NEW YORK, May 11, 2004 (PRIMEZONE) -- Wechsler Harwood LLP today announced that it has filed a Federal Securities fraud class action on behalf of persons or entities who purchased or otherwise acquired the securities of Odyssey Healthcare, Inc. (Nasdaq:ODSY) ("Odyssey" or the "Company") between May 5, 2003 and February 23, 2004, inclusive (the "Class Period").
The action, entitled Nomm v. Odyssey Healthcare, Inc., et al., Civil Action No. 3:04-cv-00984, is pending in the United States District Court for the Northern District of Texas and names as defendants, the Company, its current Chairman of the Board and former Chief Executive Officer, Richard R. Burnham, its President, Chief Financial Officer, Secretary, Treasurer and Chief Accounting Officer, Douglas B. Cannon, and its current Chief Executive Officer and President, David C. Gasmire. A copy of the complaint can be obtained from the Court or can be viewed on Wechsler Harwood web site at: (www.whesq.com).
The complaint charges that the defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by issuing a series of material misrepresentations to the market between May 5, 2003 and February 23, 2004. More specifically, the complaint alleges that defendants' statements during the Class Period failed to disclose and misrepresented the following material adverse facts which were then known to defendants or recklessly disregarded by them: (1) that the Company'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 such patients were; (3) the Company's financial results were a result of providing a level of care and services below the standards set forth under government guidelines because the Company's caseloads were heavier than industry norms; (4) that the Company could not keep up with its heady growth due to higher labor costs - especially in California, which represented 13 percent to 15 percent of Odyssey's revenues; (5) that higher drug costs were hurting the Company's margins; and (6) that Odyssey was suffering from negative cash-flows.
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 to 25 percent 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 percent, to close at $20.32 per share on February 24, 2004.
In its April 12, 2004 edition, Barron's published an article highlighting the Company's operational issues. Therein, Barron's articulated that there are signs that the Company can't keep up with its heady growth. "Higher labor costs -- especially in California, which represents 13%-15% of its revenues -- as well as higher drug costs hurt Odyssey's margins in last year's fourth quarter. In reporting those results on Feb. 23, the company forecast lower- than-expected earnings for this year. Another red flag: Odyssey disclosed that, in its most recent quarter, six of its programs exceeded the amounts they were entitled to receive in Medicare reimbursements, raising questions about whether patients admitted to its programs are truly eligible." Additionally, the article pointed out: "There are also suggestions that some of Odyssey's strong growth is the result of providing a level of care and services below the standards set forth under government guidelines, including providing adequate bereavement services for patients' families."
If you purchased or otherwise acquired Odyssey securities during the Class Period, you may request that the Court appoint you as lead plaintiff 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 the class member's claim is typical of the claims of other class members, and that the class member will adequately represent the class. Under certain circumstances, one or more class members may together serve as "lead plaintiff." Your ability to share in any recovery is not, however, affected by the decision whether or not to serve as a lead plaintiff. You may retain Wechsler Harwood, or other counsel of your choice, to serve as your counsel in this action.
Wechsler Harwood has taken a leading role in many important actions on behalf of defrauded shareholders and recovered hundreds of millions of dollars in aggregate damages. The Wechsler Harwood website (www.whesq.com) has more information about the firm and detailed information regarding this matter. If you wish to discuss this action with us, or have any questions concerning this notice or your rights and interests with regard to the case, please contact the following: