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In this article, I will feature one healthcare company that has seen intensive insider buying during the last 30 days. Intensive insider buying can be defined by the following three criteria:

  1. The stock is purchased by three or more insiders within one month.
  2. The stock is sold by no insiders in the month of intensive purchasing.
  3. At least two purchasers increase their holdings by more than 10%.

Healthways (NASDAQ:HWAY) provides specialized solutions to assist people to maintain and enhance their physical, emotional, and social well-being.

(click to enlarge)

Insider buying during the last 30 days

Here is a table of Healthways' insider-trading activity during the last 30 days by insider.

NameTitleTrade DateShares PurchasedCurrent OwnershipIncrease In Shares
Alison Taunton-RigbyDirectorNov 74,10022,155 shares+22.7%
Donato TramutoDirectorNov 74,2004,200 sharesfrom 0 to 4,200
Alfred LumsdaineCFOOct 295,00022,821 shares+28.1%

There have been 13,300 shares purchased by insiders during the last 30 days.

Insider buying by calendar month

Here is a table of Healthways' insider-trading activity by calendar month.

MonthInsider buying / sharesInsider selling / shares
November 20138,3000
October 20135,0000
September 201300

There have been 13,300 shares purchased and there have been zero shares sold by insiders since September 2013. The month of November has seen the most insider buying.

Financials

Healthways reported the third-quarter financial results on October 24 with the following highlights:

Revenue$166.6 million
Net income$1.8 million
Cash$2.8 million
Debt$260.7 million

Outlook

Healthways' guidance is as follows:

Q4/2013FY/2013FY/2014
Revenue$171-$181 million$665-$675 million$725-$760 million
EPS$0.00-$0.06-$0.10 to -$0.04N/A

Competition

Healthways' competitors include Cigna (NYSE:CI), Cardinal Health (NYSE:CAH), and McKesson (NYSE:MCK). Here is a table comparing these companies.

CompanyHWAYCICAHMCKIndustry Average (Specialized Health Services)
Market Cap:437.10M22.42B21.42B36.27B621.58M
Employees:2,40035,80033,60043,5001.70K
Qtrly Rev Growth (yoy):0.000.10-0.050.110.08
Revenue:669.23M31.85B99.73B127.16B1.01B
Gross Margin:0.190.350.050.050.29
EBITDA:39.69M3.73B2.51B3.22B73.90M
Operating Margin:0.020.110.020.020.07
Net Income:-2.65M1.52B403.00M1.40BN/A
EPS:-0.085.301.175.880.66
P/E:N/A15.3053.9826.8420.50
PEG (5 yr expected):-5.991.081.711.411.54
P/S:0.640.700.210.290.62

Healthways is trading above the industry-average P/S ratio.

Here is a table of these competitors' insider-trading activities this year.

CompanyInsider buying / sharesInsider selling / shares
CI4,200403,966
CAH4351,271,828
MCK01,758,848

Only Healthways has seen intensive insider buying during the last 30 days.

Conclusion

There have been three different insiders buying Healthways and there have not been any insiders selling Healthways during the last 30 days. All three of these insiders increased their holdings by more than 10%. Healthways has an insider ownership of 1.70%.

There are four analyst buy ratings, three neutral ratings, and three sell ratings with an average price target of $13.86. Healthways is trading at a forward P/E ratio of 38.64 and the company has a book value of $8.86 per share.

Healthways reported the third-quarter financial results on October 24, and the stock plunged after the report. The insiders started buying shares after the plunge. I believe the stock could be a good pick around $10 based on the intensive insider buying.

Source: Insiders Are Buying Healthways