Stockholders v Odyssey Healthcare, Inc.
Odyssey Healthcare Shareholders Allege Hospice Programs Exceeded Medicare Reimbursements
Several class actions have been filed against hospice operator Odyssey Healthcare, Inc. (Nasdaq:ODSY) and certain of its officers and directors by stockholders who purchased the company's common stock between May 5, 2003, and February 23, 2004. The actions claim that the defendants violated federal securities laws by issuing a series of material misrepresentations to the market over this time period, thereby artificially inflating the price of the company's securities. The stockholders seek to recover compensatory damages for the loss of value of their stock.
The action alleges that the defendants failed to disclose the following material adverse facts: (1) that Odyssey's financial results were materially inflated because at least six of its hospice programs exceeded the amounts they were entitled to receive in Medicare reimbursements; (2) that the company admitted patients to its hospice programs who were not eligible for Medicare yet claimed that they were; (3) that the company's financial results resulted from its providing a level of care and services below the standards set forth under government guidelines-- this was allegedly caused because Odyssey caseloads were heavier than industry norms; (4) that Odyssey could not keep up with its growth due to higher labor costs - especially in California, which represented 13-15% of its revenues; (5) that higher drug costs were hurting the company's margins; and (6) that Odyssey was suffering from significant negative cash-flow.
On February 23, 2004, Odyssey announced that its first-quarter profits would be below analysts' estimates. According to the company, it expected its 2004 earnings per share results to reflect a 23-25% increase over 2003, or $1.03 to $1.05 for the year. For the first quarter of 2004, Odyssey expected earnings per share of $0.20 to $0.22, (analysts expected the company to earn earnings per share of $0.25) compared to $0.19 for the first quarter of 2003. News of this shocked the market with shares of Odyssey falling $7.11 per share, or 26%, to close at $20.32 per share on February 24, 2004.
If you purchased securities issued by Odyssey Healthcare during the applicable period, you may request appointment by the court as a lead plaintiff if you do so by June 21, 2004. A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the court must determine that your claim is typical of the claims of other class members, and that you will adequately represent the class. Under certain circumstances, one or more class members may together serve as lead plaintiffs. Your ability to share in any recovery is not affected by the decision whether or not to serve as a lead plaintiff. You may retain any counsel of your choice to serve as you in this action, or you may choose to do nothing, and remain in the class as a silent member.
