EXHIBIT 99.1
(HEALTHWAYS LOGO)
FOR IMMEDIATE RELEASE
Contacts:
Mary A Chaput (investors)
615.665.7674
Kriste Goad (media) Jonathan Burns (media)
615.263.7524 (o), 615.294.4771 (cell) 615.263.3571 (o), 615.627.7755 (cell)
kriste.goad@healthways.com jonathan.burns@healthways.com
HEALTHWAYS ANNOUNCES MERGER AGREEMENT WITH LIFEMASTERS
MEDICAID MARKET ENTRY TO SIGNIFICANTLY EXPAND
HEALTHWAYS' GOVERNMENT BUSINESS OPPORTUNITY
NASHVILLE, TENN. -- MAY 30, 2006 -- Healthways, Inc. (NASDAQ: HWAY), the
nation's leading provider of Health and Care Support(SM) services, today
announced the signing of a definitive merger agreement with LifeMasters
Supported SelfCare, a leading disease management company based in California.
The $307.5 million cash merger is expected to close in early fiscal 2007,
subject to satisfaction of customary closing conditions, including obtaining
Hart-Scott-Rodino (HSR) clearance. As of today, LifeMasters' business would add
nearly 600,000 lives under management to Healthways' base.
STRATEGIC FIT
LifeMasters provides disease management programs and services to governmental
organizations and some of the nation's leading health plans, employers and
retirement systems and has significant experience in the large, emerging
Medicaid market. Their government business includes both an ongoing Centers for
Medicare and Medicaid Services (CMS) demonstration project -- the first and
largest of its kind -- for 30,000 dual-eligible Medicare-Medicaid beneficiaries
in Florida and contracts for services to portions of the Medicaid populations in
Florida, Georgia and Texas. Additional Medicaid programs are provided through a
number of contracts with Medicaid risk health plans. LifeMasters is also
participating in two CMS Medicare Health Support (MHS) pilots, providing
services directly to Medicare beneficiaries in Oklahoma and as a subcontractor
for Aetna's MHS pilot in Chicago.
"We are pleased to announce this merger agreement with LifeMasters which will
further enhance our position as the Health and Care Support leader for the
commercial, Medicare and Medicaid markets," said Healthways President and CEO
Ben R. Leedle, Jr. "Through this merger, we will enter the Medicaid market -- an
addressable market of more than 20 million Medicaid participants -- strengthen
our program and management capabilities to provide services to the elderly and
disabled populations, and add significantly to our customer base of leading
health plans in the commercial health insurance market.
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May 30, 2006
"LifeMasters' highly skilled and deeply experienced colleagues have created a
strong, long-term reputation for serving their customers with credibility and
success. In this industry, with the growth dynamics that we each have
experienced, the merging of our human talent achieves a key strategic objective
and supports our ability to capitalize on the opportunities before us. Further,
we expect our merger with LifeMasters to enable us to bring Healthways'
capabilities, products and services to LifeMasters' customers, providing
substantial future cross-selling opportunities. The addition of their existing
base of business will also further diversify our revenue sources.
"Equally as important," Leedle continued, "our two companies are highly
compatible from an operations, business philosophy and cultural perspective.
LifeMasters' operations have produced top-line growth and profit margins similar
to ours. Like us, LifeMasters has grown its business over the years by focusing
on programs, interventions and solutions that create validated outcomes and real
value for their customers and program participants. Our philosophical and
cultural alignment should facilitate a smooth and effective integration of the
two organizations and assure the development of new, scalable value-added
solutions for the market."
David Strand, president and CEO of LifeMasters, added, "Our capabilities,
programs and markets are a natural complement to those of Healthways. We share a
common commitment to improve the health of people with chronic conditions. The
combination of our companies will strengthen our ability to succeed in the
future by continuing to meet the emerging needs of our existing customers while
providing solutions in new markets, in further support of our mission. Joining
Healthways will ensure that our employees can continue to pursue their passion
for helping individuals improve their health. Combining with Healthways, was, in
the opinion of our Board and senior management team, the fastest and best way
for us to secure LifeMasters' mission and our commitment to excellence for the
long term."
COMBINED ORGANIZATION
Together, Healthways and LifeMasters will have nearly 75 unique customers
including health plans, employers and government Medicare and Medicaid programs.
Both directly and through health plan ASO relationships, the combined
organization will provide services to over 500 employers. The combined
organization will employ more than 3,500 people, the majority of whom are nurses
and other clinicians delivering services from 14 call centers across the
country.
"Effective integration of our two organizations will require dedicated executive
talent," Leedle added. "I am delighted, therefore, to announce that David Strand
and other key members of LifeMasters' senior management team will continue with
Healthways. David's role will be to assure oversight and support in the melding
of our two businesses while continuing to provide leadership and executive
management of LifeMasters' customer relationships.
