Wednesday, August 22, 2007

William Blair Health Care IT Index (WBHCIT)

I'd like to draw your attention to this Index which was developed by William Blair and Company. The Index (WBHCIT) is an equal-weighted index of 31 health care IT stocks, originally constituted with a base value of 1,000 on December 31, 2000. The index objective is to capture the aggregate stock performance of the majority of companies that focus on providing software, systems, online content, or technology-oriented services to the health care sector. It is designed to serve as a useful tool for benchmarking both historical and future Health Care Information Technology (HCIT) stock performance. Some of the stocks in the current mix include Cerner, Allscripts Healthcare Solutions, and QuadraMed.

Index members must meet the following criteria:

Business Requirement: 50% of revenue must come from HCIT activities
Company Structure: Must be an operating company, not an investment trust
Market Capitalization Requirement: $50 million or higher
Exchange Requirement- Must be traded on the NASDAQ, NYSE, or AMEX

A student of mine calculated that if you had invested in the Blair Index as of January 1, 2001, you would have enjoyed a 47.7% annual return.

To the best of my knowledge, there are no aging services technology firms in the Index, as of today. Most of these firms are either privately held, have a market cap of less than $50 million, or are like ADT Security Services, a division of Tyco. Perhaps we'll see the inclusion of such a company in the future, or it may make sense to consider a separate Index for aging technology companies.

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