UNITED STATES SECURITIES AND EXCHANGE COMMISSION

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of

Filed by the Registrant          þ

Filed by a Party other than the Registrant          o

Check the appropriate box:

VISTACARE, INC.

Payment of Filing Fee (Check the appropriate box):

      (5)     Total fee paid:

Dear Stockholder:

      We cordially invite you to attend our 2006 Annual Meeting of Stockholders, to be held on Thursday, February 23, 2006 at the FINOVA Theater, located at 4800 North Scottsdale Road, Scottsdale, Arizona, commencing at 2:00 p.m. We look forward to greeting those of you who are able to attend.

      Our 2005 Annual Report is enclosed. Also enclosed is our notice of the annual meeting, proxy statement and proxy card. We encourage you to read carefully all of the enclosed information.

      At the annual meeting, we will be asking you to vote for three Class I directors and to ratify the selection of our independent registered public accounting firm, as described more fully in the enclosed proxy statement. Our board of directors recommends that you vote “FOR” each of the proposals described above.

      Whether or not you plan to attend the annual meeting, it is important that your shares be represented and voted. Accordingly, please read the enclosed material and mark, date, sign and return the enclosed proxy card at your earliest convenience. If you attend the annual meeting, you may revoke your proxy by requesting the right to vote in person.

January 23, 2006

VISTACARE, INC.

NOTICE OF 2006 ANNUAL MEETING OF STOCKHOLDERS

       The 2006 Annual Meeting of Stockholders of VistaCare, Inc. will be held at 2:00 p.m. on Thursday, February 23, 2006 at the FINOVA Theater, located at 4800 North Scottsdale Road, Scottsdale, Arizona. The annual meeting is being held for the following purposes:

      Stockholders of record at the close of business on January 17, 2006, the record date for the annual meeting, are entitled to receive notice of and to vote at the annual meeting.

      The enclosed proxy card, proxy statement and our 2005 Annual Report to Stockholders are being sent to you along with this notice.

Scottsdale, Arizona

VISTACARE, INC.

PROXY STATEMENT

General

      This proxy statement is provided in connection with the solicitation of proxies by the board of directors of VistaCare, Inc. for the 2006 Annual Meeting of Stockholders to be held at 2:00 p.m. on Thursday, February 23, 2006 at the FINOVA Theater, located at 4800 North Scottsdale Road, Scottsdale, Arizona, and at any adjournment or postponement of the annual meeting. Our principal executive offices are located at 4800 North Scottsdale Road, Suite 5000, Scottsdale, Arizona 85251.

      This proxy statement and the accompanying proxy card are expected to be mailed on or about January 23, 2006 to all stockholders entitled to vote at the annual meeting. We are mailing our Annual Report to Stockholders for the fiscal year ended September 30, 2005 together with these proxy materials. The Annual Report to Stockholders does not constitute part of this proxy statement.

What is the purpose of the annual meeting?

      At the annual meeting, stockholders will consider and vote on the following matters:

Who can vote at the annual meeting?

      Only stockholders of record at the close of business on January 17, 2006 may vote at the annual meeting. This date is the record date for the annual meeting. On the record date, there were 16,392,143 outstanding shares of our Class A Common Stock, $0.01 par value per share, which we refer to in this proxy statement as our common stock.

How many votes do I have?

      Each share of our common stock that you owned on the record date entitles you to one vote on each matter that is voted on.

Is my vote important?

      Your vote is important regardless of how many shares you own. Please take the time to vote and to read the instructions below.

How can I vote?

      You can vote in two ways. You can vote by mail or you can vote in person at the meeting.

      You may vote by mail. You may vote by completing and signing the proxy card that accompanies this proxy statement and promptly mailing it in the enclosed postage-prepaid envelope. You do not need to put a stamp on the enclosed envelope if you mail it in the United States. The shares you own will be voted according

      You may vote in person. If you attend the meeting, you may vote by delivering your completed proxy card in person or you may vote by completing a ballot. Ballots will be available at the meeting.

Can I change my vote after I have mailed my proxy card?

      Yes. You can change your vote and revoke your proxy at any time before the proxy is exercised at the meeting by doing any one of the following things:

      Your attendance at the meeting alone will not revoke your proxy.

Can I vote if my shares are held in “street name”?

      If the shares you own are held in “street name” by a bank or brokerage firm, your bank or brokerage firm, as the record holder of your shares, is required to vote your shares according to your instructions. In order to vote your shares, you will need to follow the directions your bank or brokerage firm provides you. Many banks and brokerage firms also offer the option of voting over the Internet or by telephone, instructions for which would be provided by your bank or brokerage firm on your vote instruction form.

      If your shares are held in street name, you must bring an account statement or letter from your brokerage firm or bank showing that you are the beneficial owner of the shares as of the record date in order to be admitted to the meeting on the record date. To be able to vote your shares held in street name at the meeting, you will need to obtain a proxy card from the holder of record.

What will happen if I do not give my bank or brokerage firm instructions on how to vote my shares?

      If you do not give your broker instructions as to how to vote on the two proposals described in this proxy statement, your broker is entitled to use its discretion in voting your shares.

What constitutes a quorum?

      In order for business to be conducted at the meeting, a quorum must be present. A quorum consists of the presence, in person or by proxy, of a majority of the shares of common stock issued, outstanding and entitled to vote at the meeting, or at least 8,196,072 shares.

      Shares of common stock represented in person or by proxy (including broker non-votes and shares that abstain or do not vote with respect to one or more of the matters to be voted upon) will be counted for the purpose of determining whether a quorum exists. A “broker non-vote” occurs when a record holder (e.g., a bank or brokerage firm) holding shares for a beneficial owner votes on one proposal but does not vote on another proposal because the record holder does not have discretionary voting power and has not received voting instructions from the beneficial owner.

      If a quorum is not present, the annual meeting will be adjourned until a quorum is obtained.

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What vote is required for each proposal?

