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Healthways Sinks on Lowered Forecast as Profit Misses Estimates

Healthways Inc. (HWAY), a provider of health-care programs for employers, dropped the most in two years after lowering its 2013 forecast on third-quarter profit that missed analysts’ estimates.

Healthways sank 29 percent to $11.72 at 10:42 a.m. New York time, after falling to $11.25 in the biggest intraday decline since Oct. 25, 2011. The shares had gained 55 percent this year through yesterday.

Full-year revenue will be $665 million to $675 million, with a net loss of as much as 10 cents a share, Franklin, Tennessee-based Healthways said yesterday in a statement after the markets closed. That compares with a July forecast of as much as $750 million in revenue and earnings of 18 cents to 28 cents a share.

Third-quarter net income dropped 64 percent to $1.8 million, or 5 cents a share, missing the 12-cent average estimate of eight analysts surveyed by Bloomberg. Fewer people than expected participated in Healthways’ wellness programs, the company said.

“Actual contracts are growing, but the adoption at the health system and Healthways level are growing slower than expected,” Thomas Carroll, an analyst with Stifel Nicolaus (SF), wrote in a research note today. “We are disappointed in the magnitude of the revision but -- gulp -- continue to like Healthways as a small cap health-care idea as new contracts mature.”

To contact the reporter on this story: Meg Tirrell in New York at mtirrell@bloomberg.net

To contact the editor responsible for this story: Reg Gale at rgale5@bloomberg.net

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