,029 $ — $ 284 $ — $ 12,632 $ — Liabilities: Derivatives not designated as hedging instruments: Accrued liabilities $ 246 $ — $ — $ 3,366 $ 48 $ — $ — $ 3,323 Other long-term liabilities — — 5,029 2,223 — — 12,632 3,016 Derivatives designated as hedging instruments: Accrued liabilities — 357 — — — 397 — — Other long-term liabilities — — — — — — — — Total liabilities $ 246 $ 357 $ 5,029 $ 5,589 $ 48 $ 397 $ 12,632 $ 6,339 See also Note 7 for more information on fair value measurements. |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted [Table Text Block] | The following is a reconciliation of the numerator and denominator of basic and diluted earnings per share for the three months ended March 31, 2016 and 2015: (In 000s, except per share data) Three Months Ended March 31, March 31, 2016 2015 Numerator: Net loss attributable to Healthways, Inc. - numerator for basic loss per share $ (14,209 ) $ (2,913 ) Denominator: Shares used for basic loss per share 36,109 35,595 Effect of dilutive securities outstanding: Non-qualified stock options (1) — — Restricted stock units (1) — — Market stock units (1) — — Performance-based stock units (1) — — CareFirst Warrants (1) — — Shares used for diluted income per share (1) $ 36,109 $ 35,595 Loss per share: Basic $ (0.39 ) $ (0.08 ) Diluted (1) $ (0.39 ) $ (0.08 ) Dilutive securities outstanding not included in the computation of loss per share because their effect is antidilutive: Non-qualified stock options 1,651 1,243 Restricted stock units 1,105 404 Market stock units 161 — Performance-based stock units — 98 Warrants related to Cash Convertible Notes 7,707 7,707 CareFirst Convertible Note 892 892 CareFirst Warrants 591 36 (1) |
Accumulated OCI (Tables)
Accumulated OCI (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Accumulated OCI [Abstract] | |
Schedule of changes in accumulated other comprehensive income (AOCI) | The following tables summarize the changes in accumulated OCI, net of tax, for the three months ended March 31, 2016 and 2015: (In $000s) Net Change in Fair Value of Interest Rate Swaps Foreign Currency Translation Adjustments Total Accumulated OCI, net of tax, as of January 1, 2016 $ (239 ) $ (3,848 ) $ (4,087 ) Other comprehensive income (loss) before reclassifications, net of tax (56 ) 924 868 Amounts reclassified from accumulated OCI, net of tax 80 — 80 Net increase in other comprehensive income (loss), net of tax 24 924 948 Accumulated OCI, net of tax, as of March 31, 2016 $ (215 ) $ (2,924 ) $ (3,139 ) (In $000s) Net Change in Fair Value of Interest Rate Swaps Foreign Currency Translation Adjustments Total Accumulated OCI, net of tax, as of January 1, 2015 $ (342 ) $ (1,706 ) $ (2,048 ) Other comprehensive loss before reclassifications, net of tax (111 ) (1,625 ) (1,736 ) Amounts reclassified from accumulated OCI, net of tax 59 — 59 Net decrease in other comprehensive income (loss), net of tax (52 ) (1,625 ) (1,677 ) Accumulated OCI, net of tax, as of March 31, 2015 $ (394 ) $ (3,331 ) $ (3,725 ) |
Reclassification out of Accumulated Other Comprehensive Income | The following table provides details about reclassifications out of accumulated OCI for the three months ended March 31, 2016 and 2015: Three Months Ended March 31, Statement of Comprehensive (In $000s) 2016 2015 Loss Classification Interest rate swaps $ 133 $ 98 Interest expense (53 ) (39 ) Income tax benefit $ 80 $ 59 Net of tax |
Restructuring and Related Cha26
Restructuring and Related Charges and Impairment Loss (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Restructuring and Related Charges and Impairment Loss [Abstract] | |
Change in accrued restructuring and related charges | The following table shows the costs incurred for the three months ended March 31, 2016 directly related to our 2015 Restructuring Plan and other restructuring costs: (In $000s) Severance and Other Employee-Related Costs Consulting and Other Costs (1) Total Accrued restructuring and related charges liability as of January 1, 2016 $ 7,093 $ 2,900 $ 9,993 2015 Restructuring Plan charges 3,073 2,668 5,741 Cash payments (2,541 ) (2,428 ) (4,969 ) Non-cash charges (2) (127 ) — (127 ) Accrued restructuring and related charges liability as of March 31, 2016 $ 7,498 $ 3,140 $ 10,638 (1) (2) |
Recent Accounting Standards (De
Recent Accounting Standards (Details) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Recent Accounting Standards | ||
Unamortized Debt Issuance Costs | $ 3,519 | $ 4,073 |
Share-Based Compensation (Detai
