(RTTNews) - Odyssey Healthcare Inc. (ODSY) nearly doubled its third-quarter profit, as patient service revenue rose 6%.
The company provides hospice care in more than 30 states for terminally ill patients and their families. Odyssey is highly dependent on the Medicare program, as services provided under the program represented about 92.4% and 92.5% of its net patient service revenue for 2007 and 2008, respectively.
In 1982, the Congress enacted legislation to create the Medicare hospice benefit, and hospice care became a covered Medicare benefit in 1983.
Under the Medicare hospice benefit, a patient is considered appropriate for hospice care if two physicians determine that the patient's life expectancy is six months or less, if the terminal illness runs its normal course and the patient agrees to forego curative treatment for the patient's terminal diagnosis.
Medicare beneficiaries, who are hospice appropriate and elect to receive hospice care, have virtually all care giving, medical equipment, supplies and drugs related to the terminal illness covered by Medicare.
Odyssey offers nursing care, medical social services, physician services, patient counseling, general inpatient care, medical supplies and equipment, drugs for pain control and symptom management, home health aide services, homemaker services, respite inpatient care, and family bereavement counseling, as well as physical, occupational, and speech therapy services.
In a regulatory filing the company says the number of Medicare beneficiaries electing hospice care has increased 100% from about 500,000 in 2000 to about 1 million in 2007 and Medicare spending for hospice care has grown from about $2.9 billion in 2000 to about $10.1 billion in 2007, boding well for the hospice industry.
Net income for the third quarter jumped to $11.6 million, or $0.35 per share, from year-ago $5.9 million, or $0.18 per share. Analysts were looking for earnings of 25 cents per share. The company has topped earnings estimates in three of the last four quarters by an average 27.2%.
Net patient service revenue rose 6% to $175.2 million from $165.2 million last year, topping the consensus estimate of $173.02 million. Gross revenue per patient day rose to $156.77 in the latest third quarter from $150.83 last year. In the last five years, revenue has grown 96.9% to $616.1 million in 2008 from $312.9 million in 2004.
Operating expense per patient day declined to $133.15 in the third quarter from $135.38 in the year-ago period, and from $142.01 in the fourth quarter of 2007.
Analysts seem bullish about the company's earnings prospects in the fourth quarter and the full year. In the last 90 days, earnings per share estimates have been revised up by 4 cents to 25 cents for the fourth quarter and by 11 cents to $1.04 for the full year.
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