Odyssey Healthcare Inc. (ODSY) is growing its hospice-care business through acquisition as revenue jumped 65.5% in the third-quarter. 2008 consensus estimates are 13% higher in the last 2 months. ODSY has a price-to-book of only 1.25.

Company Description

Odyssey Healthcare provides hospice care around the country 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 Beat Wall Street Estimates by 35.17% in the Third Quarter

On Oct 28, Odyssey Healthcare reported third-quarter earnings and saw revenue rise 65.5% to $165.2 million from $99.8 million in the third quarter of 2007. Revenue was positively impacted by the March 2008 acquisition of VistaCare, Inc.

The company also saw good patient volume during the quarter. The average daily census rose to 12,329 in the third quarter from 12,212 in the second quarter.

Net income was $5.9 million, or 18 cents, compared to $3.1 million, or 9 cents, in the year ago period.

The company took some charges during the quarter related to consolidating operations after the VistaCare acquisition.

Odyssey continues to expand. It announced that it entered into a joint venture with Valley Baptist Medical Center in the Brownsville- McAllen, Texas area to provide hospice care. The venture is effective beginning Oct 1.

Odyssey was already operating its own hospice program in the area but will now be joining forces with Valley Baptist to provide one single hospice program under Odyssey management.

2008 Consensus Estimates Jump

Given the solid third-quarter results, covering analysts are bullish about the fourth quarter and the full-year. Fourth-quarter consensus estimates increased 2 cents to 16 cents in the last 60 days. For 2008, consensus estimates rose 7 cents to 61 cents per share in the last 2 months.

Analysts expect 2008 year-over-year earnings growth of 22%.

Value Fundamentals

Odyssey Healthcare is a Zacks #1 Rank (strong buy) stock. It’s trading at 10.2x forward earnings. The company’s price-to-book is 1.25. ODSY has a stellar 5-year average return on equity (ROE) of 16.02%.

Content Courtesy: Zacks Investment Research

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