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Biotech / Medical : Novacare (NOV) breaking out... -- Ignore unavailable to you. Want to Upgrade?

To: Jim Oravetz who wrote (324)	7/31/1998 3:02:00 PM
From: Todd D. Wiener	Respond to of 420

Jim- FORMF is too pricey for my tastes, especially with its balance sheet complexities. Why was NOV upgraded? It is very cheap. I'm still waiting for some shareholder value enhancement. Todd

To: Jim Oravetz who wrote (324)	8/5/1998 8:32:00 PM
From: Todd D. Wiener	Read Replies (2) \| Respond to of 420

I spoke to the company today. Apparently, the conference call discussed more details regarding the "strategic alternatives." By the end of September, NOV will announce their plans for a spinoff or dividend to shareholders of one of the companies. This deal should be completed by year-end. The most likely plan will be to separate the contract therapy business (which has been the reason for the depressed stock price) from the outpatient services/occupational health/O&P businesses. The latter businesses have been growing at a rapid pace, and should grow by 40+% next year, while the contract therapy business should be up only slightly. NOV wouldn't say which part would retain the 71% interest in NCES. But the NOV contract for NCES will not change to NCES' disadvantage. I suspect that the contract therapy business (long-term care) will keep the PEO interest, and the other 3 businesses will separate. This way the contract/PEO segment can deliver long-term growth in the mid-teens, while the other businesses could deliver long-term growth in the 30% range. The company said it may use the spinoff as an opportunity to raise some capital, perhaps through equity or even debt (although I doubt the latter option). Overall, the outlook for NOV's businesses is very good, and the stock is a giveaway at current prices. Actually, the outpatient/O&P/occupational health businesses are near-giveaways, as the current price reflects only the contract and PEO interest. And FWIW, NCES is a steal, too. Todd