      Election of directors. The three nominees receiving the highest number of votes cast at the meeting will be elected, regardless of whether that number represents a majority of the votes cast. Abstentions and broker non-votes will have no effect on the outcome of this proposal.

      Ratification of selection of independent registered public accounting firm. The affirmative vote of the holders of a majority of the shares entitled to vote at the meeting is needed to approve the ratification of the selection of our independent registered public accounting firm. Abstentions and broker non-votes will have the effect of a negative vote on this proposal.

How will votes be counted?

      Each share of common stock will be counted as one vote according to the instructions contained on a proper proxy card, whether executed by you directly or on a ballot voted in person at the meeting.

Who will count the votes?

      The votes will be counted, tabulated and certified by our transfer agent and registrar, Computershare Trust Company, N.A. Two company employees, Merle Lindlar and Carla DeMichiel, will serve as the inspectors of elections at the meeting.

How does the board of directors recommend that I vote on the proposals?

      The board of directors recommends that you vote:

Will any other business be conducted at the meeting, or will other matters be voted on?

      The board of directors does not know of any other matters that may come before the meeting. If any matter properly comes before the meeting, the persons named in the proxy card that accompanies this proxy statement will exercise their judgment in deciding how to vote, or otherwise act, at the meeting with respect to that matter or proposal.

Where can I find the voting results?

      We will report the voting results in our quarterly report on Form 10-Q for the second quarter of 2006, which we expect to file with the Securities and Exchange Commission, or SEC, on or before May 10, 2006.

How and when may I submit a stockholder proposal for the 2007 annual meeting?

      To be included in the proxy statement or considered at the annual meeting, a stockholder must timely submit nominations of directors or other proposals to the Company in addition to complying with certain rules and regulations promulgated by the SEC. The Company intends to hold its 2007 annual meeting during February 2007. We must receive proposals for our 2007 annual meeting no later than September 25, 2006 for possible inclusion in the proxy statement, or between November 25, 2006 and December 25, 2006 for possible consideration at the meeting. SEC rules permit management to vote proxies in its discretion with respect to such matters if the Company advises shareholders how management intends to vote.

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      Any proposals or notices should be sent to:

Who will bear the costs of soliciting these proxies?

      We will bear the costs of solicitation of proxies. Brokers, custodians and fiduciaries will be requested to forward proxy soliciting material to the owners of shares of our common stock they hold in their names. We will reimburse banks and brokers for their reasonable out-of-pocket expenses incurred in connection with the distribution of proxy materials.

How can I obtain a copy of VistaCare’s 2005 Annual Report on Form 10-K?

      Our Annual Report on Form 10-K is a part of our 2005 Annual Report to Stockholders, and it is being mailed to you together with this proxy statement. However, you may also receive a copy of our Annual Report on Form 10-K for the fiscal year ended September 30, 2005 by visiting our website (www.vistacare.com) and clicking on “Investor Relations,” or we will send you a paper copy without charge upon request. For a paper copy, please contact:

Whom should I contact if I have any questions?

      If you have any questions about the annual meeting or your ownership of our common stock, please contact Investor Relations at the address or telephone number listed above.

Householding of Annual Meeting Materials

      Some banks, brokers and other nominee record holders may be participating in the practice of “householding” proxy statements and annual reports. This means that only one copy of our proxy statement and annual report to stockholders may have been sent to multiple stockholders in your household. We will promptly deliver a separate copy of either document to you if you contact us at the Investor Relations address and telephone number listed above. If you want to receive separate copies of the proxy statement or annual report to stockholders in the future, or if you are receiving multiple copies and would like to receive only one copy per household, you should contact your bank, broker, or other nominee record holder, or you may contact us at the above address or telephone number.

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PROPOSAL 1

ELECTION OF DIRECTORS

General

      Three Class I nominees have been nominated for election at the 2006 Annual Meeting of Stockholders to serve three-year terms expiring at the 2009 Annual Meeting of Stockholders and until their successors have been elected and duly qualified. Unless instructed otherwise, the proxy holders will vote the proxies received by them for our nominees: James C. Crews, David W. Elliot, Jr., and Geneva B. Johnson. In the event that any of these nominees are unable or decline to serve as directors at the time of the annual meeting, the proxies may be voted for a substitute nominee designated by the present board of directors (unless another nominee is indicated in any particular proxy), or the board of directors may reduce the number of directors. Messrs. Crews and Elliot and Ms. Johnson have consented to serve as directors, and our board of directors has no reason to believe that they will be unavailable for service.

      The board of directors recommends a vote “FOR” the proposed nominees.

Composition of the Board of Directors

      Effective May 4, 2005, two vacancies on the board of directors were created by the retirement of William J. McBride and the resignation of David E. Faeder. Effective May 5, 2005, the board of directors appointed Jack A. Henry to serve the remainder of Mr. McBride’s Class II Director term ending in 2007, and appointed James C. Crews to serve the remainder of Mr. Faeder’s Class I Director term ending in 2006.

      Our certificate of incorporation provides that directors shall be divided into three classes and that each director shall serve for a term of three years and until his or her successor is elected and qualified or until his or her earlier resignation, death, or removal. One class of directors is elected at each annual meeting. Prior to July 2005, we had eight (8) directors. On July 7, 2005, acting on the recommendation of the Nominating and Corporate Governance Committee, the board of directors resolved to create one (1) new directorship effective immediately. Under our Bylaws, the board of directors has the authority to fill the new directorship position. Accordingly, effective July 7, 2005, the Nominating and Corporate Governance Committee recommended, and the board of directors unanimously approved, the appointment of Jon M. Donnell as a Class II member of the board to fill the newly created vacancy. As a result, the board consists of nine (9) members, with three (3) directors in each of Classes I, II and III.

      The Class II directors (whose terms expire in 2007) are Jon M. Donnell, Perry G. Fine and Jack A. Henry. The Class III directors (whose terms expire in 2008) are Pete A. Klisares, Ronald A. Matricaria and Richard R. Slager. There are no family relationships between any of our directors or executive officers.

