Sep 10, 2010 8:47 AM PDT
It looks like the whispers we heard on Wall Street about Hythiam, Inc. (OTCBB:HYTM) turned out to be true and they could have a significant impact on the company going forward.
This morning, Hythiam is announcing that the Company has officially entered into a multi-year agreement with Health Plan of Nevada, Inc., a UnitedHealthcare® company and a leading health insurer in Nevada, to provide their Catasys® integrated substance dependence solution to its enrolled members.
As we reported about the company last week, landing this type of contract in the past has proven to be much more difficult than anyone imagined and many investors had given up on the company- whose stock is coming off all time lows.
The news is significant because UnitedHealthcare is one of the largest health benefit plan providers in the United States and as we pointed out, a deal of this magnitude would not only support, but also validate HYTM's innovative (some say controversial), proprietary and integrated substance dependence treatment programs that combines medical interventions, psychosocial therapy and care coaching.
According to this morning's news, eligible Health Plan of Nevada members affected by substance dependence will be covered under HYTM's Catasys program, which includes both medical and psychosocial interventions, as well as with care coaching components over a 52 week period.
Health Plan of Nevada will pay Hythiam monthly fees for members enrolled into the Catasys program. In cooperation with Health Plan of Nevada, the Company will enroll qualified members through outreach efforts and working with key health plan staff to identify those members eligible for enrollment. Operational implementation has begun, and the program is expected to launch in the third quarter of 2010 with cash flow anticipated to commence shortly thereafter.
Analysts who know the sector think the ultimate value of this morning's announced deal is $10 million because the State of Nevada has the highest substance dependence rate in the country. There are already projections that this initial customer group should provide significan revenue (seven figures) to HYTM in 2011 and the company will use this opportunity to solidify more business from UnitedHealthcare.
In an interview with BioMedReports, Terren S. Peizer, CEO of Hythiam said: "All these health plans, if you just told them we could switch your residential stays to outpatient, it would be a huge win for them. We are seeing very much increased traction. So despite where our stock is right now, we are not running out of business, we will sign health plans and we will see hockey stick growth."
In other words, we can probably expect more deals like this to follow during the second half of this year.
Disclosure: No Positions