Share-Based Compensation (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Aggregate Intrinsic Value [Abstract] | ||
Cash received from option exercises | $ 0 | $ 1,138 |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Allocated share-based compensation | $ 2,427 | $ 2,380 |
Stock Options [Member] | ||
Shares [Roll Forward] | ||
Outstanding, beginning of period (in shares) | 2,122 | |
Granted (in shares) | 0 | |
Exercised (in shares) | 0 | |
Forfeited (in shares) | (2) | |
Expired (in shares) | (96) | |
Outstanding, end of period (in shares) | 2,024 | |
Exercisable, end of period (in shares) | 1,629 | |
Weighted-Average Exercise Price [Roll Forward] | ||
Outstanding, beginning of period (in dollars per share) | $ 13.34 | |
Granted (in dollars per share) | 0 | |
Exercised (in dollars per share) | 0 | |
Forfeited (in dollars per share) | 17.12 | |
Expired (in dollars per share) | 21.63 | |
Outstanding, end of period (in dollars per share) | 12.95 | |
Exercisable, end of period (in dollars per share) | $ 13.02 | |
Weighted-Average Remaining Contractual Term [Abstract] | ||
Outstanding | 5 years 4 months 17 days | |
Exercisable | 5 years 1 month 2 days | |
Aggregate Intrinsic Value [Abstract] | ||
Outstanding | $ 985 | |
Exercisable | $ 869 | |
Market Stock Units [Member] | ||
Shares [Roll Forward] | ||
Nonvested, beginning of period (in shares) | 474 | |
Granted (in shares) | 204 | |
Vested (in shares) | 0 | |
Forfeited (in shares) | 0 | |
Nonvested, end of period (in shares) | 678 | |
Weighted-Average Grant Date Fair Value [Roll Forward] | ||
Nonvested, beginning of period (in dollars per share) | $ 6.53 | |
Granted (in dollars per share) | 7.15 | |
Vested (in dollars per share) | 0 | |
Forfeited (in dollars per share) | 0 | |
Nonvested, end of period (in dollars per share) | $ 6.72 | |
Restricted Stock and Restricted Stock Units (RSUs) [Member] | ||
Shares [Roll Forward] | ||
Nonvested, beginning of period (in shares) | 1,618 | |
Granted (in shares) | 727 | |
Vested (in shares) | (81) | |
Forfeited (in shares) | (41) | |
Nonvested, end of period (in shares) | 2,223 | |
Weighted-Average Grant Date Fair Value [Roll Forward] | ||
Nonvested, beginning of period (in dollars per share) | $ 12.35 | |
Granted (in dollars per share) | 10.24 | |
Vested (in dollars per share) | 10.24 | |
Forfeited (in dollars per share) | 13.16 | |
Nonvested, end of period (in dollars per share) | $ 11.72 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Income Taxes [Abstract] | ||
Effective tax rate | 1.30% | (38.10%) |
Open Tax Year | 2,012 | |
Valuation Allowance increase on certain deferred tax assets | $ 5.1 |
Long-Term Debt, Table (Details)
Long-Term Debt, Table (Details) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Debt, Long-term and Short-term, Combined Amount [Abstract] | ||
Debt, Long-term and Short-term, Combined Amount | $ 232,912 | $ 235,670 |
Unamortized Deferred Loan Costs | (3,519) | (4,073) |
Total Debt, excluding Deferred Loan Costs | 229,393 | 231,597 |
Short-term Debt | (23,007) | (23,308) |
Long-term Debt, excluding current portion | 206,386 | 208,289 |
Cash Convertible Notes, net of unamortized discount | ||
Debt, Long-term and Short-term, Combined Amount [Abstract] | ||
Debt, Long-term and Short-term, Combined Amount | 132,121 | 130,296 |
CareFirst Convertible Note [Member] | ||
Debt, Long-term and Short-term, Combined Amount [Abstract] | ||
Debt, Long-term and Short-term, Combined Amount | 20,000 | 20,000 |
Term Loan Facility [Member] | ||
Debt, Long-term and Short-term, Combined Amount [Abstract] | ||
Debt, Long-term and Short-term, Combined Amount | 75,000 | 80,000 |
Revolver | ||
Debt, Long-term and Short-term, Combined Amount [Abstract] | ||
Debt, Long-term and Short-term, Combined Amount | 1,100 | 0 |
Capital lease obligations and other | ||
Debt, Long-term and Short-term, Combined Amount [Abstract] | ||
Debt, Long-term and Short-term, Combined Amount | $ 4,691 | $ 5,374 |
Long-Term Debt (Details)
Long-Term Debt (Details) | Oct. 01, 2019 | Oct. 01, 2013 | Mar. 31, 2016USD ($)$ / sharesshares | Mar. 31, 2015USD ($) |
Debt Instrument [Line Items] | ||||
Date of Registration Rights Agreement | Oct. 1, 2013 | |||
Debt Instrument, Interest Rate, Effective Percentage | 5.70% | |||
Amortization of debt discount | $ 1,826,000 | $ 1,726,000 | ||
Debt Instrument, Unamortized Discount | 17,879,000 | |||
Deferred Finance Costs, Gross | $ 3,939,543 | |||
Interest Rate for Notes | 1.50% | |||
Aggregate Principal of convertible notes | $ 150,000,000 | |||
