This is a securities class action lawsuit against Healthways and certain of its officers and directors.
Healthways provides disease management and wellness programs for health plans, hospitals and small businesses, helping members with diabetes, cancer and other diseases to coordinate care, keep up with treatment and maintain healthy behaviors.
The class action complaint alleges that, during the Class Period, Healthways issued a series of materially false and misleading statements concerning Healthways' financial performance and prospects. According to the complaint, starting in 2005, Healthways, along with four other companies, became involved in the Medicare Health Support ("MHS") pilot program launched by the Centers for Medicare & Medicaid Services ("CMS"). The MHS program was designed to improve quality of care and life for people with multiple chronic conditions, and to help the Medicare program and its beneficiaries save money. Under the plan's first three-year phase, patients were tracked to evaluate care, satisfaction and whether the plan achieved savings targets. Based on those results, CMS would decide whether to expand the program to a second phase.
The class action complaint alleges that Healthways failed to disclose that:
(i) Healthways was not meeting the savings targets, among other requirements, set by CMS. As a result of Healthways' failure, CMS would not expand the MHS program to a second phase and Healthways would be required to reimburse CMS for the fees they had already received through the program;
(ii) Healthways was in danger of losing at least two existing contracts and was experiencing slower enrollment in an existing contract due to a decline in the need for Healthways' services; and
(iii) as a result of the foregoing, Healthways had no reasonable basis for its revenues and earnings guidance for fiscal 2008.
Then, on February 26, 2008, Healthways announced that it was lowering its financial guidance for fiscal 2008 "due to slower-than-projected enrollment in a new Health Support program with one large health plan customer and the recent indication that two previously anticipated contracts will not materialize during this fiscal year."
Upon this news, shares of Healthways' stock fell $13.42 per share, or approximately 30%, to close at $31.93 per share, on heavy trading volume.
The information provided on ClassAdvocate.com is general in nature,
does not apply to any particular factual situation, and is not and
should not be taken as legal or other professional advice. We make no
commitment or warranty that the factual, legal or any other information
on ClassAdvocate.com, or on any linked website, is accurate, complete,
error-free, or current. As such, you should not rely on such information,
and should seek professional advice if and as you determine appropriate.
ClassAdvocate.com is not a lawyer referral service, and no attorney-client
or confidential relationship is or should be formed by use of the site.
The investigations listed on ClassAdvocate.com are attorney advertisements
and do not in any way constitute a referral or endorsement by ClassAdvocate.com
or any approved or authorized lawyer referral service.