Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.
Large accelerated filer x Accelerated filer o Non-accelerated filer o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
Yes o No x
As of February 28, 2007, the last business day of the Registrant’s most recently completed second fiscal quarter, the aggregate market value of the shares held by non-affiliates of the registrant was approximately $1.5 billion based on the closing bid price reported for such date on The NASDAQ Stock Market.
As of October 18, 2007, 35,633,057 shares of Common Stock were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant’s Proxy Statement for the Annual Meeting of Stockholders to be held February 14, 2008 are incorporated by reference into Part III of this Form 10-K.
Healthways, Inc.
Form 10-K
Table of Contents
Page
Part I
Item 1.
Business
Item 1A.
Risk Factors
Item 1B.
Unresolved Staff Comments
Item 2.
Properties
Item 3.
Legal Proceedings
Item 4.
Submission of Matters to a Vote of Security
Holders
Part II
Item 5.
Market for Registrant’s Common Equity, Related
Stockholder
Matters and Issuer Purchases of Equity
Securities
Item 6.
Selected Financial Data
Item 7.
Management’s Discussion and Analysis of Financial
Condition and
Results of Operation
Item 7A.
Quantitative and Qualitative Disclosures About Market
Risk
Item 8.
Financial Statements and Supplementary Data
Item 9.
Changes in and Disagreements with Accountants on
Accounting and
Financial Disclosure
Item 9A.
Controls and Procedures
Item 9B.
Other Information
Part III
Item 10.
Directors, Executive Officers and Corporate
Governance
Item 11.
Executive Compensation
Item 12.
Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters
Item 13.
Certain Relationships and Related Transactions, and
Director Independence
Item 14.
Principal Accounting Fees and Services
Part IV
Item 15.
Exhibits, Financial Statement Schedules
PART I.
Item 1. Business
Founded in 1981, Healthways, Inc. (the “Company”) provides
specialized, comprehensive Health and Care SupportSM solutions to help
people maintain or improve their health and, as a result, reduce overall healthcare
costs.
Designed to provide highly specific and personalized interventions for
each individual in a population, irrespective of health status, age, or payor,
Healthways’ evidence-based services are made available to consumers by phone,
mail, internet, and face-to-face interactions. To expand our Health Support offerings,
on December 1, 2006 we acquired Axia Health Management, Inc. (“Axia”), a
national provider of preventive health and wellness programs, for approximately $467.0
million in cash.
We deliver our programs to customers, which include health plans,
governments, employers, and hospitals, in all 50 states, the District of Columbia,
Puerto Rico, and Guam. These services include:
•
fostering wellness and disease prevention through total
population screening, health risk assessments, and supportive
interventions;
•
providing access to health improvement programs such as
fitness, weight management, complementary and alternative medicine and
smoking cessation;
•
promoting the reduction of lifestyle behaviors that lead
to poor health or chronic conditions;
•
providing educational materials and personal
interactions with highly trained nurses and other healthcare
professionals that are designed to create and sustain healthier
behaviors to members with chronic conditions;
•
incorporating current evidence-based clinical guidelines
into interventions to optimize patient health outcomes;
•
developing Care Support plans and motivating members to
set attainable goals for themselves;
•
providing local market resources to address acute
episodic interventions; and
•
coordinating members’ care with local healthcare
providers.
Our programs focus on prevention, education, physical fitness, health
coaching, behavior change and evidence-based medicine to drive adherence to proven
standards of care, medications and physicians’ plans of care. The programs are
designed to support better health and assist in providing more effective care, which we
believe will optimize the health status of member populations and reduce both the
short-term and long-term healthcare costs for members.
Health and Care Support services enable health plans and employers to
reach and engage everyone in their covered populations through interventions that are
both sensitive to and specific to each individual’s health risks and needs.
Health Support products are designed to motivate people to make positive lifestyle
changes and accomplish individual goals, such as becoming more physically active
through the Healthways SilverSneakers® Fitness Program, staying fit using on-line
tools and a vast network of fitness centers, and quitting smoking through an on-line
smoking cessation community, QuitNet®. The Care Support product line includes
programs for people with chronic diseases or conditions, including diabetes, coronary
artery disease, heart failure, asthma, chronic obstructive pulmonary disease, end-stage
renal disease, cancer, chronic kidney disease, depression, high-risk obesity, metabolic
syndrome, acid-related stomach disorders, atrial fibrillation, decubitus ulcer,
fibromyalgia, hepatitis C, inflammatory bowel disease, irritable bowel syndrome,
low-back pain, osteoarthritis, osteoporosis, and urinary incontinence. We also provide
high-risk care management through our StatusOne® product for members at risk for
hospitalization due to complex conditions. We believe that creating real and
sustainable behavior change generates measurable long-term cost savings.