Debt Instrument, Convertible, Conversion Price | $ / shares | $ 19.46 | |||
Notional amount of foreign currency exchange contracts | $ 33,400,000 | |||
Payments for Hedge, Financing Activities | $ 36,750,000 | |||
Initial Conversion rate | $ / shares | $ 19.46 | |||
Warrants Strike Price | $ / shares | $ 25.95 | |||
Conversion price premium percentage | 60.00% | |||
CareFirst Warrant Shares Maximum | shares | 1,600,000 | |||
CareFirst Warrant Shares for one year period | shares | 400,000 | |||
CareFirst Warrants Outstanding | shares | 590,683 | |||
Warrants Weighted Average Exercise Price | $ / shares | $ 15.83 | |||
Debt Discount at time of issuance | $ 36,750,000 | |||
Cash Convertible Notes [Member] | ||||
Debt Instrument [Line Items] | ||||
Debt Instrument, Convertible, Conversion Ratio | 51.38 | |||
CareFirst Convertible Note [Member] | ||||
Debt Instrument [Line Items] | ||||
Notes, Issuance Date | Oct. 1, 2013 | |||
Debt Instrument, Maturity Date | Oct. 1, 2019 | |||
Interest Rate for Notes | 4.75% | |||
Aggregate Principal of convertible notes | $ 20,000,000 | |||
Debt Instrument, Convertible, Conversion Price | $ / shares | $ 22.41 | |||
Initial Conversion rate | $ / shares | $ 22.41 |
Long-Term Debt, Line of Credit
Long-Term Debt, Line of Credit and Term Loan (Details) - USD ($) $ in Millions | Jun. 08, 2017 | Jun. 08, 2012 | Mar. 31, 2016 |
Line of Credit Facility [Line Items] | |||
Initiation date | Jun. 8, 2012 | ||
Expiration date | Jun. 8, 2017 | ||
Amount outstanding | $ 75 | ||
Availability under the revolving credit facility under most restrictive covenant | $ 61.7 | ||
Interest rate description | Borrowings under the Fifth Amended Credit Agreement generally bear interest at variable rates based on a margin or spread in excess of either (1) the one-month, two-month, three-month or six-month rate (or with the approval of affected lenders, nine-month or twelve-month rate) for Eurodollar deposits ("LIBOR") or (2) the greatest of (a) the SunTrust Bank prime lending rate, (b) the federal funds rate plus 0.50%, and (c) one-month LIBOR plus 1.00% (the "Base Rate"), as selected by the Company. The LIBOR margin varies between 1.75% and 3.00%, and the Base Rate margin varies between 0.75% and 2.00%, depending on our leverage ratio. | ||
Commitment fee description | The Fifth Amended Credit Agreement also provides for an annual fee ranging between 0.30% and 0.50% of the unused commitments under the revolving credit facility. | ||
Terms of periodic payments | We are required to repay term loans in quarterly principal installments aggregating (1) 1.875% of the original aggregate principal amount of the term loans during each of the four quarters beginning with the quarter ending September 30, 2014, and (2) 2.500% of the original aggregate principal amount of the term loans during each of the remaining quarters prior to maturity on June 8, 2017, at which time the entire unpaid principal balance of the term loans is due and payable. | ||
Fifth Amended Credit Agreement [Member] | |||
Line of Credit Facility [Line Items] | |||
Maximum borrowing capacity | $ 125 | ||
Letters of Credit Sub Facility [Member] | |||
Line of Credit Facility [Line Items] | |||
Maximum borrowing capacity | 75 | ||
Swingline Sub Facility [Member] | |||
Line of Credit Facility [Line Items] | |||
Maximum borrowing capacity | 20 | ||
Term Loan Facility [Member] | |||
Line of Credit Facility [Line Items] | |||
Maturity date | Jun. 8, 2017 | ||
Uncommitted Incremental Accordion Facility [Member] | |||
Line of Credit Facility [Line Items] | |||
Maximum borrowing capacity | $ 100 |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ in Millions | Mar. 31, 2016USD ($) |
Contractual Commitment [Abstract] | |
Minimum remaining contractual cash obligations | $ 25.5 |
Total minimum payments required under outsourcing agreement over remaining term | 84.7 |
Estimate of remaining payments pursuant to outsourcing agreement | $ 176.7 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) | 3 Months Ended | |||
Mar. 31, 2016 | Dec. 31, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | |
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Purchases, (Sales), Issuances, (Settlements) [Abstract] | ||||
Cash and cash equivalents | $ 3,094,000 | $ 1,870,000 | $ 3,752,000 | $ 1,765,000 |
Aggregate Principal of convertible notes | 150,000,000 | |||
Gallup Derivative [Member] | ||||
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Purchases, (Sales), Issuances, (Settlements) [Abstract] | ||||
