Being the premier provider of managed care services, Healthways (NASDAQ:HWAY) has been able to attract, keep, and expand its relationships with insurers and other managed care plan providers like Humana (NYSE:HUM), Wellpoint (NYSE:WLP), and Blue Cross/Blue Shield. Its core commercial business remains strong and the number of self-insured employers contracting with Healthways for managed care coverage grew 62% last quarter.

After third-quarter 2007 earnings are released on Thursday, July 5, we'll be able to wade through the data. Before then, however, let's review what investors think about it as a long-term investment. To get the pulse of the community, I tapped into Motley Fool CAPS, where more than 31,000 raters have weighed in on 4,700 stocks, Healthways among them. Here's what Fools have to say about the company.

Up or down?
More than 230 players have weighed in on Healthways. They find it to be in the pink of health, bestowing the top five-star rating on it.

The near-unanimous opinion of the investment community -- just over 98% believe the company will outperform the market -- is exceeded only by the opinions of our very best investors, the CAPS All-Stars. These are the top participants who consistently outperform their peers over time. There's only one All-Star of the 82 that have rated it that sees Healthways losing to the market.

Among companies that are considered peers of Healthways, the company finds itself at the top of the charts:

Specialized Health Services

CAPS Rating



CVS Caremark (NYSE:CVS)


Express Scripts (NASDAQ:ESRX)


Omnicare (NYSE:OCR)


Healthsouth (NYSE:HLS)


Wall St. vs. Main St.
There are 15 analysts that cover Healthways. Seven of them rate the company a buy, seven say hold, and only one thinks it's a sell. Yet over on CAPS, the feel-good feeling about the company is just as strong. Of the six analysts we track on CAPS, all of them rate the company as outperforming the market.

With sales expected to rise to $169.8 million, a 59% increase over last year on the strength of acquisitions like its most recent one of Axia, and with earnings expected to grow 11% to $0.29 per share, it's easy to see why there's a strong, favorable opinion.

Bull pitch
Healthways bulls see the company "playing to a demographic trend," feel that the "aging population and health care cost control needs will increase demand for health preservation services/training," and that with the number of aging baby boomers, "diabetes number's predictably (sadly) going up" where "(d)isease management is only going to grow."

Bear pitch
Though there are a couple of bears on Healthways, it appears they're hibernating and haven't opined why they think it will underperform.

My pitch
While I find the demographic trends noted by the bulls to be encouraging (if not somewhat disheartening considering my own age), there are a few company-specific issues that I think need monitoring. Those cause me to hesitate recommending a buy, even though Healthway's stock has recovered from its recent lows.

Healthways participation in the Medicare Health Support program could cause a big hit to earnings if the pilot program doesn't realize the cost savings it's supposed to. The company has reported much-worse than average results so far, has recorded nearly $2 million in revenue reversals as a result (a number that could go much, much higher if they don't hit targets), and is virtually negotiating 'round-the-clock to change the agreement with the government to reflect some anomalies in the target market that may not prove successful. With such uncertainty, I think it's too much of a gamble to put money here now.

Your pitch
What do you think? Find out who the wise Fools are who penned the words above, add your own commentary to either the bull or bear side, and explore the multitude of financial data that's been compiled on Healthways, all by just clicking here.

Give Healthways a checkup with these related Foolish articles:

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Omnicare is an Inside Value selection.

Fool contributor Rich Duprey does not have a financial position in any of the stocks mentioned in this article. You can see his holdings here. The Motley Fool's disclosure policy has received a clean bill of health.