      The following sets forth the names of and information about the persons nominated for election at the annual meeting and the directors whose terms do not expire at the annual meeting. Information regarding their compensation is presented in the section of this proxy statement entitled “Directors Compensation,” and information regarding their beneficial ownership of shares of our common stock is presented in the section of this proxy statement entitled “Security Ownership of Certain Beneficial Owners and Management.”

Nominees for Class I Director

      James C. Crews, 68, has served as a member of our board of directors since May 2005. Most recently, Mr. Crews served as the Chief Executive Officer of Banner Health Arizona. Prior to that, he was the CEO of the Samaritan Health System in Phoenix, and led the merger of that organization with the Lutheran Health System to create Banner Health, one of the largest not-for-profit health systems in the country. In 2000, Mr. Crews retired from Banner Health after serving in the not-for-profit health field for 38 years in hospitals and health systems in Minnesota, Illinois, West Virginia and Arizona. He achieved Life Fellow status with the American College of Healthcare Executives and received his Masters degree in Healthcare Administration

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      David W. Elliot, Jr., 45, has served as a member of our board of directors since January 2005, when Mr. Elliot joined VistaCare as the President and Chief Operating Officer. Prior to joining VistaCare, Mr. Elliot was the President, CEO and a member of the board of directors, of VMBC, LLC, The VASCLIP Company, a privately held company focused on providing a less invasive surgical alternative to vasectomy, from May 2002 until January 2005. Prior to that, from March 2001 to May 2002, Mr. Elliot was Vice President of Sales and Marketing of Advanced Respiratory, Inc., a privately held, profitable company, now owned by Hillenbrand Industries, Inc. From August 1996 through February 2001, Mr. Elliot held management positions at St. Jude Medical, Inc., including serving as Director of Corporate Business Development and Vice President, Global Marketing for its Cardiac Rhythm Management Division.

      Geneva B. Johnson, 76, has served as a member of our board of directors since May 2004. Ms. Johnson currently serves as the Executive Director of the Women’s Leadership Institute at Mount Mary College and has served since 1994 as the President and CEO of Family Service America, Inc., an organization that serves four million people in more than 1,000 communities through community-based family counseling and support services. She is also a trustee for several organizations, including the Medical College of Wisconsin and Froedtert Lutheran Memorial Hospital, and serves on the Advisory Board at the Harvard School of Business. Ms. Johnson earned a bachelor’s degree from Albright College, a master’s degree from Case Western University, and a Certificate in Executive Management from the Harvard School of Business. She also holds an honorary Doctor of Humanities by Albright College and an honorary Doctor of Humane Letters by Alvernia College.

Directors Whose Terms Expire at the 2007 Annual Meeting (Class II Directors)

      Jon M. Donnell, 46, has served as a member of our board of directors since July 2005. For over 20 years, Mr. Donnell has held a variety of leadership roles in accounting, financial, and operating management. Currently, Mr. Donnell serves as Chief Operating Officer of Levitt and Sons, a Florida based homebuilder with revenues exceeding $500 million per year. Prior to that, Mr. Donnell served as President and Chief Operating Officer for Dominion Homes. Additionally, Mr. Donnell held the position of Chief Financial Officer for Dominion Homes as well as holding operational leadership positions with Del Webb. He was also part of the audit team for Peat, Marwick, Mitchell, & Co., a Phoenix, Arizona-based accounting firm, where he earned his CPA.

      Perry G. Fine, M.D., 53, has served as a member of our board of directors since September 2001. In addition, Dr. Fine served as our National Medical Director from June 1996 until August 2003. Dr. Fine is currently a Professor of Anesthesiology in the School of Medicine at the University of Utah, a post he has held since July 1985. Starting in the fall of 2004, he assumed the position of Vice President, Medical Affairs of the National Hospice and Palliative Care Organization, Alexandria, Virginia. Dr. Fine has extensive clinical, educational, research and public policy experience dating to the inception of the Medicare hospice benefit. He is a founding member of the American Academy of Hospice and Palliative Medicine. Dr. Fine serves on the board of directors of the Society for Arts in Healthcare.

      Jack A. Henry, 62, has served as a member of our board of directors since May 2005. In October 2000, Mr. Henry formed Sierra Blanca Ventures LLC, a private equity advisory and investment firm. Prior to that, Mr. Henry was employed with Arthur Andersen LLP, including 18 years as the Managing Partner for the Arizona office. Additionally, he continues his active involvement in community initiatives and as a board member for multiple business enterprises. Currently, he is an active board member of Vodavi Technology, Inc., White Electronic Designs Corporation and two private companies. Mr. Henry received his MBA from the University of Michigan.

Directors Whose Terms Expire at the 2008 Annual Meeting (Class III Directors)

      Pete A. Klisares, 70, has served as a member of our board of directors since November 2001. Since November 1999, Mr. Klisares has been a principal of MiGG Capital Investment Company, a private capital

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      Ronald A. Matricaria, 63, has served as a member of our board of directors since August 2002. From April 1993 to December 2002, Mr. Matricaria served, at various times, as the Chairman, Chief Executive Officer and President of St. Jude Medical, Inc., a developer, manufacturer and distributor of cardiovascular medical devices. He retired from the St. Jude board in December 2002. Mr. Matricaria currently serves as the non-executive Chairman of the board of directors of Haemonetics Corporation, a manufacturer and global marketer of automated blood processing systems. He is also a director of Invitrogen Corp.

      Richard R. Slager, 51, has served as our President, Chief Executive Officer and a member of our board of directors since May 2001 and the Chairman of our board of directors since August 2003. From June 1999 until May 2001, he was Chief Executive Officer of SilverAge LLC, an online monitoring and interactive technical company for seniors. In May 1989, Mr. Slager founded Karrington Health, Inc., an assisted living provider, and he served as Chairman of the board of directors and Chief Executive Officer of Karrington Health, Inc. until May 1998.

