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Also involved in the earnings "disappointment" was Odessy's contention that the analysts forecasting models did not properly account for Medicare changes.

=DJ Odyssey Hlth Down 26%; Says Mkt View Lacked Medicare Cap

By Adam L. Freeman

NEW YORK (Dow Jones)--Odyssey HealthCare Inc. (ODSY) shares plunged 26% Tuesday as investors punished the company for issuing financial projections below Wall Street's expectations.

But company officials argued that analysts had failed to factor in the effect that caps on Medicare reimbursements would have on the company's 2004 revenue.
The selloff came after the Dallas-based hospice care company said results for the first quarter and this year would fall short of expectations. Odyssey's chief executive said those expectations failed to reflect important data related to Medicare reimbursement reported by the company months ago.

Odyssey began reporting the impact of Medicare reimbursement caps in October, but analysts' financial models failed to consider possible revenue reduction resulting from the caps in 2004, Chief Executive David Gasmire said.

The company said Tuesday that Medicare reimbursement caps would result in a $3 million reduction in 2004. In calculating projections, analysts "didn't have those numbers on the cap."

Late Monday Odyssey said it expects 2004 earnings per share of $1.03 to $1.05. Wall Street expects $1.09 a share, according to a survey by Thomson First Call. For the full year, the company earned 84 cents a share.

For the first quarter of 2004, the company expects to earn 20 cents to 22 cents a share, below analysts' estimate of 25 cents. In the year-earlier first quarter, the company posted a profit of 19 cents a share.

After posting a string of quarterly financial reports that exceeded the analyst consensus, investors were hopeful Odyssey could do the same for the first quarter and 2004, and were particularly taken aback when the company guided below the consensus forecast, said Chris Rigg, an analyst with Merrill Lynch & Co., a firm which has conducting investment banking services for Odyssey.

For the fourth quarter, Odyssey said it earned almost $8.6 million, on revenue of $78.3 million. That compares with $7 million, on revenue of $57 million during the year-earlier period.

Shares of Odyssey recently fell 26%, or $7.14, to $20.30 on volume of 10.2 million compared with average daily volume of 686,600.

(MORE) Dow Jones Newswires

Hope this helps!

Murph ( who, having been born in the first official "baby boomer" year of 1946, is long on ODSY and is buying more)

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