Predicated on the fundamental belief that healthier people cost less,
Healthways’ programs are designed to help keep healthy individuals healthy,
mitigate and delay the progression to disease associated with family or lifestyle risk
factors, and promote the best possible health for those who are already affected by
disease. At the same time, we recognize that each individual plays a variety of roles
in his or her pursuit of health, often simultaneously. By providing the full spectrum
of Health and Care Support services to meet each individual’s needs, we believe
that our interventions can be delivered both at scale and in a manner that reflects the
unique needs of each consumer over time. Further, Healthways’ extensive and fully
accredited complementary and alternative provider network offers convenient access to
the significant number of individuals who seek health services outside of the
traditional healthcare
system.
Customer Contracts
Contract Terms
We generally determine our contract fees by multiplying a contractually
negotiated rate per member per month (“PMPM”) by the number of members
covered by our services during the month. We typically set the PMPM rates during
contract negotiations with customers based on the value we expect our programs to
create and a sharing of that value between the customer and the Company. In some
contracts, the PMPM rates may differ between a customer’s lines of business [e.g.
Preferred Provider Organizations (“PPO”), Health Maintenance Organizations
(“HMO”), Medicare Advantage]. In addition, some of our services are billed
on a fee for service basis.
Our contracts generally range from three to five years with provisions
for subsequent renewal; contracts with self-insured employers, either direct or through
their health plans, typically have one-year terms. Some contracts allow the customer to
terminate early.
Some of our contracts provide that a portion (up to 100%) of our fees
may be refundable to the customer (“performance-based”) if our programs do
not achieve, when compared to a baseline year, a targeted percentage reduction in the
customer’s healthcare costs and selected clinical and/or other criteria that
focus on improving the health of the members. Approximately 4% of revenues recorded
during fiscal 2007 were performance-based and were subject to final reconciliation as
of August 31, 2007. We anticipate that this percentage will fluctuate due to the level
of performance-based fees in new contracts, revenue recognition associated with
performance-based fees, and the timing of data reconciliation, which varies according
to contract terms. A limited number of contracts also provide opportunities for us to
receive incentive bonuses in excess of the contractual PMPM rate if we exceed
contractual performance targets.
We are participating in two Medicare Health Support (“MHS”)
pilots awarded under the Chronic Care Improvement Program authorized by the Medicare
Modernization Act of 2003. The pilots are scheduled to operate for 36 months but may be
terminated by either party with six months written notice. We began operating one pilot
in August 2005 to serve 20,000 Medicare fee-for-service beneficiaries in Maryland and
the District of Columbia. All fees under this pilot are performance-based. In addition,
in September 2005 we began serving 20,000 beneficiaries in Georgia in collaboration
with CIGNA HealthCare, Inc (“CIGNA”). The majority of our fees under our
contract with CIGNA are performance-based. Both of the pilots are for complex diabetes
and congestive heart failure disease management services and, while operationally
similar to our programs for commercial and Medicare Advantage health plan populations,
have been modified for the special needs and conditions of this population.
In June 2006, we signed an amendment to our cooperative agreement with
the Centers for Medicare & Medicaid Services (“CMS”) for our MHS
stand-alone pilot in Maryland and the District of Columbia, which, among other things,
enabled us to provide congestive heart failure programs to approximately 4,500
additional Medicare fee-for-service beneficiaries for two years beginning on August 1,
2006 (the “refresh population”). All fees for the refresh population are
performance-based.
Technology
Our customer contracts require sophisticated analytical, data
management, Internet and computer-telephony solutions based on state-of-the-art
technology. These solutions help us deliver Health and Care Support services to large
populations within our customer base. Our predictive modeling capabilities allow us to
identify and stratify those participants who are most at risk for an adverse health
event. We incorporate behavior-change science with consumer-friendly interactions such
as face-to-face, telephonic, print materials and web portals to facilitate consumer
preferences for engagement and convenience. Sophisticated data analytical and reporting
solutions are used to validate the impact of our programs on clinical and financial
outcomes. We continue to invest heavily in technology and are continually expanding and
improving our proprietary clinical, data management, and reporting systems to continue
to meet the information management requirements of our Health and Care Support
services.