"Christobel Selecky, LifeMasters' Executive Chairman is a highly knowledgeable
and well-regarded industry leader," Leedle added. "She was instrumental in
guiding the inclusion of Chronic Care Improvement Programs in the Medicare
Modernization Act of 2003, and in working with CMS to develop the MHS pilot
process. We look forward to her providing her insight and perspective to
Healthways as a member of our Strategic Advisory Board."
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May 30, 2006
FINANCIAL CONSIDERATIONS
"Because this merger is scheduled to close early in our 2007 fiscal year, we are
not making any change to our previously issued fiscal 2006 revenue or EPS
guidance," Leedle said. "We project this merger to be accretive in fiscal 2007.
The merger will be financed through a combination of cash on hand and committed
bank debt. Details of the merger will be provided after it is completed."
CONCLUSION
"Our agreement to merge with LifeMasters represents a major step in our
continuing strategy to address the full spectrum of this country's population
with programs and services that drive better health outcomes and reduce
healthcare costs," Leedle continued. "In addition to the value represented by
LifeMasters' existing customers, they have a strong pipeline of prospects in all
market segments.
"We believe, as a result of our combined strengths, that Healthways will be the
best positioned organization in the industry to leverage opportunities into
further and sustained growth. In addition, combining the human capital of the
industry's two leading innovators will reinforce our capabilities in support of
our ongoing initiatives to provide health and care support programs that go
beyond disease management to address whole populations with collaborative,
integrated solutions that are sensitive and specific to each individual's health
risks and needs and that improve health, motivate behavior change and lead to
measurable cost savings."
CONFERENCE CALL
Healthways will hold a conference call to discuss this announcement tomorrow at
8:45 a.m. Eastern time. Investors will have the opportunity to listen to the
conference call live over the Internet by going to www.healthways.com and
clicking Investor Relations or by going to www.earnings.com at least 15 minutes
early to register, download and install any necessary audio software. For those
who cannot listen to the live broadcast, a replay will be available on the
Company's Web site for the next 12 months. Any material information disclosed on
the conference call that has not been previously disclosed publicly will be
available on the Company's website at www.healthways.com.
SAFE HARBOR PROVISIONS
This press release contains forward-looking statements that are based upon
current expectations and involve a number of risks and uncertainties. These
forward-looking statements include, but are not limited to, those statements
regarding our beliefs and expectations with respect to the integration of
LifeMasters into the Company's business and the effect of the transaction on the
Company's future results of operations. In order for Healthways to utilize the
"safe harbor" provisions of the Private Securities Litigation Reform Act of
1995, investors are hereby cautioned that these statements may be affected by
the important factors, among others, set forth below, and consequently, actual
operations and results may differ materially from those expressed in these
forward-looking statements. These factors include but are not limited to: the
Company's ability to successfully integrate the operations of LifeMasters
Supported SelfCare into the Company's business; the Company's ability to retain
existing customers of LifeMasters Supported SelfCare and to achieve the
performance targets specified in their customer contracts; the Company's ability
to satisfy the closing conditions in the merger agreement, including receipt of
required regulatory approvals; the Company's
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May 30, 2006
ability to satisfy the conditions of its financing commitment and other risk
factors detailed in the Company's filings with the SEC. The Company undertakes
no obligations to update or revise any such forward-looking statements.
ABOUT LIFEMASTERS SUPPORTED SELFCARE
LifeMasters Supported SelfCare, Inc. is a leading provider of disease management
programs and services that create health partnerships among individuals, their
physicians and payors. Its mission is to empower individuals to achieve and
maintain optimal health. The programs improve quality of care for people with
chronic illnesses, reduce chronic-disease costs for payors and provide
decision-support tools for physicians. LifeMasters offers programs for
individuals with diabetes, congestive heart failure (CHF), coronary artery
disease (CAD), chronic obstructive pulmonary disease (COPD) hypertension and
asthma (all of which are fully accredited by the National Committee for Quality
Assurance (NCQA) and URAC) and musculo-skeletal pain. LifeMasters' programs are
holistically focused, support co-morbidities such as depression and facilitate
lifestyle changes such as smoking cessation and weight loss. LifeMasters
provides services to nearly 600,000 people throughout the nation.
Founded in 1994 by a physician, LifeMasters works with some of the nation's
leading health plans, employers, retirement systems and governmental
organizations, including Aetna, BlueCross BlueShield of Tennessee, State
Teachers Retirement System of Ohio, Florida's Agency for Health Care
Administration (Medicaid) and CMS.
ABOUT HEALTHWAYS
Healthways, Inc. is the leading and largest provider of specialized,
comprehensive Health and Care Support(SM) programs and services, including
disease management, high-risk care management and outcomes-driven wellness to
health plans, employers and government in all 50 states, the District of
Columbia, Puerto Rico and Guam. As of February 28, 2006, the Company provided
Health and Care Support services for more than 2 million people. Healthways
helps people lead healthier lives while reducing overall healthcare costs. As
The Health/Care Trust Channel(SM), Healthways provides people the support they
need when they need it to enable them to make better choices and achieve better
health outcomes. For more information, visit www.healthways.com.
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