Balance at beginning of period | (6,339,000) | |||
Purchases of Level 3 instruments | 0 | |||
Settlements of Level 3 instruments | 750,000 | |||
Gains/(Losses) included in Earnings | 0 | |||
Balance at end of period | (5,589,000) | |||
Cash Convertible Notes Hedge [Member] | ||||
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Purchases, (Sales), Issuances, (Settlements) [Abstract] | ||||
Balance at beginning of period | 12,632,000 | |||
Purchases of Level 3 instruments | 0 | |||
Settlements of Level 3 instruments | 0 | |||
Gains/(Losses) included in Earnings | (7,603,000) | |||
Balance at end of period | 5,029,000 | |||
Fifth Amended Credit Facility [Member] | ||||
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Purchases, (Sales), Issuances, (Settlements) [Abstract] | ||||
Carrying Amount of Outstanding borrowings under the Fifth Amended Credit Agreement | 76,100,000 | |||
Fair Value of Outstanding borrowings under the Fifth Amended Credit Agreement | 75,500,000 | |||
Cash Convertible Notes [Member] | ||||
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Purchases, (Sales), Issuances, (Settlements) [Abstract] | ||||
Aggregate Principal of convertible notes | 150,000,000 | |||
Debt Instrument, Carrying Amount | 132,100,000 | |||
Debt Instrument, Fair Value | 137,100,000 | |||
Cash Conversion Derivative [Member] | ||||
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Purchases, (Sales), Issuances, (Settlements) [Abstract] | ||||
Balance at beginning of period | (12,632,000) | |||
Purchases of Level 3 instruments | 0 | |||
Settlements of Level 3 instruments | 0 | |||
Gains/(Losses) included in Earnings | 7,603,000 | |||
Balance at end of period | (5,029,000) | |||
CareFirst Convertible Note [Member] | ||||
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Purchases, (Sales), Issuances, (Settlements) [Abstract] | ||||
Debt Instrument, Carrying Amount | 20,000,000 | |||
Debt Instrument, Fair Value | 20,000,000 | |||
Recurring [Member] | Gallup Derivative [Member] | ||||
Liabilities measured at fair value on a recurring basis | ||||
Gross Fair Value | 5,589,000 | 6,339,000 | ||
Netting | 0 | 0 | ||
Net Fair Value | 5,589,000 | 6,339,000 | ||
Recurring [Member] | Gallup Derivative [Member] | Level 2 [Member] | ||||
Liabilities measured at fair value on a recurring basis | ||||
Gross Fair Value | 0 | 0 | ||
Recurring [Member] | Gallup Derivative [Member] | Level 3 [Member] | ||||
Liabilities measured at fair value on a recurring basis | ||||
Gross Fair Value | 5,589,000 | 6,339,000 | ||
Recurring [Member] | Foreign Exchange Contract [Member] | ||||
Assets measured at fair value on a recurring basis | ||||
Gross Fair Value | 375,000 | 284,000 | ||
Netting | (213,000) | (26,000) | ||
Net Fair Value | 162,000 | 258,000 | ||
Liabilities measured at fair value on a recurring basis | ||||
Gross Fair Value | 246,000 | 48,000 | ||
Netting | (213,000) | (26,000) | ||
Net Fair Value | 33,000 | 22,000 | ||
Recurring [Member] | Foreign Exchange Contract [Member] | Level 2 [Member] | ||||
Assets measured at fair value on a recurring basis | ||||
Gross Fair Value | 375,000 | 284,000 | ||
Liabilities measured at fair value on a recurring basis | ||||
Gross Fair Value | 246,000 | 48,000 | ||
Recurring [Member] | Foreign Exchange Contract [Member] | Level 3 [Member] | ||||
Assets measured at fair value on a recurring basis | ||||
Gross Fair Value | 0 | 0 | ||
Liabilities measured at fair value on a recurring basis | ||||
Gross Fair Value | 0 | 0 | ||
Recurring [Member] | Interest Rate Swap [Member] | ||||
Liabilities measured at fair value on a recurring basis | ||||
Gross Fair Value | 357,000 | 397,000 | ||
Netting | 0 | 0 | ||
Net Fair Value | 357,000 | 397,000 | ||
Recurring [Member] | Interest Rate Swap [Member] | Level 2 [Member] | ||||
Liabilities measured at fair value on a recurring basis | ||||
Gross Fair Value | 357,000 | 397,000 | ||
Recurring [Member] | Interest Rate Swap [Member] | Level 3 [Member] | ||||
Liabilities measured at fair value on a recurring basis | ||||
Gross Fair Value | 0 | 0 | ||
Recurring [Member] | Cash Convertible Notes Hedge [Member] | ||||
Assets measured at fair value on a recurring basis | ||||
Gross Fair Value | 5,029,000 | 12,632,000 | ||
Netting | 0 | 0 | ||
Net Fair Value | 5,029,000 | 12,632,000 | ||
Recurring [Member] | Cash Convertible Notes Hedge [Member] | Level 2 [Member] | ||||
Assets measured at fair value on a recurring basis | ||||