Billed Lives and Available Lives
Following the acquisition of Axia on December 1, 2006, we introduced new
metrics to replace the “actual lives under management” metric historically
used to measure our Care Support business. The first new metric was “billed
lives”, which is the total number of lives for which we receive fees under our
contracts and equates to our historical metric “actual lives under
management”. The second new metric was “available lives”, which
measures the entire population covered by our domestic customers. The number of
available lives and billed lives as of August 31, 2007 and 2006 were as
follows:
August 31,
August 31,
(In 000s)
Available lives(1)
188,500
76,900
Billed lives
27,446
2,426
(1) Estimated based on the Atlantic Information Services,
Inc. (AIS) Directory of Health Plans and publicly available information.
Backlog
Backlog represents the estimated annualized revenue at target
performance associated with signed contracts at August 31, 2007 for which we have not
yet begun providing services. Annualized revenue in backlog as of August 31, 2007 and
2006 was as follows:
August 31,
August 31,
(In 000s)
Annualized revenue in backlog
$
39,900
$
6,625
We continue to see increasing demand for our Health and Care Support
services from self-insured employer accounts, most of which are contracted through the
Administrative Services Only (ASO) line of business with our health plan customers and
for which our health plan customers do not assume medical cost risk but provide
primarily administrative claim and health network access services. Signed contracts
between these self-insured employers and our health plan customers are incorporated in
our contracts with our health plan customers, and these program-eligible members are
included in the available and billed lives or in the annualized
revenue in backlog reported in the table above, as appropriate.
This increasing demand for our Health and Care Support services from
self-insured employer accounts, which generally begin their benefit year on January 1,
has typically resulted in a disproportionate amount of our growth occurring in our
second fiscal quarter.
Business Strategy
Our primary strategy is to optimize the health of entire populations as
well as the quality and affordability of healthcare through our Health and Care Support
solutions both domestically and internationally, thereby creating value for
individuals, health plans, governments, and employers. We plan to continue using our
scalable state-of-the-art care enhancement centers, medical information content,
behavior change processes and techniques, strategic relationships, health provider
networks and proprietary technologies to gain a competitive advantage in delivering our
Health and Care Support services.
We expect to continue adding and enhancing solutions to extend our reach
and effectiveness for entire populations. The flexibility of our programs allows
customers to enter the Health and Care Support market at the level of services that
they deem appropriate for their organization. Customers may select from a single
prevention program or chronic disease to a total-population approach, in which all
members of the customer’s population receive the benefit of our
programs.
We deliver programs that engage consumers in their health. We believe
that we can achieve health improvements and generate significant cost savings by
addressing consumer and customer needs for effective programs that support the
individual throughout his or her lifetime.
We anticipate that we will incur significant costs during fiscal 2008 to
enhance and expand our Health and Care Support capabilities, pursue opportunities in
domestic government and international markets, enhance our information technology
support, integrate the operations of Axia, and open additional or expand current
capacity as needed. We may add some of these new capabilities and technologies through
internal development, strategic alliances with other entities and/or through selective
acquisitions or investments.
Segment Information
We have one reportable segment, Health and Care Support services. During
fiscal 2007, CIGNA HealthCare, Inc. comprised approximately 22% of our revenues. No
other customer accounted for more than 10% of our revenues in fiscal 2007.
Competition
The health-care industry is highly competitive and subject to continual
change in the manner in which services are provided. Other entities, whose financial,
research, staff, and marketing resources may exceed our resources, are marketing a
variety of care support, health support, and other services to health plans and
self-insured employers, or have announced an intention to offer such services. These
entities include disease management companies, major pharmaceutical companies, health
plans, health care organizations, providers, pharmacy benefit management companies,
health care information technology companies and other entities that provide services
to health plans and self-insured employers.
We believe we have advantages over our competitors because of
our state-of-the-art care enhancement center technology linked to our proprietary
information technology, predictive modeling capabilities, behavior-change techniques,
the comprehensive recruitment, pre-testing and training of our clinical colleagues, the
comprehensive clinical nature of our product offerings, our established reputation for
providing care to members with chronic diseases, and the proven financial and clinical
outcomes of our programs; however, we cannot assure you that we can compete effectively
with these companies.
Consolidation has been, and may continue to be, an important factor in
all aspects of the health care industry, including the Health and Care Support sector.
