THC is a healthcare services company that owns or operates general hospitals and related healthcare facilities serving urban and rural communities in 18 states. As of 11/99, the Company operated 113 hospitals. For the 3 months ended 8/00, revenues rose 1% to $2.89B. Earnings before accounting change rose 20% to $154M. Results reflect increases in patient volumes and revenues, a $10M gain on sales of facilities.

December 3, 2000

With a strong portfolio of hospitals, ranging from top teaching hospitals to facilities that are sole-providers for communities, THC has done a great job in preparing for future growth. Also, the government’s national expenditures on health care are projected to nearly double to $2.2 trillion over the next 5 years. This growth potential is another reason why the health care sector has seen good capital inflows. As for the stock, a lack of follow through from Thursday’s advance caused the stock to back into its previous consolidation range near $41. Strong support resides at this level in the form of a previous high and the convergence of the 5 and 10-dma’s of $41.16 and $41.01, respectively. A bearish engulfing candlestick pattern, which engulfs Thursday’s price indicates that the stock may retest further support at the $40 mark before resuming its upward course. Should an advance to higher levels unfold, look for resistance at the all time high of $43.44 to be trailed by tougher challenges at the $45 and $50 levels. Trading volume of 2 million shares or better will confirm an advance to higher levels. Keep firm stops at $39.50 to protect against a reversal in trend and remember that $39.56 could still provide some support ahead of the stop. Consider confirming entries with strength in the S&P Health Care Index (HCX.X) prior to opening positions.