Gross Fair Value | 0 | 0 | ||
Recurring [Member] | Cash Convertible Notes Hedge [Member] | Level 3 [Member] | ||||
Assets measured at fair value on a recurring basis | ||||
Gross Fair Value | 5,029,000 | 12,632,000 | ||
Recurring [Member] | Cash Conversion Derivative [Member] | ||||
Liabilities measured at fair value on a recurring basis | ||||
Gross Fair Value | 5,029,000 | 12,632,000 | ||
Netting | 0 | 0 | ||
Net Fair Value | 5,029,000 | 12,632,000 | ||
Recurring [Member] | Cash Conversion Derivative [Member] | Level 2 [Member] | ||||
Liabilities measured at fair value on a recurring basis | ||||
Gross Fair Value | 0 | 0 | ||
Recurring [Member] | Cash Conversion Derivative [Member] | Level 3 [Member] | ||||
Liabilities measured at fair value on a recurring basis | ||||
Gross Fair Value | $ 5,029,000 | $ 12,632,000 |
Derivative Instruments and He35
Derivative Instruments and Hedging Activities (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 | |
Derivatives, Fair Value [Line Items] | |||
Current notional amount at March 31, 2016 | $ 50,000 | ||
Variable interest rate (in hundredths) | 1.48% | ||
Fair Values of Derivative Instruments [Abstract] | |||
Reclassification of net losses on interest rate swap agreements from accumulated OCI to interest expense within the next 12 months | $ 100 | ||
Derivatives in Cash Flow Hedging Relationships [Abstract] | |||
Loss related to effective portion of derivatives recognized in accumulated OCI, gross of tax effect | 92 | $ 201 | |
Loss related to effective portion of derivatives reclassified from accumulated OCI to interest expense, gross of tax effect | (133) | (98) | |
Gains or losses on cash flow hedges recognized in our consolidated statements of comprehensive income (loss) resulting from hedge ineffectiveness | 0 | $ 0 | |
Notional amount of foreign currency exchange contracts | 33,400 | ||
Forward Contracts [Member] | |||
Fair Values of Derivative Instruments [Abstract] | |||
Liabilities | 246 | ||
Forward Contracts [Member] | Derivatives Not Designated as Hedging Instruments [Member] | |||
Fair Values of Derivative Instruments [Abstract] | |||
Assets | 375 | $ 284 | |
Forward Contracts [Member] | Derivatives Not Designated as Hedging Instruments [Member] | Other Current Assets [Member] | |||
Fair Values of Derivative Instruments [Abstract] | |||
Assets | 375 | 284 | |
Forward Contracts [Member] | Derivatives Not Designated as Hedging Instruments [Member] | Other Long-Term Liabilities [Member] | |||
Fair Values of Derivative Instruments [Abstract] | |||
Liabilities | 0 | ||
Forward Contracts [Member] | Derivatives Not Designated as Hedging Instruments [Member] | Other Noncurrent Assets [Member] | |||
Fair Values of Derivative Instruments [Abstract] | |||
Assets | 0 | 0 | |
Forward Contracts [Member] | Derivatives Designated as Hedging Instruments [Member] | Accrued Liabilities [Member] | |||
Fair Values of Derivative Instruments [Abstract] | |||
Liabilities | 0 | ||
Swap [Member] | |||
Fair Values of Derivative Instruments [Abstract] | |||
Liabilities | 357 | 397 | |
Swap [Member] | Derivatives Not Designated as Hedging Instruments [Member] | |||
Fair Values of Derivative Instruments [Abstract] | |||
Assets | 0 | 0 | |
Swap [Member] | Derivatives Not Designated as Hedging Instruments [Member] | Other Current Assets [Member] | |||
Fair Values of Derivative Instruments [Abstract] | |||
Assets | 0 | 0 | |
Swap [Member] | Derivatives Not Designated as Hedging Instruments [Member] | Accrued Liabilities [Member] | |||
Fair Values of Derivative Instruments [Abstract] | |||
Liabilities | 0 | ||
Swap [Member] | Derivatives Not Designated as Hedging Instruments [Member] | Other Long-Term Liabilities [Member] | |||
Fair Values of Derivative Instruments [Abstract] | |||
Liabilities | 0 | 0 | |
Swap [Member] | Derivatives Not Designated as Hedging Instruments [Member] | Other Noncurrent Assets [Member] | |||
Fair Values of Derivative Instruments [Abstract] | |||
Assets | 0 | 0 | |
Swap [Member] | Derivatives Designated as Hedging Instruments [Member] | Accrued Liabilities [Member] | |||
Fair Values of Derivative Instruments [Abstract] | |||
Liabilities | 357 | 0 | |
Swap [Member] | Derivatives Designated as Hedging Instruments [Member] | Other Long-Term Liabilities [Member] | |||
Fair Values of Derivative Instruments [Abstract] | |||
Liabilities | 397 | ||
Interest Rate Swap Agreements [Member] | Swap [Member] | Derivatives Not Designated as Hedging Instruments [Member] | Accrued Liabilities [Member] | |||
