Shares of Healthways Inc. (NASDAQ: HWAY), a provider of solutions to help people to maintain or improve their health, are sinking in today’s trading after the company slashed the upper end of 2011 earnings forecast. The company also said that it expects a significant drop in revenue from its contract with Cigna Corp. (NYSE: CI).
At last check, Healthways shares were trading 42.16% lower at $6.46, with volume up from daily average of 206,726 to 2.26 million.
Healthways said that it expects a reduction in revenue from Cigna, its largest customer, in 2012 due to the winding down of the company’s current contract with Cigna in 2012 in advance of the contract’s expiration in February 2013. The company expects a reduction in revenue from Cigna in a range of $60 million-$65 million in 2012 compared with 2011.
Heathways also narrowed its 2011 earnings guidance from a range of $0.90-$1.08 per share to $0.90-$1 per share. The downward revision has been due to an expected delay in the timing for achievement of certain revenue milestones in the CNAMTS contract from the end of 2011 to early 2012. The company expects 2011 revenue to come in between $672 million and $710 million.
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