CORPORATE GOVERNANCE

General

      We believe that good corporate governance is an important part of our long-term strategy of building value for our stockholders. Accordingly, we annually review our corporate governance practices and policies to ensure that they are in line with current best practices and in compliance with the requirements of the SEC and the Nasdaq National Market.

      Copies of the charters of our Audit, Compensation and Nominating and Corporate Governance Committees, as well as the Code of Conduct for our officers, employees and directors and Corporate Governance Guidelines, are available on our website (www.vistacare.com) under “Investor Relations — Corporate Governance” captions. Set forth below is a brief description of some of our most important corporate governance policies and practices currently in effect.

Independence of Directors

      We believe that independent directors play a critical role in company governance, and we are committed to ensuring that a majority of our directors are independent. Presently, six (6) of our nine (9) directors are independent under the standards specified by the Nasdaq National Market. In particular, our board of directors has determined that none of Messrs. Crews, Donnell, Henry, Klisares, Matricaria, and Ms. Johnson has a material relationship with us (either directly or as a partner, shareholder or officer of an organization that has a relationship with us) and that each of these directors is “independent” within the meaning of Nasdaq’s director independence standards. In addition, our board of directors has determined that each of the members of each of our Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee has no material relationship with us (either directly or as a partner, shareholder or officer of an organization that has a relationship with us) and is “independent” within the meaning of Nasdaq’s director independence standards.

      “Independence” for Audit Committee Members and Audit Committee Financial Expert. In addition, as required by Nasdaq rules, the members of the Audit Committee each qualify as “independent” under special standards established by the U.S. Securities and Exchange Commission (“SEC”) for members of audit committees. The Audit Committee also includes at least one independent member who is determined by the board of directors to meet the qualifications of an “audit committee financial expert” in accordance with SEC

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Lead Director

      In order to ensure a balanced relationship between management and the board of directors, in 2003 our board of directors established the role of Lead Director. The Lead Director serves as the Chair of any meeting at which management directors are not present and acts as a liaison between management, including the Chairman/ Chief Executive Officer, and the independent directors. Mr. Klisares served as the Lead Director during our 2005 fiscal year. In this capacity, Mr. Klisares had frequent contact with Mr. Slager and other members of management on a broad range of matters.

Nomination of Directors

      If we identify a need to add a new member to the board of directors, or fill a vacancy, the Nominating and Corporate Governance Committee will identify and evaluate prospective candidates, and recommend to the board its proposed candidate(s). After seeking input from other members of the board of directors and from senior management, the Chair of the Nominating and Corporate Governance Committee will compile a list of potential candidates. If the Nominating and Corporate Governance Committee deems appropriate, it may also engage a professional search firm.

      The Chair of the Nominating and Corporate Governance Committee, working with the other members of the board of directors and senior management, determines whether any of the candidates proposed by the Nominating and Corporate Governance Committee have relationships with any of the members of the board of directors or management, and oversees the initial contact with candidates. The Chairman of the board of directors, together with at least one member of the Nominating and Corporate Governance Committee, interviews prospective candidates. Following such interview, the Nominating and Corporate Governance Committee deliberates to consider whether and to what extent prospective candidates satisfy the criteria for nomination established by the board of directors.

      In evaluating potential director nominees, including candidates recommended by stockholders, the Nominating and Corporate Governance Committee will consider, among other things, the candidate’s integrity, business acumen, experience, other commitments, conflicts of interest and the ability to act in the interest of all of our stockholders. The Nominating and Corporate Governance Committee does not assign specific weights to particular criteria and no particular criterion is necessarily applicable to all prospective nominees. In addition, there are no specific minimum qualifications that must be met for any nominee. We believe that the backgrounds and qualifications of the directors, considered as a group, should provide a significant composite mix of experience, knowledge and abilities that will allow the board of directors to fulfill its responsibilities.

      Following its evaluation discussion, the Nominating and Corporate Governance Committee will then recommend to the board of directors the final nominee(s). The board of directors will then consider and vote on such recommendations.

      We have not paid, to date, any third party a fee to assist in evaluating and identifying nominees. During 2005, no candidate was recommended to us by any beneficial owner of more than 5% of our common stock.

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      Our stockholders may recommend director candidates for inclusion by the board of directors in the slate of nominees which the board of directors recommends to our stockholders for election. The qualifications of recommended candidates will be reviewed by our Nominating and Corporate Governance Committee in the same manner, and subject to the same criteria, as nominees proposed by the board of directors or management.

      To propose a nominee, stockholders should submit the name of the proposed nominee, together with sufficient biographical information about the proposed nominee to enable the Nominating and Corporate Governance Committee to make an informed evaluation of the proposed nominee’s qualifications. Such proposals should be directed to:

      The Nominating and Corporate Governance Committee will consider recommendations that are provided on a timely basis in accordance with our Bylaws.

Stockholder Communications with the Board of Directors

      The board of directors provides a process for stockholders to send communications to the board of directors. In particular, stockholders may send written communications to the board of directors at the following address:

      Upon receipt, the General Counsel will review such communications to determine whether they relate to matters of corporate governance or strategy or to matters unrelated to the responsibilities of the board of directors. Communications relating to matters of corporate governance or strategy will be forwarded to the Lead Director, who will, in turn, provide copies or summaries of such communications to the other members of the board of directors for consideration, as appropriate.

Board of Directors Meetings and Committees

      The board of directors has responsibility for establishing broad corporate policies and reviewing our overall performance rather than day-to-day operations. The primary responsibility of the board of directors is to oversee the management of the company and, in so doing, to serve the best interests of the company and its stockholders. The board of directors selects, evaluates and provides for the succession of executive officers and, subject to stockholder election, directors. It reviews and approves corporate objectives and strategies, and evaluates significant policies and proposed major commitments of corporate resources. It participates in decisions that have a potential major economic impact on us. Management keeps the directors informed of company activity through regular written reports and presentations at board and committee meetings.