Fair Values of Derivative Instruments [Abstract] | |||
Liabilities | 0 | ||
Interest Rate Swap Agreements [Member] | Swap [Member] | Derivatives Designated as Hedging Instruments [Member] | Other Long-Term Liabilities [Member] | |||
Fair Values of Derivative Instruments [Abstract] | |||
Liabilities | 0 | ||
Foreign Currency Exchange Contracts [Member] | Forward Contracts [Member] | |||
Fair Values of Derivative Instruments [Abstract] | |||
Liabilities | 48 | ||
Foreign Currency Exchange Contracts [Member] | Forward Contracts [Member] | Derivatives Not Designated as Hedging Instruments [Member] | Accrued Liabilities [Member] | |||
Fair Values of Derivative Instruments [Abstract] | |||
Liabilities | 246 | 48 | |
Foreign Currency Exchange Contracts [Member] | Forward Contracts [Member] | Derivatives Not Designated as Hedging Instruments [Member] | Other Long-Term Liabilities [Member] | |||
Fair Values of Derivative Instruments [Abstract] | |||
Liabilities | 0 | ||
Foreign Currency Exchange Contracts [Member] | Forward Contracts [Member] | Derivatives Designated as Hedging Instruments [Member] | Accrued Liabilities [Member] | |||
Fair Values of Derivative Instruments [Abstract] | |||
Liabilities | 0 | ||
Foreign Currency Exchange Contracts [Member] | Forward Contracts [Member] | Derivatives Designated as Hedging Instruments [Member] | Other Long-Term Liabilities [Member] | |||
Fair Values of Derivative Instruments [Abstract] | |||
Liabilities | 0 | 0 | |
Embedded Derivative Financial Instruments [Member] | |||
Fair Values of Derivative Instruments [Abstract] | |||
Liabilities | 5,029 | 12,632 | |
Embedded Derivative Financial Instruments [Member] | Derivatives Not Designated as Hedging Instruments [Member] | Accrued Liabilities [Member] | |||
Fair Values of Derivative Instruments [Abstract] | |||
Liabilities | 0 | 0 | |
Embedded Derivative Financial Instruments [Member] | Derivatives Not Designated as Hedging Instruments [Member] | Other Long-Term Liabilities [Member] | |||
Fair Values of Derivative Instruments [Abstract] | |||
Liabilities | 5,029 | 12,632 | |
Embedded Derivative Financial Instruments [Member] | Derivatives Designated as Hedging Instruments [Member] | Accrued Liabilities [Member] | |||
Fair Values of Derivative Instruments [Abstract] | |||
Liabilities | 0 | 0 | |
Embedded Derivative Financial Instruments [Member] | Derivatives Designated as Hedging Instruments [Member] | Other Long-Term Liabilities [Member] | |||
Fair Values of Derivative Instruments [Abstract] | |||
Liabilities | 0 | 0 | |
Cash Convertible Notes Hedge [Member] | Selling, General and Administrative Expenses [Member] | |||
Derivatives in Cash Flow Hedging Relationships [Abstract] | |||
Gains or losses on cash flow hedges recognized in our consolidated statements of comprehensive income (loss) resulting from hedge ineffectiveness | (7,603) | ||
Cash Convertible Notes Hedge [Member] | Derivatives Not Designated as Hedging Instruments [Member] | |||
Fair Values of Derivative Instruments [Abstract] | |||
Assets | 5,029 | 12,632 | |
Cash Convertible Notes Hedge [Member] | Derivatives Not Designated as Hedging Instruments [Member] | Other Current Assets [Member] | |||
Fair Values of Derivative Instruments [Abstract] | |||
Assets | 0 | 0 | |
Cash Convertible Notes Hedge [Member] | Derivatives Not Designated as Hedging Instruments [Member] | Other Noncurrent Assets [Member] | |||
Fair Values of Derivative Instruments [Abstract] | |||
Assets | 5,029 | 12,632 | |
Cash Conversion Derivative [Member] | Selling, General and Administrative Expenses [Member] | |||
Derivatives in Cash Flow Hedging Relationships [Abstract] | |||
Gains or losses on cash flow hedges recognized in our consolidated statements of comprehensive income (loss) resulting from hedge ineffectiveness | 7,603 | ||
Gallup Derivative [Member] | |||
Derivatives in Cash Flow Hedging Relationships [Abstract] | |||
Gains or losses on cash flow hedges recognized in our consolidated statements of comprehensive income (loss) resulting from hedge ineffectiveness | 0 | ||
Gallup Derivative [Member] | Derivatives Not Designated as Hedging Instruments [Member] | |||
Fair Values of Derivative Instruments [Abstract] | |||
Assets | 0 | 0 | |
Gallup Derivative [Member] | Derivatives Not Designated as Hedging Instruments [Member] | Other Current Assets [Member] | |||
Fair Values of Derivative Instruments [Abstract] | |||
Assets | 0 | 0 | |
Gallup Derivative [Member] | Derivatives Not Designated as Hedging Instruments [Member] | Accrued Liabilities [Member] | |||
