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Accipiter Capital Management and its affiliates do not intend to tendertheir shares in connection with the acquisition and plan to exercise theirappraisal rights to the full extent permissible under law should the tenderoffer and subsequent merger be consummated. The text of the letter fromAccipiter Capital Management to the Board of Directors of VistaCare follows:
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Accipiter Capital Management and its affiliates (collectively "Accipiter"or "we") have reviewed the Quarterly Report for the quarterly period endedDecember 31, 2007 (the "10-Q"), filed by VistaCare, Inc. ("VistaCare" or the"Company") on February 8, 2008. Careful review of VistaCare's results for itsfirst fiscal quarter (the "First Quarter") as disclosed in the 10-Q hasreinforced our belief that the offer by Odyssey Healthcare, Inc., throughOdyssey Investment, Inc., a wholly owned subsidiary of Odyssey HealthCareHolding Company (collectively, "Odyssey") to acquire the Company for $8.60 pershare (the "Acquisition") is a discount bid rather than a premium.
It is clear to us from the 10-Q that VistaCare significantly outperformedanalyst expectations for the First Quarter -- reporting EBITDA of $2.2 millionand earnings per share of $0.09 versus analysts' estimates of $1.6 million ofEBITDA and earnings per share of $0.05. If VistaCare were to remainindependent, we believe the Company's future results would be even higherconsidering VistaCare's corporate restructuring activities (the"Restructuring") occurred throughout the quarter and the full benefits are notyet fully reflected Company's operating results. Although VistaCare publiclydisclosed in its Solicitation/Recommendation Statement filed on January 30,2008 (the "Recommendation") that the Restructuring has fallen behind internalexpectations, independent analyst estimates signal, and the results disclosedin the 10-Q confirm, that the Restructuring is well ahead of Wall Street'sexpectations. Furthermore, the 10-Q signifies strong cash flow, as indicatedby the increase in the cash net of VistaCare's Medicare cap liability from $18million on September 30, 2007 to $23 million on December 31, 2007. Based onthese results we believe VistaCare is effectively being purchased for $7.20per share in enterprise value, $0.30 lower than our previous estimate. Infact, these results have further convinced us that had VistaCare not agreed toa takeover, the Company's stock price would currently be well ahead of the$8.60 per share purchase price being offered by Odyssey.
Although we are pleased with VistaCare's restructuring success so far, weare also troubled by the Company's disclosure in the 10-Q relating toinconsistencies between management's internal analysis of the Restructuring'sprogress versus the information the Company's management disclosed toinvestors. For example, as first publicly disclosed in the Recommendat
