Odyssey HealthCare (ODSY) is one of the largest providers of hospice care in the United States. Following the company’s March 2008 acquisition of VistaCare, Odyssey leads the nation in both the number of patients being served and in the number of Medicare certified hospice programs. ODSY now serves more than 12,000 patients in 110 Medicare hospice programs in 30 states
ODSY’s fourth-quarter and year-end earnings release reported continued growth in patient numbers, revenues and earnings. Net patient revenues increased by 63.7% over the comparable period in 2007 to $167.3 million.
The growth in revenues was aided by the acquisition of VistaCare, which added 30 locations to the Odyssey hospice group.
Full-year 2008 net income for the company increased from 36 cents per share in 2007 to 48 cents per share. Company earnings beat analysts’ expectations in three of the past four quarters.
The aging United States population is increasing the demand for hospice related services. As the population bubble continues to move through the age brackets, the availability of these services and the ability to pay for them through private resources or Medicare also grows.
Leader in the Hospice Industry
Odyssey is the strongest of the public companies engaged almost exclusively in the development and operation of hospice facilities. The company has a very strong balance sheet. Odyssey’s current ratio at year end stood at 1.75, well above the industry average of 1.3. Long term debt as a percentage of equity was also favorable, ending the year at under 0.60. The long term debt to equity ratio for the industry was 1.20.
While most of the fundamentals affecting the company are positive, the impact of the current economy on the utilization of hospice facilities is an unknown. With the vast majority of Odyssey’s patients covered by Medicare, the impact of delinquent payments is minimal. The length of patient stay, however, could be a matter of concern.
In the fourth quarter of 2008, the company experienced a spike in discharges. The average length of stay during that period dropped from 84.5 days in the fourth quarter of 2007 to 82.5 days for 2008. A continuation of this trend could have an impact on company revenues and earnings.
Robert Lofton, company president and CEO, discussed steps taken by management to consolidate some operations and to close or sell some facilities. He reported that “…we have closed or sold 8 hospice programs and 2 inpatient units in 2008.”
This article was written by Jamie Dlugosch, contributor to InvestorPlace Media. For more actionable insights likes this, visit www.InvestorPlace.com.
