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  • cmc587 cmc587 Mar 29, 2008 11:41 AM Flag

    Why, Montana will:"Today will be a GREAT day for us Longs"

    s'alright lady, I'll take .04 off yesterday as "a good day for longs" and, better yet, I'll take last week every week. FEAR the SPEAR- AT&T is huge, Montana. From this spins more than PBMing, it is a kernel to mail order and "specials." Is it UNH to MHS? NO. Is it close- yes, after the loss of the FED, calPERS, Illinois, FL minus Texas is added in. You see, three companies at one time owned this "market" and, despite "intrusion-sabre-rattling" (WMT, UNH, multi-State (WVa group, ME group threats) two still do. But, MHS is in a pickle with UNH and it would not surprise me to see a merger/acquisition deal in the making. This is a merger directed up-stream towards the "service" model whereas CVS-CMX was a merger directed towards the end-user ("retail") model. Which direction is best, I assure you, is being carefully thought through by many; especially MHS and UNH. (In some respect, these two both need each other at this time, at the very least.) Margins are definitely shrinking and there is no reason why they should not be. The buyer clearly has seen that it has the leverage. The PBMs are getting squeezed and are now in a TAKE AWAY WAR with one another. They cannot withdraw from the war since mail order (one of their true "staples") is fed by PBM volume. Most have heard that the PBM portion of contracts are now being dealt with as near money-turners (LITTLE IF ANY PROFIT ON THAT PORTION ONLY.) This is why keeping the far less profitable portion of the FED contract was still a positive for us and, ditto, TexTeachers.
    So, again: 1. watch for signs of a "combine" in any order between UNH and MHS (this could even happen within the next 30-60 days). How will the market view such a deal? How will this (UNH/MHS) synergy-business plan play out vis a vie the CVS-CMX business plan. (I prefer ours; a retail model over a service model). 2. Be wary of the impact "take aways" will have on out price per share because it is something only the most informed actually will understand-and they will be either "buying up" or "bailing out" before we can finish reading the "lead story." This does not mean a bail out would be "the end" but as has happened with WAG- try 7 years flat with inflation (from years of FED rate cuts) barking like "the hounds from hell" outside the door. 3. understand that CMX is still the #2 pony in the CVS-CMX deal so that retail-direction will always be the designed path. CMX is merely the hedge. This is not bad per se, just a fact of life. (When we were MDM and owned an non-public peanut of an entity called Caremark, this #2 pony eventually was what we all rode to prosperity! NEVER HAPPENS IN OUR (CVS-CMX) BUSINESS MODEL!
    Watch these FACTORS carefully, montana, (as opposed listening to message board cheerleading, bashing, back-patting and back-stabbing), and if you combine understanding their potential impact with your "here-to-date" extraordinary gal-intuition, WE SHOULD HAVE A WINNER.
    p.s. How do you "feel" about Monday? I am "watching"

 
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