Fair Values of Derivative Instruments [Abstract] | |||
Liabilities | 3,366 | 3,323 | |
Gallup Derivative [Member] | Derivatives Not Designated as Hedging Instruments [Member] | Other Long-Term Liabilities [Member] | |||
Fair Values of Derivative Instruments [Abstract] | |||
Liabilities | 2,223 | 3,016 | |
Gallup Derivative [Member] | Derivatives Not Designated as Hedging Instruments [Member] | Other Noncurrent Assets [Member] | |||
Fair Values of Derivative Instruments [Abstract] | |||
Assets | 0 | 0 | |
Gallup Derivative [Member] | Derivatives Designated as Hedging Instruments [Member] | |||
Fair Values of Derivative Instruments [Abstract] | |||
Liabilities | 5,589 | 6,339 | |
Gallup Derivative [Member] | Derivatives Designated as Hedging Instruments [Member] | Accrued Liabilities [Member] | |||
Fair Values of Derivative Instruments [Abstract] | |||
Liabilities | 0 | 0 | |
Gallup Derivative [Member] | Derivatives Designated as Hedging Instruments [Member] | Other Long-Term Liabilities [Member] | |||
Fair Values of Derivative Instruments [Abstract] | |||
Liabilities | $ 0 | $ 0 |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |||
Mar. 31, 2016 | Mar. 31, 2015 | |||
Numerator [Abstract] | ||||
Net loss attributable to Healthways, Inc. | $ (14,209) | $ (2,913) | ||
Denominator [Abstract] | ||||
Shares used for basic income (loss) per share (in shares) | 36,109 | 35,595 | ||
Shares used for diluted loss per share (in shares) | [1] | 36,109 | 35,595 | |
Earnings (loss) per share [Abstract] | ||||
Basic (in dollars per share) | $ (0.39) | $ (0.08) | ||
Diluted (in dollars per share) | [1] | $ (0.39) | $ (0.08) | |
Non-Qualified Stock Options [Member] | ||||
Denominator [Abstract] | ||||
Effect of dilutive stock options and restricted stock units outstanding (in shares) | 0 | [1] | 0 | |
Restricted Stock Units [Member] | ||||
Denominator [Abstract] | ||||
Effect of dilutive stock options and restricted stock units outstanding (in shares) | 0 | [1] | 0 | |
Market Stock Units [Member] | ||||
Denominator [Abstract] | ||||
Effect of dilutive stock options and restricted stock units outstanding (in shares) | 0 | [1] | 0 | |
Performance-based Stock Units | ||||
Denominator [Abstract] | ||||
Effect of dilutive stock options and restricted stock units outstanding (in shares) | 0 | [1] | 0 | |
CareFirst Warrants | ||||
Denominator [Abstract] | ||||
Effect of dilutive stock options and restricted stock units outstanding (in shares) | 0 | [1] | 0 | |
Non-Qualified Stock Options [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Dilutive securities outstanding not included in the computation of loss per share because their effect is antidilutive (in shares) | 1,651 | 1,243 | ||
Restricted Stock Units [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Dilutive securities outstanding not included in the computation of loss per share because their effect is antidilutive (in shares) | 1,105 | 404 | ||
Market Stock Units [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Dilutive securities outstanding not included in the computation of loss per share because their effect is antidilutive (in shares) | 161 | 0 | ||
Performance-based Stock Units | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Dilutive securities outstanding not included in the computation of loss per share because their effect is antidilutive (in shares) | 0 | 98 | ||
Warrants Related to Cash Convertible Notes [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Dilutive securities outstanding not included in the computation of loss per share because their effect is antidilutive (in shares) | 7,707 | 7,707 | ||
CareFirst Convertible Note [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Dilutive securities outstanding not included in the computation of loss per share because their effect is antidilutive (in shares) | 892 | 892 | ||
CareFirst Warrants | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Dilutive securities outstanding not included in the computation of loss per share because their effect is antidilutive (in shares) | 591 | 36 | ||
[1] | The impact of potentially dilutive securities for the three months ended March 31, 2016 and 2015 was not considered because the effect would be anti-dilutive in each of those periods. |
Accumulated OCI (Details)
Accumulated OCI (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Accumulated Other Comprehensive Income Loss [Line Items] | ||
