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Six analysts and top management from seven sector firms examine the Health Care Facilities sector in this special 64-page issue from The Wall Street Transcript, available at (212/952-7433) or http://www.twst.com/info/info386.htm

TWST: Adam, how does the performance of the group in 2001 year to date compare with the performance of the health care facilities stocks in 2000?

Mr. Feinstein: No one is sending me flowers anymore like last year with 2001 returns beating the market but still negative for the year. I’d say 2000 was an “all-star” year. We were coming off all-time depressed trends, creating the opportunity for abnormally high returns. The group I monitor, encompassing health care facilities, was up 145% in 2000. That doesn’t happen very often. As a result, it will be very hard to replicate that performance anytime soon. However, that doesn’t mean that the group can’t deliver decent returns. Nonetheless, the group is down about 10%, year to date. In my view, there was a lot of interest in the group during the fourth quarter of last year. The index traded up almost 30% in that quarter. Thus, as we entered 2001, suddenly the stocks looked pretty expensive, contradicting the trend of 12 months earlier. As a result, there was a big rotation into more depressed stocks. Thus, we saw the group trade down pretty dramatically over the first few weeks of the year. However, we have seen a rebound since that time with a very nice rally over the past month (with the group up almost 20% over the past six weeks).

TWST: Adam, what are you telling investors? Is this the time to put new money into the stocks, and what kind of investors are showing interest in health care facilities?

Mr. Feinstein: My thesis continues to be the seventh inning stretch, so I think that we are getting toward the end of a good run. But we’re not completely there yet. So our recommendation for the next couple of months is to overweight the facilities area. Moving into the late 2001 period, there’s going to be a lot more pressure coming from some of the things we highlighted earlier that may cause some depression in the valuations, etc. At that point, we would be a bit more hesitant. To answer your question about whether or not this is the time to be pouring new money in, I think you have to be a little more careful than last year. It’s not like 2000 all over again, where you could buy whatever stocks you wanted and they doubled. You’re going to have to be a little more specific here. So some of the more beaten-up specialty companies, such as HealthSouth (NYSE:HRC), may make more sense from a longer-term perspective.

TWST: Adam, you mentioned HealthSouth earlier as one you particularly like. Does it rank up there as one of your top picks?

Mr. Feinstein: Yes, it is one of our favorite names. The company has scrapped its overly aggressive acquisition strategy and, in our view, has reemerged as a more focused organization. We think that HealthSouth will begin to generate improved cash flow from operations, allowing it to pay down debt and continue to invest in its existing infrastructure. The company is also benefiting from improved commercial pricing trends, following the pressure it experienced in the past from these payors. At the same time, HealthSouth should benefit from recent Medicare givebacks, reflecting a more accommodating federal government. The company is also experiencing strong volume trends as more patients continue to shift to the alternate site for outpatient surgery procedures and rehabilitative care. We also believe that there are future value creation opportunities as the company may look to separate assets through divestitures, as well as possible spinoffs.

This special issue includes:

1) Health Care Facilities - In an in-depth (12,400 words) Analyst Roundtable, Adam Feinstein, Vice President in Equity Research at Lehman Brothers, Leslie Henshaw, Managing Director at ING Asset Management, Gary Taylor, Vice President of Equity Research at Banc of America Securities LLC, examine the outlook for the sector including, volume trends in hospitals, demographics and share specific stock recommendations.

2) The TWST confidential Off-The-Record survey of management performance at seventeen sector firms asked market insiders about the ability of management teams to create shareholder value.

3) Investing in Health Care Facilities - In an in-depth (4,700 words) Analyst Interview, James Kumpel, Health Care Services Analyst at Raymond James & Associates, examines the outlook for the sector and shares specific stock recommendations .

4) Specialty Healthcare Providers - In an in-depth (3,500 words) Analyst Interview, Peter Emch, Director-Equity Research at Credit Suisse First Boston, examines the outlook for the sector and shares specific stock recommendations.

5) Hospital Management Stocks - In an in-depth (3,300 words) Analyst Interview, Leo Murphy, Vice President-Senior Analyst at Pioneer Investment Management USA, Inc., examines the outlook for the sector and shares specific stock recommendations.

6) CEO interviews (average 2,500 words). Top management of seven sector firms examine the outlook for their firm and the sector.