Ann: Intravitreal Injections , page-16

d_ricardo,

Thanks for your considered thoughts. I'm not a fan of 'peer comparison', I prefer to look at it as follows:

If I was to buy the entire VEI business, at current prices, I would pay approximately $30 million for the equity and have to take over around $70 million in debt. Thus, my total outlay would be $100 million.

Now looking at cash-flow, VEI will earn around $23.5 million OCF, they will pay maintenance CAPEX of circa $4 mil. All things being equal, the tax bill would be $5.85 mil thus leaving free cash flow of $13.65 million.

What is this cash-flow worth? Well, imo its a relatively risky cash-flow given the potential impact of legislative changes & doctor remuneration. Everyone sees the risk differently, but I would require at least a 15% return for investing in VEI - thus implying a total value of VEI of no more than $90 million.

I know on PE terms it makes it look cheap but I think you have to consider the business as a whole, not just the equity component.

Regarding your comment on EV/EBITDA resulting in extreme swings in value - if VEI repays $10 million of debt, that $10 million of value transfers across to the equity. This results in a huge swing in the value of the equity, but very little change in the overall value of the business. That massive swing illustrates the extreme leverage being employed in the business.

Regarding a potential capital raising - of course the banks can force a capital raising. They could change the covenants/hike the interest rate and many other methods for effectively forcing VEI's hand. Will they? I don't know. But if they did, imo the perceived discount to 'value' would evaporate.