Accumulated OCI, net of tax Beginning Balance | $ (4,087) | $ (2,048) |
Other comprehensive loss before reclassifications, net of tax | 868 | (1,736) |
Amounts reclassified from accumulated OCI, net of tax | 80 | 59 |
Net increase (decrease) in other comprehensive income (loss), net of tax | 948 | (1,677) |
Accumulated OCI, net of tax Ending Balance | (3,139) | (3,725) |
Reclassification adjustments out of AOCI [Abstract] | ||
Reclassification to interest expense | (4,382) | (4,490) |
Amounts reclassified from accumulated other comprehensive income to: [Member] | ||
Reclassification adjustments out of AOCI [Abstract] | ||
Reclassification to interest expense | 133 | 98 |
Tax effect of reclassification | (53) | (39) |
Reclassification Adjustment on Derivatives Included in Net Income | 80 | 59 |
Net Change in Fair Value of Interest Rate Swaps [Member] | ||
Accumulated Other Comprehensive Income Loss [Line Items] | ||
Accumulated OCI, net of tax Beginning Balance | (239) | (342) |
Other comprehensive loss before reclassifications, net of tax | (56) | (111) |
Amounts reclassified from accumulated OCI, net of tax | 80 | 59 |
Net increase (decrease) in other comprehensive income (loss), net of tax | 24 | (52) |
Accumulated OCI, net of tax Ending Balance | (215) | (394) |
Foreign Currency Translation Adjustments [Member] | ||
Accumulated Other Comprehensive Income Loss [Line Items] | ||
Accumulated OCI, net of tax Beginning Balance | (3,848) | (1,706) |
Other comprehensive loss before reclassifications, net of tax | 924 | (1,625) |
Amounts reclassified from accumulated OCI, net of tax | 0 | 0 |
Net increase (decrease) in other comprehensive income (loss), net of tax | 924 | (1,625) |
Accumulated OCI, net of tax Ending Balance | $ (2,924) | $ (3,331) |
Restructuring and Related Cha38
Restructuring and Related Charges and Impairment Loss (Details) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016USD ($) | ||
Restructuring Reserve [Roll Forward] | ||
Accrued restructuring and related charges liability as of period start | $ 9,993 | |
2015 Restructuring Plan charges | 5,741 | |
Cash payments | (4,969) | |
Non-cash charges | (127) | [1] |
Accrued restructuring and related charges liability as of period end | 10,638 | |
Restructuring and Related Cost, Expected Cost [Abstract] | ||
Restructuring and Related Cost, Expected Cost | 25,000 | |
Severance and other employee-related costs [Member] | ||
Restructuring Reserve [Roll Forward] | ||
Accrued restructuring and related charges liability as of period start | 7,093 | |
2015 Restructuring Plan charges | 3,073 | |
Cash payments | (2,541) | |
Non-cash charges | (127) | [1] |
Accrued restructuring and related charges liability as of period end | 7,498 | |
Severance and other employee-related costs [Member] | Minimum [Member] | ||
Restructuring and Related Cost, Expected Cost [Abstract] | ||
Restructuring and Related Cost, Expected Cost | 10,500 | |
Severance and other employee-related costs [Member] | Maximum [Member] | ||
Restructuring and Related Cost, Expected Cost [Abstract] | ||
Restructuring and Related Cost, Expected Cost | 11,500 | |
Lease termination costs [Member] | Minimum [Member] | ||
Restructuring and Related Cost, Expected Cost [Abstract] | ||
Restructuring and Related Cost, Expected Cost | 8,000 | |
Lease termination costs [Member] | Maximum [Member] | ||
Restructuring and Related Cost, Expected Cost [Abstract] | ||
Restructuring and Related Cost, Expected Cost | 9,000 | |
Consulting and other costs [Member] | ||
Restructuring Reserve [Roll Forward] | ||
Accrued restructuring and related charges liability as of period start | 2,900 | [2] |
2015 Restructuring Plan charges | 2,668 | [2] |
Cash payments | (2,428) | [2] |
Non-cash charges | 0 | [1],[2] |
Accrued restructuring and related charges liability as of period end | 3,140 | [2] |
Consulting and other costs [Member] | Minimum [Member] | ||
Restructuring and Related Cost, Expected Cost [Abstract] | ||
Restructuring and Related Cost, Expected Cost | 5,500 | |
Consulting and other costs [Member] | Maximum [Member] | ||
Restructuring and Related Cost, Expected Cost [Abstract] | ||
Restructuring and Related Cost, Expected Cost | $ 6,000 | |
[1] | Non-cash charges consist of share-based compensation costs. | |
[2] | Consulting and other costs primarily consist of third-party consulting charges incurred in connection with the 2015 Restructuring Plan. Consulting and other costs also include approximately $0.1 million of lease termination payments. |