S&P downgrades Healthways

Standard & Poor's said it lowered the counterparty credit rating on Healthways Inc. to BB- from BB, along with the ratings on its senior secured credit facilities to BB- from BB.

The recovery rating remains 3, which indicates 50% to 70% expected recovery in a default.

The downgrade is based on a view that Healthways' business and financial risk profiles will be weakened as a result of the loss of the Cigna Corp. contract, assuming no substantial revenue and earnings offset from other near-term growth prospects, S&P said.

The impact of the contract loss is significant given that Cigna is by far Healthways' largest contract and one of its most profitable, the agency said.

The stable outlook is based on an expectation that Healthways has sufficient scale and product expertise to continue competing effectively in the specialized disease-management and wellness markets, S&P said.

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