Healthways Signs Medicare Health Support Budget Neutrality Amendment

Healthways (NASDAQ: HWAY) president and CEO, Ben R. Leedle, Jr., announced today that the Company has signed an Amendment to its Medicare Health Support Protocol with the Centers for Medicare and Medicaid Services (CMS), which changes the financial performance target for both its Initial Cohort and Refresh Cohort to budget neutrality from 5.0% net savings and 2.5% net savings, respectively. Based on performance data provided to the Company by CMS’s third-party actuarial firm, and the application of agreed-to baseline adjustment factors and standard completion factors, the amendment resulted in current-quarter revenue recognition of $5.2 million. These revenues represent approximately 93% of accrued fees through January 31st for the Refresh Cohort. "Our performance through the first 18 months of the Refresh Cohort’s two-year pilot indicates that we are very close to achieving budget neutrality for this population,” Mr. Leedle remarked. "Achieving budget neutrality would enable us to recognize as revenue all fees for the Refresh Cohort. Based on the cumulative performance reflected in the third-party actuarial results, we believe that our cumulative savings for the Refresh Cohort will meet or exceed budget neutrality by the time the pilot ends this July 31.” Mr. Leedle concluded, "Our Cooperative Agreement with CMS indicates the Refresh Cohort will be treated separately from the Initial Cohort for purposes of both financial performance guarantees and evaluation. We continue to believe that the Refresh Cohort constitutes a component of our Pilot program and that, for this cohort, we will meet or exceed the statutory and current Cooperative Agreement targets by which Medicare Health Support performance is to be evaluated. We also expect that those who look to Medicare Health Support to provide proof of the efficacy of our programs will soon have it. We continue to be confident that this country has a significant opportunity to design and implement a national program for all traditional Medicare Beneficiaries that will meet or surpass the final results we expect to achieve with the Refresh Cohort.” The Company does not intend to revise its established financial guidance based on revenue recognition from the Refresh Cohort. CONFERENCE CALL Healthways will hold a conference call to discuss this release today at 4:00 p.m. Eastern time. Investors will have the opportunity to listen to the conference call live over the Internet by going to www.healthways.com and clicking Investor Relations, or by going to www.earnings.com, at least 15 minutes early to register, download and install any necessary audio software. For those who cannot listen to the live broadcast, a telephonic replay will be available for one week at 800-642-1687 or 706-645-9291, Conference ID 46817546, and the replay will also be available on the Company’s Web site for the next 12 months. SAFE HARBOR This press release contains forward-looking statements that are based upon current expectations and involve a number of risks and uncertainties. Those forward-looking statements include all statements that are not historical statements of fact and those regarding the intent, belief or expectations of the Company. In order for the Company to utilize the "safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, investors are hereby cautioned that the following important factors, among others, may affect these forward-looking statements. Consequently, actual operations and results may differ materially from those expressed in these forward-looking statements. The important factors include but are not limited to: the effect of any new or proposed legislation, regulations and interpretations relating to the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, including the potential expansion to Phase II for Medicare Health Support Programs; the Company’s ability to effect the financial, clinical and satisfaction outcomes under its Cooperative Agreement with CMS and reach mutual agreement with CMS with respect to results necessary to achieve success under Phase I of Medicare Health Support; and other risks detailed in the Company’s Annual Report on Form 10-K for the fiscal year ended August 31, 2007, and other filings with the Securities and Exchange Commission. The Company undertakes no obligation to update or revise any such forward-looking statements. ABOUT HEALTHWAYS Healthways is the leading provider of specialized, comprehensive Health and Care SupportSM solutions to help millions of people maintain or improve their health and, as a result, reduce overall healthcare costs. Healthways' solutions are designed to help healthy individuals stay healthy, mitigate and slow the progression of disease associated with family or lifestyle risk factors and promote the best possible health for those already affected by disease. Our proven, evidence-based programs provide highly specific and personalized interventions for each individual in a population, irrespective of age or health status, and are delivered to consumers by phone, mail, internet and face-to-face interactions, both domestically and internationally. Healthways also provides a national, fully accredited complementary and alternative Health Provider Network, offering convenient access to individuals who seek health services outside of, and in conjunction with, the traditional healthcare system. For more information, please visit www.healthways.com.