Odyssey Healthcare, Inc.

Odyssey Healthcare, Inc. (ODSY - Analyst Report) surprised on estimates 3 out of the last 4 quarters by an average of 29.37%. The hospice provider is cheap, trading with a PEG ratio of just 0.91.

Company Description

Odyssey Healthcare provides hospice care in more than 30 states for terminally ill patients and their families. ODSY offers pain management and addresses the psychological and spiritual needs of the patients and their families.

Odyssey uses nurses, doctors, home healthcare aides, social workers, chaplains, bereavement counselors and trained volunteers to provide care in patients' homes, nursing homes or assisted living facilities.

Odyssey Surprised in the Second Quarter by 17.39%

On Aug 4, Odyssey reported second quarter results that beat the Zacks Consensus Estimate by 4 cents. Earnings per share increased 125% to 27 cents from 12 cents in the year ago quarter. The Zacks Consensus Estimate called for 23 cents.

Net patient service revenue continued to increase, rising by 6% to $170.3 million from $160.7 million in the second quarter of last year. Volume improved in May and June after a slow start in April prompting the average daily patient census to rise to 12,268 from 12,186 in the first quarter.

The company has to contend with Medicare Hospice Wage Index among other government set rates.

"I am also very pleased with our Medicare cap contractual during the quarter," said Robert Lefton, CEO.

"Even if you exclude the $534,000 positive adjustment related to the 2007 Medicare cap year, we still had a reduction in our net Medicare cap contractual of an additional $500,000, pre-tax, as we recovered amounts accrued during prior quarters for the current Medicare cap year as a result of changes in patient mix and increased admissions in some of our cap markets," he added.

2009 Zacks Consensus Estimate Rises

Third quarter estimates have been holding over the last 60 days at 25 cents per share. But the 2009 Zacks Consensus Estimate is up 9 cents to $1.03 in the last 90 days. 1 analyst out of 7 covering analysts has raised in the last 30 days.

Analysts expect year over year earnings growth of 73.85%.

Odyssey is scheduled to report third quarter results on Oct 27.

Value Fundamentals

Odyssey Healthcare is a Zacks #1 Rank (strong buy) stock. It is attractively valued with a forward P/E of 12.3. It has a price-to-book ratio of 1.87. The company also has a solid 5-year average return on equity (ROE) of 13.93%.