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Tickers in this Article: WLP, HWAY, ESRX
Well-being enhancement company Healthways (HWAY) recently reported that WellPoint (WLP) had lengthened its present contract providing Healthways' SilverSneakers Fitness Program to qualified enrollees of many of its associated health plans. SilverSneakers is available to over 700,000 Medicare Supplement and Medicare Advantage enrollees of WellPoint associated plans.

Exercise plays a pivotal role in the management of different chronic conditions. A study released by the Centers for Disease Control (CDC) and Prevention revealed that persons who enroll in the SilverSneakers regimen report reduced medical costs in the long term while hospitals and health centers report a lower number of inpatient admissions. Another CDC study also found that at-risk participants of the SilverSneakers program enjoyed real health benefits.     

The Healthways model encourages people to make favorable lifestyle changes that lead to enhanced well-being, reduced healthcare costs, improved performance and economic value for customers. The company has invested in technology platforms that provide scalable support with large populations. It has tie-ups with a large proportion of U.S. health plans and counts many millions of lives in its customer base.

Due to its unique scalable business model, Healthways shares may present a long-term investment opportunity, although it faces many challenges in the short term.

Healthways is the leader in a strategically critical and rapidly evolving part of the health care services market. Its fitness program (SilverSneakers Fitness Program) for seniors is available at over 15,000 centers across the U.S. and is available to over nine million eligible enrollees through Medicare Supplement, Medicare Advantage plans and group retiree plans. Healthways competes with Express Scripts Holding Company (ESRX) among others.

We currently have an Outperform recommendation on Healthways. The stock retains a Zacks #2 Rank, which translates into a short-term Buy rating.

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