While we believe the size of our membership base provides us with the economies of scale
to compete even in a consolidating market, we cannot assure you that we can effectively
compete with companies formed as a result of industry consolidation or that we can
retain existing health plan customers if they are acquired by other health plans which
already have or are not interested in Health and Care Support programs.
Governmental Regulation
Governmental regulation impacts us in a number of ways in addition to
those regulatory risks presented under the “Risk Factors” below.
While many of the governmental and regulatory requirements affecting
health-care delivery generally do not directly affect us, our customers must comply
with a variety of regulations including the licensing and reimbursement requirements of
federal, state and local agencies and the requirements of municipal building codes and
health codes. Certain of our services, including health service utilization management
and certain claims payment functions, require licensure by government agencies. We are
subject to a variety of legal requirements in order to obtain and maintain such
licenses.
Certain of our professional health-care employees, such as nurses must
comply with individual licensing requirements. All of our health-care professionals who
are subject to licensing requirements are licensed in the state in which they are
physically present, such as the professionals located at a care enhancement center.
Multiple state licensing requirements for health-care professionals who provide
services telephonically over state lines may require us to license some of
our health-care professionals in more than one state. We continually monitor
legislative, regulatory and judicial developments in telemedicine; however, new agency
interpretations, federal or state legislation or regulations, or judicial decisions
could increase the requirement for multi-state licensing of all care enhancement center
health professionals, which would increase our costs of services.
Changes in laws governing reimbursement to health plans providing
services under governmental programs such as Medicare and Medicaid may affect us.
Legislative and regulatory bodies may continue to reduce the funding of the Medicare
and Medicaid programs in an effort to reduce overall federal health care spending. In
recent years, federal legislation has reduced or significantly altered Medicare and
Medicaid reimbursements to most hospitals. These changes, future legislative
initiatives or government regulation and/or changes in the administration could
adversely affect our operations or reduce the demand for our services.
Federal privacy regulations issued pursuant to the Health Insurance
Portability and Accountability Act of 1996 (“HIPAA”) extensively
restrict the use and disclosure of individually-identifiable health information by
health plans, most health-care providers, and certain other entities (collectively,
“covered entities”). Federal security regulations issued pursuant to HIPAA
require covered entities to implement and maintain administrative, physical and
technical safeguards to protect the confidentiality, integrity and availability of
electronic individually-identifiable health information. We are contractually required
to comply with certain aspects of the HIPAA privacy and security regulations. In
addition, we are contractually obligated to comply with any applicable state laws or
regulations related to privacy that are more restrictive than the federal privacy
regulations. We may also be directly subject to state requirements related to the
confidentiality and security of confidential personal information.
Various federal and state laws regulate the relationships among
providers of health-care services, other health-care businesses and physicians. The
"fraud and abuse" provisions of the Social Security Act provide civil and criminal
penalties and potential exclusion from the Medicare and Medicaid programs for persons
or businesses who offer, pay, solicit or receive remuneration in order to induce
referrals of patients
covered
by federal health-care programs (which include Medicare, Medicaid, TriCare and other
federally funded health programs). While we believe that our business arrangements with
our customers comply with these statutes, these fraud and abuse provisions are broadly
written, and the full extent of their application is not yet known. Therefore, we are
unable to predict the effect, if any, of broad enforcement interpretation of these
fraud and abuse provisions.
Further, the health care industry is highly regulated at the federal and
state levels. For example, federal law contains various prohibitions related to false
statements and false claims, some of which apply to private payors as well as federal
programs. Our participation in the MHS program being administered by CMS may subject us
directly to various laws and regulations applicable to entities contracting to provide
services to federal programs, including but not limited to provisions related to
billing and reimbursement and the False Claims Act. Violations of the False Claims Act
are punishable by treble damages and penalties of up to $11,000 per false claim.
Actions may be brought under the False Claims Act by the government as well as by
private individuals, known as “whistleblowers,” who are permitted to share
in any settlement or judgment.
When a private party brings an action under the whistleblower provisions
of the False Claims Act, the defendant will generally not be aware of the lawsuit until
the government makes a determination whether it will intervene and take a lead in the
litigation. There are many potential bases for liability under the False Claims Act.
