The Wall Street Transcript Publishes Healthcare Facilities Analyst Interview
NEW YORK, Feb. 18 /PRNewswire/ -- Seven leading analysts and CEOs or top
management from sixty Healthcare firms examine the Healthcare sector in the
latest issue of The Wall Street Transcript (212/952-7433) or
twst.com
In a vital review of this sector for investors and industry professionals,
this valuable 223-page Special Issue features:
1) Healthcare Facilities - In an in-depth Analyst Interview (7,500 words)
Howard Capek, Executive Director with Warburg Dillon Read, and Matt Ripperger,
Director with Warburg Dillon Read's Healthcare research group, examine the
business models of long term care companies, new developments, the outlook for
the sector, and offer specific stock recommendations.
Capek discusses the components of the sector which include "Acute care
hospitals, psychiatric hospitals, and rehabilitation, all of which include
inpatient and outpatient long-term care or skilled nursing; senior living,
which as we define it, includes assisted and independent living; and finally,
home healthcare."
Capek rates the publicly traded players in the kidney dialysis space:
"Fresenius Medical Care AG (NYSE: FMS), which I have rated Buy, is a global,
vertically integrated company that treats roughly 25% of the US population and
8% of the worldwide population. They also manufacture a kidney dialysis
product and have, again, roughly 20% market share worldwide."
Capek continues, "Then there is Gambro, which is also an international,
vertically integrated company, and Total Renal Care (NYSE: TRL) and Renal Care
Group (Nasdaq: RCGI), which are pure-play service care companies in the US.
Then there are a few private pure service companies in the US. We have Renal
Care Group rated Buy and Total Renal Care, which has had its share of
acquisition assimilation problems, rated Hold."
In the rehab group, Capek is confident about HEALTHSOUTH (NYSE: HRC) as he
states, "They are the largest and broadest provider of rehab and outpatient
services, but investors have generally lost sight of or given up on this
scale. When the pricing cycle turns, they're going to be pretty well
capitalized and poised for growth, and they are only scratching the surface of
improving asset efficiency or driving top-line growth by adding services in
existing markets."
When asked about hospital stocks, Ripperger answered: "Buy them. I am
very bullish on the sector as a whole. I would highlight first the two
spin-offs from Columbia (NYSE: COL), Triad Hospitals (Nasdaq: TRIH) and
LifePoint Hospitals (Nasdaq: LPNT). I highlight these two companies because
in addition to the overall improvement in the industry fundamentals, these
companies in my opinion have considerable upside potential due to company-
specific reasons. Triad and LifePoint were formed through a spin-off from
Columbia/HCA in May 1999. I believe that they have the opportunity for above
industry average commercial price increases, primarily because many of these
hospitals provided discounted services under the previous regional contracting
strategy."
Ripperger continues, "As for Tenet Healthcare (NYSE: THC), I have a Strong
Buy rating and a $28 price target. Tenet has successfully completed its sale
of selected non-core hospitals and the company has used the proceeds to retire
debt."
About the hospital sector, Ripperger explains: "I segment the universe
into three areas, one being urban hospitals, which would include Columbia and
Tenet; the second being middle market, which would include Quorum
(Nasdaq: QHGI), Triad Hospitals, and Universal Health (NYSE: UHS); and the
third being rural or non-urban, and that would include Health Management
Associates (NYSE: HMA), which has been the leading operator and consolidator
of rural hospitals over the past decade, LifePoint Hospitals, and Province
Healthcare (Nasdaq: PRHC), all of which, in my opinion, have attractive growth
characteristics."
Ripperger rates Province Healthcare a buy: "I am recommending Province
because in my opinion they have roughly 25% internal earnings growth over the
next three to five years through merely executing on the non-urban hospital
operating strategy of recruiting physicians to their market, adding higher
acuity services, and reducing the patient out-migration. In addition,
Province's current facilities are located in very attractive high growth
markets."
Ripperger also rates Universal Heath Services a strong buy as he explains:
"Despite this near-term earnings shortfall in the last quarter, Universal's
growth fundamentals in terms of their pure admission growth, and also the
pricing that they're getting, remains very strong. I believe the company has
addressed the problem and has improved it, and I expect them to report a
pretty material improvement in their bad debt and an improvement in their
collections in this next quarter."
"In assisted living," Capek continues, "other than Sunrise (Nasdaq: SNRZ),
which we have rated a Hold because of some near-term acquisition-related
volatility, Emeritus (Amex: ESC) is the only operator that owns all of its
assets, and does not have to unwind off balance sheet liability. They've
never pursued those black box, synthetic lease or joint venture development
structures. And subsequently, they don't have to worry about bringing all of
those off balance sheet structures on balance sheet in a very capital
constrained environment and at the expense of earnings dilution, the way most
of their competitors do. So in a nutshell, what you see is what you get.
There are no grossly overstated expectations for future growth because you can
measure everything that they're doing."
According to Capek, Manor Care (NYSE: HCR) is "An industry leader in an
industry that is tremendously out of favor. The BBRA is going to take time to
trickle down into the numbers, both for Manor Care and the rest of the sector.
So it becomes a timing call. Once that happens, probably early fourth quarter
2000, then Manor Care is the first name that anyone would fly to."
This 223-page Warburg Dillon Read Global Healthcare Services Conference
Issue also includes:
2) The following Warburg Dillon Read Analyst Interviews, (avg.
3,000-words):
Healthcare Services Industry - Geoffrey E. Harris
Internet Healthcare - P. Christian Hester
Healthcare Information Technology - Adam B. Frisch
PPOs & Home Healthcare Industry - Jeannie Lorenz
Pharmaceutical Outsourcing - Vivek Khanna
3) 60 extensive (average 2,000 words) CEO Interviews with top management
from the following sector firms discussing the outlook for their firm and the
Healthcare sector:
For a complete list of CEO interviews see twst.com
To obtain a copy of this insightful 223-page report, see
twst.com or call 212-952-7433. This special section is
also included in the HEALTHCARE Sector of TWST Online at
twst.com
The Wall Street Transcript is a premier weekly investment publication
interviewing market professionals for serious investors for over 36 years.
Available at twst.com TWST Online provides free Interview excerpts.
For highlights, recent recommendations by analysts and money managers and
business news, visit twst.com
Do a free search of the extensive TWST Archives at
archive.twst.com
The Wall Street Transcript does not endorse the views of any interviewee
nor does it make stock recommendations.
SOURCE The Wall Street Transcript
-0- 02/18/2000
/CONTACT: Peter McLaughlin of The Wall Street Transcript, 212-952-7433/
/Web site: twst.com
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