Dr. Oz' Sharecare To Acquire Healthways - Up 31% Today

Steve Kanaval  |

Sharecare Inc, a U.S. health and wellness online platform co-founded by TV personality Dr. Oz, has agreed to acquire the healthy living business of peer Healthways Inc (HWAY) the companies said on Wednesday.

The sale, first reported by Reuters, offers a way for Healthways to refocus its efforts and investments away from its unprofitable population health division toward its growing targeted health programs business, which includes the Silver Sneakers Fitness brand, one of the country's largest exercise programs for seniors. "We did not have the time or the appetite to undertake the large amount of investment needed to restore competitiveness to the population health space," Healthways Chief Executive Donato Tramuto told Reuters in an interview.

Sharecare, the digital health company helping people manage all their healthcare in one place, today announced it is acquiring the Population Health business of Healthways (HWAY), including: Gallup-Healthways Well-Being Index®; Innergy Healthier Weight, a collaboration with Johns Hopkins Medicine that provides a high-touch, personalized solution proven to sustain weight loss; its two Emerging Solutions businesses, Dan Buettner’s Blue Zones Project® and Dr. Ornish’s Program for Reversing Heart Disease™; and Healthways’ stake in Healthways Brasil Servicos de Consultoria Ltda., its Brazil-based joint venture and innovation lab with SulAmerica Servicos de Saude S.A., a subsidiary of the largest independent insurer in Brazil, Sul America S.A.

For Sharecare, the acquisition represents an opportunity to boost revenue rapidly and gain clients, including national health insurer Anthem Inc. It expects to significantly cut costs by integrating Healthways various offerings onto its digital platform, Sharecare Chief Executive Jeff Arnold told Reuters in an interview.

The population health business uses coaching and clinical protocals to improve the overall health of employees and insurance plan members. As part of the deal, Healthways Chief Financial Officer Alfred Lumsdaine will move to Sharecare. He will be joined by the president of Healthways population health division, Sean Slovenski. Atlanta-based Sharecare agreed to pay $30 million of its shares for the business, which generates about $250 million in revenue. In addition, Nashville, Tennessee-based Healthways is paying ShareCare $25 million upfront to cover expected losses from the population health business. It also agreed, if need be, to forfeit up to $20 million of its ShareCare equity stake to offset negative cash flow not covered in the upfront payment.

After the deal, Healthways expects 2016 sales to exceed $500 million, with margins for earnings before interest, taxes, depreciation and amortization (EBITDA) of around 20 percent. Healthways reported a net loss of $0.39 per share in the first quarter. In 2014, Healthways agreed to a strategic review in response to pressure from activist North Tide Capital. It decided against a sale in 2015.

Healthways hired a new chief executive, Donato Tramuto, in 2015. He announced plans for a corporate restructuring in October focused largely on cutting costs. Sharecare's Arnold previously founded and led consumer health company WebMD Health Corp.

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