Healthways Pays $14.7M for HealthHonors

John Commins, for HealthLeaders Media , October 15, 2009

Healthways, Inc., the Nashville-based population health management company, announced Wednesday that it has purchased HealthHonors, a behavioral economic company based in Braintree, MA, for $14.7 million.

"Just as Healthways has led the industry in applying behavior change science, now we will lead the market in offering scientifically based incentive programs," says Ben R. Leedle, Jr., Healthways' CEO. "Integration of HealthHonors' innovative incentive strategy will boost our overall engagement and adherence to clinical and behavioral regimens."

The purchase price includes an upfront cash payment of $14.7 million and a multi-year earn-out arrangement. Although the financial impact of the acquisition is expected to be a net cost of $0.02 per diluted share in Healthways' fourth quarter of 2009, the company's previously provided full-year earnings guidance remains unchanged, according to Healthways.

In a media release, Healthways said the acquisition was spurred by its interest in HealthHonors' so-called Dynamic Intermittent Reinforcement proprietary software that determines the lowest economic reinforcement necessary for an individual, based on behavioral patterns, to maintain healthy behavior. HealthHonors has been able to show, in trial and commercial environments, a range of 33% to 56% increase in sustained adherence to targeted behaviors, while decreasing incentive budgets.

"HealthHonors' technology was developed by physician-scientists to help people achieve their best health," says John Sheehan, president/CEO of HealthHonors. "By integrating our strong science, knowledge, and technology infrastructure with Healthways' solutions, we will be able to scale to millions of people."

Sheehan says HealthHonors will continue to sell, service, and expand its business with drug makers and others to improve medication adherence and compliance.

John Commins is a senior editor with HealthLeaders Media.

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