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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: Are there any sectors that will be particularly strong over the next 12 months, or is your outlook formulated more on a company-specific basis?

Mr. Emch: I think that it’s going to be more on a company-specific basis. We believe that we’re going to return to a normal period of stock performance, where the companies with the highest growth expectations and the companies that perform best relative to expectations are going to be substantially better stocks than the rest of the universe. While that has generally held true, it wasn’t true in 1999 and was only true to a limited extent in 2000. But I think that there has been rekindled interest in small and mid-cap growth generally, particularly small and mid-cap growth outside of tech. And traditionally, what has appealed to investors in this space is a company-specific story. Usually this is a company that is focused on an attractive niche and is executing well. So, for instance, surgery centers may be a very attractive niche. Investors have consistently found surgery centers to be attractive investments. But when we assess the attractiveness of a particular surgery center company, our conclusion will be driven by where the company is in its evolution: what are the facility margins compared to where they can go, what is the visibility of the same-facility volume and pricing growth? These trends are typically stronger in earlier stages of development than later stages. United Surgical Partners (Nasdaq:USPI) is an example of a company in an early and very dynamic stage of growth in this niche. I think you will see a similar type of dichotomy in many of these niches. Therefore, I think that stock performance is going to be more company-specific than we have seen for the last two years. In 1999 virtually all the stocks just got pounded, regardless of how well the companies were doing. And in 2000, the rural hospitals and labs were particularly strong, but the rest of the sectors really didn’t strengthen on the specialty provider side until late in the year. And now that we have had a run in some of these sectors, I think performance will be much more company-specific, driven particularly by how a company does versus earnings estimates.

TWST: Why don’t you tell us about the companies that you are recommending to investors?

Mr. Emch: We like DaVita (NYSE:DVA), a provider of renal dialysis services. The company has substantially outperformed analyst expectations for the last several quarters. It’s been successfully turned around, which I think is the first leg of the story. The management there is now putting in place the apparatus needed to grow the company. At this point, in spite of being a good performer in the fourth quarter of last year, it really hasn’t moved much from the end of the year. And so, given the lack of progress of the stock and the substantial outperformance of the company, the stock has gotten quite cheap on an enterprise value to EBITDA basis (it’s about 8 times 2001E EBITDA) and on a cash earnings basis (it’s about 15 times 2001E cash earnings). So we find that to be among the most attractively valued, consistent growth companies that we follow.

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.