      The board of directors met seven (7) times in fiscal 2005 (of which three (3) were by way of teleconference); and each of our directors attended 75% or more of the total number of meetings of the board of directors and the committees of which such director was a member. Six (6) directors attended our 2005 annual meeting of stockholders. Our Corporate Governance Guidelines state that directors are not required

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      The board of directors has a standing Audit Committee, a standing Compensation Committee, a standing Nominating and Corporate Governance Committee and a standing Investment Committee. Each such committee has a charter that has been approved by the board of directors, and each committee must review the appropriateness of its charter and perform a self-evaluation at least annually.

      Messrs. Slager and Elliot are the only directors who are also employees of VistaCare. Neither Mr. Slager nor Mr. Elliot participates in any meetings at which their compensation is evaluated. All members of all committees are non-employee directors.

      Executive sessions of non-management directors are generally held at least two times per year. The sessions are scheduled and chaired by the Lead Director. Any independent director can request that an additional executive session be scheduled.

Audit Committee

      The current members of our Audit Committee are Messrs. Henry (Chair), Crews, Donnell and Klisares. On May 5, 2005, Mr. Henry replaced Mr. McBride as a director and as Chair of the Audit Committee. In August 2005, Mr. Matricaria ceased being a member of the Audit Committee and Messrs. Crews and Donnell were appointed to the Audit Committee. Our board of directors has determined that Messrs. Henry and Donnell qualify as “audit committee financial experts” under SEC rules; that each of the members of the Audit Committee is an “independent director” under the Nasdaq rules governing the qualifications of the members of audit committees; and that each of them has the financial sophistication to satisfy the requirements of Nasdaq. The Audit Committee is empowered to retain independent advisers or consultants as it deems necessary to accomplish its mandates. None of the members of our Audit Committee serve on the audit committees of more than three (3) other public companies. The Audit Committee met four (4) times during fiscal 2005. The responsibilities of our Audit Committee and its activities during fiscal 2005 are described in the “Board Audit Committee Report” contained in this proxy statement.

Compensation Committee

      The current members of our Compensation Committee are Messrs. Donnell (Chair), Crews and Klisares and Ms. Johnson. In August 2005, Mr. Donnell became a member of the Compensation Committee. Before the December 7, 2005 meeting, Mr. Donnell became the Chair of the Compensation Committee and Mr. Matricaria ceased being Chair. After the Compensation Committee’s meeting on December 7, 2005, Mr. Crews was appointed to the Compensation Committee and Mr. Matricaria ceased being a member of the Committee. The board of directors has determined that each of the members of the Compensation Committee is independent as defined under Nasdaq rules. Our Compensation Committee held six (6) meetings (of which two (2) were by way of teleconference) during fiscal 2005. The Compensation Committee evaluates and sets the compensation of our Chief Executive Officer and makes recommendations to our board of directors regarding the salaries and bonuses of our other executive officers. Our Chief Executive Officer is not present during voting or deliberations on the determination of his salary.

      The Compensation Committee also oversees the evaluation of management by the board of directors. In addition, the Compensation Committee grants stock options and other stock incentives (within guidelines established by our board of directors) to our officers and employees. The responsibilities of our Compensation Committee and its activities during fiscal 2005 are described in the “Report of the Compensation Committee on Executive Compensation” contained in this proxy statement.

Nominating and Corporate Governance Committee

      The current members of our Nominating and Corporate Governance Committee are Ms. Johnson (Chair) and Messrs. Klisares and Matricaria. The board of directors has determined that each of the members

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Investment Committee

      Established in May 2004, the Investment Committee is charged to assist the board of directors in overseeing financial matters of importance to the Company. Specifically, the Investment Committee reviews and makes recommendations to the board of directors concerning (i) our financing objective and principles, (ii) our financial strategies and capital structure, including interest rate and financial risk management, (iii) our annual financing plans, (iv) the implications of major investments, restructurings, joint ventures, acquisitions and divestitures, after such plans have been authorized in principle by the board of directors, and (v) performs any other activities as the Committee deems appropriate or as requested by the board of directors. The current members of the Investment Committee are Messrs. Matricaria (Chair), Donnell, Henry and Klisares. During fiscal 2005, the Investment Committee met three (3) times.

Audit Committee’s Pre-Approval Policy and Procedures

      Our Audit Committee pre-approves all services, including both audit and non-audit services, provided by our independent registered public accounting firm for the purpose of maintaining the independence of our independent registered public accounting firm. For audit services, each year the independent registered public accounting firm provides us with an engagement letter outlining the scope of the audit services proposed to be performed during the year, which must be formally accepted by the Audit Committee before the audit commences. The independent registered public accounting firm also submits an audit services fee proposal, which also must be approved by the Audit Committee before the audit commences.

      Management may periodically submit to the Audit Committee proposals for non-audit services (together with an estimate of the associated fees) that it recommends the independent registered public accounting firm be engaged to provide. Management and the independent registered public accounting firm must each confirm to the Audit Committee that the performance of the proposed non-audit services would not compromise the independence of the registered independent public accounting firm and would be permissible under all applicable legal requirements. The Audit Committee must approve all non-audit services and the budget for each such service before commencement of the work. Management and the independent registered public accounting firm report to the Audit Committee at each of its regularly scheduled meetings as to the non-audit services actually provided by the independent registered public accounting firm and the approximate fees incurred by us for those services.

      During fiscal 2005, no services were provided to us by Ernst & Young LLP or any other accounting firm other than in accordance with the pre-approval policies and procedures described above.

