Updated from 2:27 p.m. EDT

Shares of

Odyssey Healthcare

( ODSY) were among the worst-performing health and pharmaceutical stocks Monday, tumbling 46.9% after the company revealed that it is the subject of a false-claims investigation, announced executive changes and warned that third-quarter earnings would fall short of expectations.

The false-claims investigation centers on the company's claims for payment submitted to the U.S. from Jan. 1, 2000, to present. The civil division of the Justice Department is also looking at the company's conduct regarding patient admissions, patient retention and billing practices.

In addition to the investigation, Odyssey announced that its CEO resigned, effective immediately. Richard Burnham, the company's chairman, will assume David Gasmire's CEO responsibilities. Gasmire had served as CEO for nine months.

Finally, Odyssey now expects to post third-quarter earnings of 24 cents a share. Analysts polled by Thomson First Call were expecting earnings of 27 cents a share. Weaker-than-expected admissions and patient count led to the earnings shortfall. Shares traded down $7.90 to $8.96.

ICU Medical

(ICUI) - Get Report

fell 12.1% after the company swung to a third-quarter loss that fell below expectations. The medical-equipment maker posted a loss of 8 cents a share on sales of $16.5 million. Analysts were expecting a profit of 20 cents a share on sales of $20.6 million. A year ago, the company earned 28 cents a share on sales of $25.5 million. Reduced sales to one of its major customers led to the earnings and sales shortfall. Shares traded down $3.07 to $22.33.

Shares of

Select Medical

(SEM) - Get Report

rose 22.4% after the company agreed to be purchased in a leveraged buyout for $18 a share. The buyout group, led by private equity firm Welsh Caron Anderson & Stowe, will pay Select Medical about $2.3 billion. The price represents a 27% premium to Friday's close of $14.22. Shares of Select Medical traded up $3.18 to $17.40.


( HLEX) fell 3.6% after the pharmacy benefit management company announced that it would sell 3.5 million shares of stock. Existing shareholders are selling an additional 1.5 million shares. HealthExtras intends to use the proceeds to repay debt on its revolving credit facility, for working capital, and for general corporate purposes. Shares traded down 51 cents to $13.71.

Shares of

Endocardial Solutions

( ECSI) fell 3.2% after the company said a subsidiary of

Johnson & Johnson

(JNJ) - Get Report

filed a patent-infringement suit against Endocardial. The suit, which was filed in a district court in Los Angeles, seeks monetary damages and injunctive relief. Endocardial Solutions, which agreed to be acquired by

St. Jude Medical


in September, said it would vigorously defend its EnSite products and technology. Shares traded down 37 cents to $11.17.

Other health care volume movers included


(PFE) - Get Report

, up 50 cents to $29;


(MRK) - Get Report

, up 40 cents to $30.90;



, up $1.29 to $22.55;


(AMGN) - Get Report

, up $1.41 to $56.63; and


( SGP), down 7 cents to $17.09.