Although liability under the False Claims Act arises when an entity knowingly submits a
false claim for reimbursement to the federal government, the False Claims Act defines
the term “knowingly” broadly. Thus, although simple negligence generally
will not give rise to liability under the False Claims Act, submitting a claim with
reckless disregard for its truth or falsity can constitute “knowingly”
submitting a claim. In some cases, whistleblowers, the federal government, and some
courts have taken the position that entities who allegedly have violated other
statutes, such as the “fraud and abuse” provisions of the Social Security
Act, have thereby submitted false claims under the False Claims Act. From time to time,
participants in the health care industry, including our company, may be subject to
actions under the False Claims Act, and it is not possible to predict the impact of
such actions.
Insurance
We maintain the following types of insurance for all of our locations
and operations: professional liability (including errors and omissions), directors and
officers, property, and general liability. While we believe our insurance coverage is
adequate for our current operations, it might not be sufficient to cover all future
claims. Such insurance might not continue to be available in adequate amounts or at a
reasonable cost. These policies contain relatively standard commercial terms and
conditions. We also maintain workers compensation insurance for all of our
employees.
Employees
As of October 19, 2007, we had approximately 3,800 employees. Our
employees are not subject to any collective bargaining agreements. We believe we have a
good relationship with our employees.
Available Information
Our Internet address is
www.healthways.com
. We make available free of charge, on or through
our Internet website, our annual report on Form 10-K, quarterly reports on Form 10-Q,
current reports on Form 8-K, and amendments to those reports filed or furnished
pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended,
as soon as reasonably practicable after we electronically file such material with, or
furnish it to, the SEC.
Item 1A. Risk Factors
In the execution of our business strategy, our operations and financial
condition are subject to certain risks. A summary of certain material risks is provided
below, and you should take such risks into account in evaluating any investment
decision involving our company. This section does not describe all risks applicable to
us and is intended only as a summary of certain material factors that could impact our
operations in the industry in which we operate. Other sections of this Annual Report on
Form 10-K (“Form 10-K”) contain additional information concerning these and
other risks. We
depend on payments from customers, and cost reduction pressure on these entities may
adversely affect our business and results of operations.
The health care industry in which we operate currently faces significant
cost reduction pressures as a result of increased competition, constrained revenues
from governmental and private revenue sources and increasing underlying medical care
costs. We believe that these pressures will continue and possibly intensify.
We believe that our Health and Care Support solutions, which are geared
to foster wellness and disease prevention and deliver interventions for people with
chronic diseases and conditions, specifically assist our customers in controlling the
high costs of healthcare; however, the pressures to reduce costs in the short term may
negatively affect our ability to sign and/or retain contracts. In addition, this focus
on cost reduction may cause our customers to focus on contract restructurings that
reduce the fees we receive for our services. These financial pressures could have a
negative impact on our results of operations. A
significant percentage of our revenues is derived from health plan
customers.
A significant percentage of our revenues is derived from health plan
customers. The health plan industry continues to undergo a period of consolidation, and
we cannot assure you that we will be able to retain health plan customers if they are
acquired by other health plans which already have or are not interested in Health and
Care Support programs. In addition, a reduction in the number of covered lives enrolled
with our health plan customers could adversely affect our results of
operations. We
currently derive a large percentage of our revenues from one customer. The loss of, or
the restructuring of a contract with, this customer could have a material adverse
effect on our business and results of operations.
Because of the size of its membership and the number of programs
purchased from us, CIGNA HealthCare, Inc. comprised approximately 22% of our revenues
in fiscal 2007. No other customer accounted for more than 10% of our revenues in fiscal
2007. Although we believe that the full-year impact of other contracts signed in 2007
and new contracts anticipated to be signed in 2008 will reduce our current revenue
concentration, our results of operations, cash flows, and financial condition could be
negatively and materially impacted by the loss or restructuring of a contract with a
single large customer.
The
Health and Care Support industry is a relatively new segment of the health-care
industry.
The rapidly growing Health and Care Support industry is a relatively new
segment of the overall health-care industry with many entrants marketing various
services and products labeled as Health and Care Support. Companies have used the
generic label of health and/or care support to characterize a wide range of activities,
from the sale of medical supplies and drugs to demand management services. Because the
industry is somewhat new, purchasers of these services have not had significant
experience purchasing, evaluating or monitoring such services, which generally results
in a lengthy sales cycle for new contracts. As the industry matures, the number of
programs that customers have been purchasing has generally expanded from one or two
programs to a more comprehensive suite of programs, while also typically increasing the
terms from
between
three to five years. These changes result in a more sizable contract commitment that
generally requires approval from the customer’s executive management and
frequently the customer’s board of directors. Our
business strategy is dependent in part on developing new and additional products to
complement our existing Health and Care Support services, as well as establishing
additional distribution channels through which we may offer our products and
services.
Our growth strategy focuses on developing new Health and Care Support
programs to address chronic diseases and medical conditions as well as the overall
health of all members. While we have considerable experience in Health and Care Support
solutions with a broad range of medical conditions, any new or modified programs will
involve inherent risks of execution, such as our ability to implement our Health and
Care Support programs within expected cost estimates; our ability to obtain adequate
financing to provide the capital that may be necessary to support the growth of our
operations; and our ability to deliver outcomes on any new products or services. In
addition, as part of our business strategy, we expect to enter into relationships, such
as our strategic relationship with Medco Health Solutions, Inc., to establish
additional distribution channels through which we may offer our products and services.
As we begin to offer new products through new or alternative distribution channels, we
may face difficulties, such as potential customer overlap that may lead to pricing
conflicts, which may adversely affect our business. If
we do not manage our growth successfully, our growth and profitability may slow or
decline.
We have expanded and expect to continue to expand our products and
services as well as our overall operations, both organically and through the
acquisition of businesses and technologies that complement our Health and Care Support
solutions. This expansion has created significant demands on our administrative,
operational and financial personnel and other resources. The inability to obtain and/or
properly allocate sufficient resources or personnel to manage our growth may have an
adverse effect on our growth and profitability. Our
inability to perform well under our Health and Care Support contracts could have a
material adverse effect on our business and results of operations.
Our ability to continue to grow and expand our business is contingent
upon our ability to continue to achieve desired financial savings and clinical
performance targets under our existing contracts and to favorably resolve contract
billing and interpretation issues with our customers. Unusual and unforeseen patterns
of health care utilization by individuals with diabetes, cardiac, respiratory and/or
other diseases or conditions for which we provide services could adversely affect our
ability to achieve desired financial savings and clinical outcomes. We
depend on the timely receipt of accurate data from
ourcustomers and
ouraccurateanalysis of such
data.
Identifying which members are eligible to receive our services and
measuring our performance under our contracts are highly dependent upon the timely
receipt of accurate data from our customers and our accurate analysis of such data. Data
acquisition, data quality control and data analysis are complex processes that carry a
risk of untimely, incomplete or inaccurate data from our customers or flawed analysis
of such data, which could have a material adverse impact on our ability to recognize
revenues. Our
MHS pilots and certain other customer contracts are performance-based and a portion (up
to 100%) of our fees may be refundable if certain performance targets are not
achieved.
Our cooperative agreements with CMS for the MHS pilots and certain other
customer contracts provide that a portion of our fees (up to 100%) may be refundable to
the customer if our programs do not
achieve
targeted savings performance. There is no guarantee that we will effect the necessary
cost savings and clinical outcomes improvements under our contracts within the time
frames contemplated and reach mutual agreement with customers with respect to cost
savings. In addition, our ability to provide financial guidance with respect to
performance-based contracts is contingent upon our ability to accurately forecast
performance and the timing of revenue recognition under the terms of our contracts
ahead of data collection and reconciliation. The
expansion of our Health and Care Support services into international markets may
subject us to additional regulatory and financial risks.
We have recently expanded our Health and Care Support services into
countries other than the United States and intend to continue expanding our
international operations as part of our business strategy. We have incurred and expect
to continue to incur costs in connection with pursuing business opportunities in
international markets. Our success in the international markets will depend in part on
our ability to anticipate the rate of market acceptance of Health and Care Support
solutions and the individual market dynamics and regulatory requirements in potential
international markets. The failure to accurately forecast the costs necessary to
implement our strategy of establishing a presence in these markets could have an
adverse effect on our business.
In addition, as a result of doing business in foreign markets, we are
subject to a variety of risks which are different from or additional to the risks the
Company faces within the United States. Our future operating results in these countries
or in other countries or regions throughout the world could be negatively affected by a
variety of factors, most of which are beyond our control. These factors include
political conditions, economic conditions, legal and regulatory constraints, currency
regulations, and other matters in any of the countries or regions in which we operate,
now or in the future. In addition, foreign currency exchange rates and fluctuations may
have an impact on our future costs or on future cash flows from our international
operations, and could adversely affect our financial performance. Other factors which
may impact our international operations include foreign trade, monetary and fiscal
policies both of the United States and of other countries, laws, regulations and other
activities of foreign governments, agencies and similar organizations. Additional risks
inherent in ou