DIRECTORS COMPENSATION

      Our non-employee directors are reimbursed for their reasonable out-of-pocket expenses incurred while involved in company work. Each non-employee director, other than our Lead Director and the Chair of the Audit Committee, receives a $20,000 annual retainer. Our Lead Director, Pete A. Klisares, receives a $40,000 annual retainer. Our current Audit Committee Chair, Mr. Henry, receives a $30,000 annual retainer. Each non-employee director, other than our Lead Director, receives fees of $1,500 per board meeting and $750 per board conference call attended. Our Lead Director receives fees of $3,000 per board meeting and $1,500 per

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      Non-employee directors are entitled to participate in our 2002 Non-Employee Director Stock Option Plan, or our director plan. Our director plan authorizes the grant of options to purchase up to an aggregate of 300,000 shares of our common stock. Under the director plan, each non-employee director is granted an option to purchase 20,000 shares of our common stock promptly following his or her election or appointment to our board of directors. Accordingly, Messrs. Crews and Henry each received an option grant to purchase 20,000 shares of our common stock in May of 2005 upon their appointments to our board of directors at a strike price of $17.58 per share (the closing price of our common stock as quoted on Nasdaq on May 5, 2005, which was the date of the grant). Mr. Donnell received an option grant to purchase 20,000 shares of our common stock in August of 2005 at a strike price of $22.98 per share (the closing price of our common stock as quoted on Nasdaq on August 4, 2005, which was the date of the grant). In addition, the director plan provides that each non-employee director will be granted an option to purchase 10,000 shares of our common stock on November 11 of each year, provided that he or she attended at least 75% of the meetings of the board of directors, and the meetings of any board committee on which he or she served, in the preceding year. In 2003, our board of directors elected to defer such annual option grants until the first quarter of 2004. Accordingly, each of our non-employee directors was granted an option in February 2004 to purchase 10,000 shares of our common stock under the director plan at an exercise price of $34.09 per share. Each option granted under the director plan is immediately exercisable in full and expires on the earlier of ten years from the date of grant, or on the first anniversary of the date on which the optionee ceases to be a director. The board of directors elected not to accept the automatic grant for 2004. On May 5, 2005, the annual grant was resumed and each of our non-employee directors received an option grant to purchase 10,000 shares of our common stock at an exercise price of $17.58 per share.

      In addition to the foregoing, all of our directors are eligible to receive option grants under our 1998 Stock Option Plan. In fiscal 2005, no grants were awarded to any of our directors pursuant to the 1998 Stock Option Plan, other than an option grant to purchase 10,000 shares of our common stock awarded May 5, 2005 to Mr. Klisares as Lead Director, at a strike price of $17.58.

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EXECUTIVE COMPENSATION

Summary Compensation Table

      The table below sets forth summary information concerning the compensation awarded to our Chief Executive Officer and our four other most highly compensated executive officers who were serving as executive officers as of September 30, 2005. The individuals listed below are referred to in this proxy statement as our “named executive officers.”

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Option Grants in 2005

      The following table lists the grants during 2005 of stock options to the officers named in the Summary Compensation Table.

Option Grants In Last Fiscal Year

      David Elliott, our President and Chief Operating Officer, was the only officer to receive options in the last fiscal year.

Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values

      The following table presents information concerning option exercises with respect to our common stock in 2005 by our named executive officers and the value of all unexercised stock options held by each of our named executive officers as of September 30, 2005.

Securities Authorized for Issuance Under Equity Compensation Plans

      The following table sets forth information as of September 30, 2005 about our common stock that may be issued upon the exercise of options and rights under our equity compensation plans. Our stockholders have

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Management Agreements

      In October 2002, we entered into management agreements with Richard R. Slager, our Chief Executive Officer, and Stephen Lewis, our Senior Vice President and General Counsel. In May 2004, we entered into a management agreement with Ronald F. Watson, our Executive Vice President of Strategic Planning and Business Development. In January 2005, we entered into a management agreement with David W. Elliot, our President and Chief Operating Officer. In June 2005, we entered into a management agreement with John Crisci our Vice President of People and Education.

      Under these agreements, the executives are entitled to compensation in the event of their employment termination or a sale of the company, as described below.

      In the event that, prior to a change of control of VistaCare, the employment of any of the executives is terminated by (i) us for any reason other than for cause or the executive’s death or disability or (ii) the executive for good reason, we are required to:

      In the event that, within two (2) years following a change in control of VistaCare, the employment of Mr. Slager is terminated for any reason, including Mr. Slager’s death, disability or voluntary resignation, but excluding a termination by VistaCare for cause, we are required to:

      In addition, upon a change in control of VistaCare, regardless of whether Mr. Slager’s employment is terminated, the vesting of all of his options to purchase common stock would be accelerated in full.

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      In the event that, within two (2) years following a change in control of VistaCare, the employment of Messrs. Lewis, Watson, Elliot, or Crisci is terminated by VistaCare for any reason other than cause or the executive’s death or disability or is terminated by the executive for good reason, we are required to:

      The management agreements for Messrs. Slager and Watson provide that, if, before December 31, 2006, there is a sale of the company as defined below, in which the per-share equity value of VistaCare implied by the transaction is at least $12.50, we are required to pay Mr. Slager a fee in the amount of $1 million and Mr. Watson a fee in the amount of $200,000.

      The management agreement for Mr. Elliot provides that, if there is a sale of the company as defined below, and Mr. Elliot terminates his employment within twelve (12) months following such a sale, we are required to:

      As used in the management agreements, a “sale of the company” means:

      In exchange for the foregoing rights, each of the executives has agreed to covenants restricting them from competing with our business or soliciting our employees or patient referral sources for two (2) years following their employment termination and from disclosing or divulging any of our confidential information.

Compensation Committee Interlocks and Insider Participation

      None of our executive officers has served as a director or member of the compensation committee of any other entity whose executive officers served as a director or member of our compensation committee.

Report of the Compensation Committee on Executive Compensation

      Our compensation committee is responsible for establishing and managing compensation policies for our executive officers and for making decisions about awards under our stock-based compensation plans in satisfaction of Rule 16b-3 under the Securities Exchange Act of 1934, as amended, or the Exchange Act. Each Committee member is a non-employee director within the meaning of Rule 16b-3 of the Exchange Act, and an outside director within the meaning of Section 162(m) of the Internal Revenue Code. This report is submitted by the Compensation Committee and addresses the compensation policies for fiscal 2005 as they affected our executive officers.

