Accipiter Capital Management Opposes Acquisition of VistaCare, Inc. by Odyssey Health...(the Company's enterprise valuation to be...),Health

Date:2/7/2008

the Company's enterprise valuation to be $180 million. Adding the $29 million of cash on VistaCare's balance sheet and subtracting $12 million of Medicare cap liabilities leaves us with an equity valuation of the Company of $197 million. This translates into a per share value of $11.50 for the stand-alone company -- 33% higher than the Purchase Price offered by Odyssey.

Furthermore, the $11.50 per share value excludes any premium that should be paid for the significant potential reduction to corporate overhead and patient care synergies that a combined VistaCare-Odyssey entity could achieve. Independent analysts estimate VistaCare's corporate overhead to be between $35 and 40 million(1) and agree there is significant geographic market overlap between VistaCare's and Odyssey's operations.(2) One Wall Street analyst estimates that the transaction could be more than $0.20 accretive to Odyssey's 2009 earnings per share.(3) Additionally, Odyssey management has stated that the transaction would be accretive to 2009. While we agree with estimates that a combined VistaCare-Odyssey entity could be positive for Odyssey, we believe that such benefits should not come at the expense of VistaCare stockholders, who, we feel, are being shortchanged by the $8.60 per share offer. Odyssey's stock price has increased by more than 6% following the announcement of the merger, compared to a decrease in the S&P 500 Index of almost 4% over the same period, suggesting that the substantial inherent value of VistaCare is being transferred to Odyssey's stockholders at a bargain price.

In fact, we estimate that the benefits of a combined VistaCare-Odyssey entity would be accretive by $0.21 per share to current analysts' estimates of Odyssey's 2009 financial results of $0.76 per share, before any synergies. Again, based on VistaCare's own EBITDA margin goals, we believe that VistaCare will generate $25 million in 2009 EBITDA before any synergies. Factoring in depreciation and amort
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SOURCE Accipiter Capital Management Copyright©2008 PR Newswire. All rights reserved

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