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TWST: Daren, I know that you’ve looked at e-health in the past. What are you looking at most closely today?

Mr. Marhula: The angle that we’re taking at Piper Jaffray is what we’re calling information-driven health care. And we’re really looking at any company that uses information and data that can turn that information and data into knowledge for more efficient health care. So under that umbrella, similar to John, we’ve lumped the health care IT and e-health companies together because, in essence, they’re doing the same thing. They’re providing software solutions to the health care industry. So that’s one segment. We’re also looking at the PBMs, the pharmacy benefit managers, and then lastly, the drug distribution companies. Stock Performance

TWST: Daren, what has been most notable about the performance of these stocks over the past six to 12 months?

Mr. Marhula: The most noticeable trend has been the move away from the hype of the Internet back to the reality of real businesses and real companies. So maybe a year ago, if we would have been having this call, everyone would have been talking about the promise of the Internet, but stocks that would have been popular back then aren’t popular now. We’ve seen a shift in mentality back to investors being interested in companies with real business models, real revenue bases, real profitability. We talk to a number of chief information officers who are out there spending those IT budgets, and they’re spending those budgets primarily on clinically-focused software systems.

TWST: Back to you, Daren. You talked about Eclipsys (Nasdaq:ECLP) and you talked about Cerner (Nasdaq:CERN). What are some other companies that you particularly like at this time?

Mr. Marhula: I would say our two top picks right now, based on stock prices and improved fundamentals, are Cerner, which we’ve talked about quite a bit, and then also one that we haven’t talked about — AdvancePCS (Nasdaq:ADVP).

TWST: Tell me about the company and then about the stock.

Mr. Marhula: It’s in a space referred to as the PBM space, the pharmacy benefit management space. They essentially have leapfrogged to be the largest provider in the industry of PBM services through their recent acquisition of PCS Health Systems. They are now the largest company managing pharmacy services for approximately 75 million members. They are just starting to reap the rewards of the synergies created by that acquisition and are beginning to show some good momentum on new contract signing. I think that’s one that we’ll see continue to fare well over the next six to 12 months.

TWST: How have they been able to acquire 75 million members?

Mr. Marhula: Think of what they do as essentially bulk purchasing. They go out and sign up different insurers, whether they’re commercial HMOs or self-insured Fortune 500 corporations. They sign up insurers, combine all of those members, and with a larger base of members, you can negotiate lower pharmaceutical prices with pharmaceutical companies.

TWST: How do you arrive at a valuation for a company such as this?

Mr. Marhula: These companies are valued off earnings using traditional p/e and p/e to growth valuation metrics.