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      The Compensation Committee’s policy is to structure executive compensation that is aligned with the achievement of specific company goals, such as growth, compliance and earnings. In addition to specific goals, the Compensation Committee also considers other aspects of an executive’s performance that may not relate to or be measurable by objective standards. In sum, the Compensation Committee strives to structure executive compensation that provides incentives and rewards to our executive officers and enables us to retain our valued employees in a competitive environment.

      There are two (2) compensation components for our executive officers: cash compensation in the form of salary and bonus pay, and non-cash compensation in the form of stock options or restricted stock awards.

      Salary. The amount of an executive’s annual salary is based on the executive’s experience, skills and responsibilities, as well as economic and business conditions affecting VistaCare.

      Bonus Pay. The amount of bonus pay awarded to any executive officer is based on the executive’s performance in relation to stated goals and VistaCare’s overall performance. Results that affect bonus pay include reaching target patient census goals, the achievement of revenue and net income targets and controlling costs and other expense items. There is no set amount of bonus pay to which any executive is entitled, and the Compensation Committee establishes the amount of annual bonus pay payable to each of the executive officers in respect of any year following the completion of the audit of VistaCare’s financial statements for such year. During fiscal years 2004 and 2005, the Compensation Committee did not grant any bonus pay award to any of the named executive officers.

      Stock Options and Restricted Stock Awards. The Compensation Committee uses stock options and restricted stock awards as a long-term, non-cash incentive and as a means of aligning the long-term interests of executives and stockholders. The exercise price of stock options is set at the market price of our common stock on the date of the grant, thus linking the value of the options to the holder to the future performance of our stock. Stock options do not become valuable unless the price of our stock increases above the price on the date of the grant. In the case of restricted stock awards, the holder of the award does not realize the value of the stock until the restrictions imposed on the award expire. The number of stock options or restricted stock awards granted to an executive as a form of non-cash compensation is determined by taking into consideration factors such as the executive’s performance, the number of stock options or restricted stock awards previously granted to the executive, the executive’s remaining options exercisable and the value of those stock options or restricted stock awards, as compared to the anticipated value that an executive will add to VistaCare in the future. Stock options or restricted stock awards are not necessarily granted to executives on an annual basis.

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      The Compensation Committee, in determining the salary, bonus pay and stock option components for our Chief Executive Officer in fiscal 2005 considered the various factors described above. During fiscal 2005, we did not grant any stock options or restricted stock awards to our Chief Executive Officer.

      Section 162(m) of the Internal Revenue Code generally disallows a tax deduction to public companies for compensation over $1 million paid to its chief executive and its four (4) other most highly compensated executives. Performance-based compensation is excluded from the compensation taken into account for purposes of the limit if certain requirements are met. We currently intend to structure our stock options and restricted stock awards granted to executives in a manner that complies with the performance-based requirements of the statute. The Compensation Committee believes that, given the general range of salaries and bonuses for our executive officers, the $1 million threshold of Section 162(m) will not be reached by any of our executive officers in the foreseeable future.

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PROPOSAL 2

RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED

      Our Audit Committee has selected Ernst & Young LLP, an independent registered public accounting firm, to audit our financial statements for the fiscal year ending September 30, 2006. Ernst & Young LLP audited our financial statements for the fiscal year ended September 30, 2005. Although stockholder approval of the selection of Ernst & Young LLP is not required by law, our board of directors believes that it is advisable to give stockholders the opportunity to ratify this selection. We expect that representatives of Ernst & Young LLP will be present at the 2006 Annual Meeting, with the opportunity to make a statement if they so desire, and will be available to respond to appropriate questions from stockholders. In the event of a negative vote on this proposal by the stockholders, the Audit Committee will consider whether it is appropriate in the future to consider the selection of other independent registered public accounting firms.

      The board of directors recommends that you vote “FOR” the ratification of the selection of Ernst & Young LLP as our independent registered public accounting firm, and proxies solicited by the board will be voted in favor thereof unless a stockholder has indicated otherwise on the proxy.

FEES PAID TO ERNST & YOUNG

      The following table shows the fees paid or accrued by us for the audit and other services provided by Ernst & Young LLP for the fiscal years 2005 and 2004.

      Audit fees represent fees for professional services provided in connection with the audit of our financial statements for the fiscal years ended September 30, 2005 and September 30, 2004, and reviews of quarterly reports on Form 10-Q filed during fiscal years 2004 and 2005, as well as the specific compliance requirements of Section 404 of the Sarbanes-Oxley Act of 2002 for the fiscal year ended September 30, 2005.

      Audit-related fees represent fees for professional services provided in connection with an audit of our pension plans and accounting consultation regarding stock options.

      Tax fees consist of fees for tax compliance, tax advice and tax planning.

      All other fees represents an annual subscription we paid to Ernst & Young LLP for access to its online database that provides us access to accounting guidance issued by the Financial Accounting Standards Board and other related standard setting bodies.

      All audit and non-audit services provided by Ernst & Young LLP in fiscal years 2004 and 2005 were approved in advance by the Audit Committee.

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Board Audit Committee Report

      VistaCare’s Audit Committee oversees our financial reporting process on behalf of the board of directors. Management has the primary responsibility for the financial statements and the reporting process, including the systems of internal controls. The primary duties and responsibilities of the Audit Committee are to:

      The Audit Committee has:

      The Audit Committee has also received the written disclosures and the letter from VistaCare’s independent registered public accounting firm required by Independence Standards Board Standard No. 1 (entitled “Independence Discussions with Audit Committees”), has discussed the independence of its independent registered public accounting firm and considered whether the provision of non-audit services by its independent registered public accounting firm is compatible with maintaining auditor independence, and has satisfied itself as to the independent registered public accounting firm’s independence.

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      Based on the review and discussions described above, the Audit Committee has recommended to the board of directors that VistaCare’s audited financial statements be included in VistaCare’s Annual Report on Form 10-K for the fiscal year ended September 30, 2005 for filing with the Securities and Exchange Commission. The Audit Committee has also recommended the selection of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending September 30, 2006.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

      The following table sets forth certain information regarding beneficial ownership of our common stock as of January 10, 2006 by:

      For purposes of this table, beneficial ownership is determined in accordance with Rule 13d-3 of the Securities Exchange Act of 1934, as amended, and generally includes voting and investment power over securities. Under this rule, a person is deemed to be the beneficial owner of securities that can be acquired by such person within sixty (60) days of January 10, 2006 upon the exercise of options. Each beneficial owner’s percentage ownership is determined by assuming that all options held by such person that are exercisable within sixty (60) days of January 10, 2006 have been exercised.

      Except as indicated in the footnotes to this table and subject to applicable community property laws, the persons named in this table have the sole voting power with respect to all shares of common stock listed as beneficially owned by them. Unless otherwise noted in the footnotes to this table, the address of each beneficial owner is c/o VistaCare, Inc., 4800 North Scottsdale Road, Suite 5000, Scottsdale, Arizona 85251.

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STOCK PERFORMANCE GRAPH

      The following performance graph illustrates hypothetical investments of $100 in our common stock, in the Russell 2000 Index, a broad market index of which VistaCare’s common stock is a component, and in the Standard & Poor’s Healthcare Index, a general index of the securities of publicly traded healthcare companies, on December 18, 2002 (the date on which our common stock first traded on the Nasdaq National Market) and compares the change in such investment between such date and December 31, 2002, between January 1, 2003 and December 31, 2003, between January 1, 2004 and September 30, 2004, and between October 1, 2004 and September 30, 2005. We paid no dividends during the periods shown, whereas the performance of the indices is shown on a total return, dividend reinvestment basis.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

VistaCare Hospice Foundation

      The VistaCare Hospice Foundation (formerly, Vista Care Foundation) is a non-profit corporation established by Barry M. Smith, the former Chairman of our board of directors, in March 1996 for the purpose of soliciting, investing and distributing funds to advance the cause of end-of-life care. The foundation:

      The business and affairs of the foundation are currently governed by a six (6)-member board of trustees. Geneva B. Johnson, one of our directors serves as Chair of the board of trustees. Since May 2005, Martin A. Yenawine, an employee of the Company and former Assistant to the Chairman, has served as President and Chief Executive Officer of the foundation and as a member of its board of trustees. We pay Mr. Yenawine’s compensation to work with the foundation on a full-time basis, which, from May 2005 through September 30, 2005, totaled approximately $63,466. At any meeting of the foundation’s board of trustees at which at least three, but fewer than four, trustees are present, it is possible that Ms. Johnson and Mr. Yenawine could control the outcome of all actions taken at such meeting.

      In addition, we made a cash contribution to the foundation of $69,000 in January 2005.

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Consulting Services Agreement

      In September 2003, we entered into a consulting services agreement with Dr. Perry G. Fine, a member of our board of directors, pursuant to which Dr. Fine provides certain consulting and other related services to VistaCare as we may request from time to time. In return, Dr. Fine receives an annual retainer of $60,000, paid in equal monthly installments commencing on September 1, 2003, plus reimbursement by us in accordance with Company policy of travel and other business-related expenses. The agreement may be terminated by either Dr. Fine or us upon thirty (30) days’ written notice with or without cause. In addition, we may terminate the agreement immediately under certain circumstances. A copy of the agreement was filed as Exhibit 10.39 to our 2003 annual report on Form 10-K.

Other Transaction

      On September 27, 2005, in order to aid in the relocation of Mr. Elliot to the Phoenix, Arizona metropolitan area, the board of directors, at a special meeting and without the participation of Mr. Elliot, agreed to purchase Mr. Elliot’s house in Minnesota for $940,000. The purchase price was based on two (2) independent real estate appraisals. An agreement for the sale of the house to the Company was executed on October 11, 2005. Pursuant to the terms of this agreement, if the Company is able to sell the house for more than $940,000, Mr. Elliot is entitled to the difference between the sales price and $940,000. If the house sells for less than $940,000, Mr. Elliot is to pay the Company the difference between $940,000 and the sales price. On December 15, 2005, the Company sold the house to an unrelated third party for $900,000. The sale of the house was closed on December 15, 2005. As of the date of this proxy statement, Mr. Elliot owes the Company approximately $40,000, which he has agreed to pay by March 31, 2006.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

      Section 16(a) of the Exchange Act requires our executive officers, directors and persons who own more than ten percent of a registered class of VistaCare’s equity securities to file reports of ownership and changes in ownership on Forms 3, 4 and 5 with the SEC and The Nasdaq National Market. These persons are required by SEC regulation to furnish us with copies of all Forms 3, 4 and 5 they file with the SEC and Nasdaq.

      Based on a review of reports filed by our directors and executive officers and based on representations from them, we believe all stock ownership reports required to be filed by those reporting persons during 2005 were timely made, except with regard to the following transactions due to administrative error: (i) a Form 4 on behalf of Mr. Crews relating to a stock option grant on May 5, 2005; (ii) a Form 4 on behalf of Mr. Donnell relating to a stock option grant on August 4, 2005; and (iii) a Form 4 on behalf of Mr. Henry relating to a stock option grant on May 5, 2005. The corresponding Form 4 for each of the persons identified above has since been filed. In addition, a Form 3 filed on behalf of Mr. Elliot on January 12, 2005 inadvertently excluded certain shares of our common stock owned by Mr. Elliot. The Form 3 for Mr. Elliot was amended on January 28, 2005 to include the correct share ownership information. Further, a Form 4 was not filed relating to the sale of shares by Dr. Fine on March 30, 31 and April 12, 2004. A Form 5 has been filed to record those transactions.

OTHER MATTERS

      Our board of directors does not know of any matters which will be brought before the annual meeting other than those matters specifically set forth in the notice of the 2006 Annual Meeting of Stockholders. However, if any other matter properly comes before the annual meeting, it is intended that the persons named in the enclosed proxy card, or their substitutes acting thereunder, will vote on such matter in accordance with their best judgment.

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