I suggest that the sell off is related to this/these F-A-C-T-S ANNOUNCED TODAY...GE and AT&T billions in drug related writedowns based on new health-care format! (Who is their PBM???) Remember everyone, the CVS/CMX merger was built upon an integration into retail though data and "choice." It is working from what I "hear" but the independents are raising hell and hell (a/k/a State and Fed AG's) is "looking into their complaint." IMHO, the independents will lose this battle. However, when the PBM stand alone play (MHS, ESRX)- and retail drug store (WAG) play- seem to be riding the crest, why "play" CVS whose merger/business plan is only "well" based upon an admission of billions in losses and promises to change... but NOT FACTUALLY PROVEN. Remember, what the merger created was NOT two companies (a retail pharmy and PBM) under one banner. CVS became a "new animal." Based upon the pain it is causing to independents, that new animal appears to be working. However, the PBM part of CVS is really "not." It factually remains a "CVS-feeder." Yes, the new team is trying to revive the independent PBM operation but as yet, there is nothing to evidence success. To the contrary, the GE and AT&T announcement today is yet another serious "blow" to retention of gross sales. So, perhaps this is why WAG, ESRX and MHS are riding the crest while CVS hits yet another "bump" and is selling off. CVS is a winner ONLY if the new BP works. I believe it will and hold on. However, the investors are correct to be cautious and sell into any impediment to the announced business plan.
GE's latest 10-K filing states General Electric "contracted with a third party to administer our principal post age-65 drug plan as a Medicare-approved prescription drug plan," and as a result, the plan would no longer qualify for the subsidy as of Jan. 1.
Why would GE willingly give up a subsidy? "We anticipated that healthcare reform could potentially change many aspects of healthcare, including the tax-free subsidy. We acted in a manner we believe to be in the best interests of GE, our retirees and our shareholders," wrote GE spokeswoman Anne Eisele, in an emailed response to my questions. There is still something puzzling about this. Why give up $65 million before you have to?
Was GE compensated in some way, I wanted to know. Eisele said it received no compensation from CVS Caremark Corp.(CVS), which is administering the GE plan.
GE must get something out of this deal, I insisted, but Eisele offered no further explanation. CVS Caremark spokespeople did not respond to calls and e-mail messages.
He is certainly worthy of that and "letting 100 shares ride" IMHO is a wise play...HOLD and SEE. But as far as adding to what is being held, that video "catches" what I believe is the true sentiment. CVS is not just a retail pharmacy; neither is it a PBM. Because it is neither, each one's (retail pharmy and PBM) CORE is subject to attack. The PBM side has been ravished and CVS' CEO went to the woodshed and returned with a pitbull. Bravo! On the retail side, CVS' ability to grow with WAG has been hurt by CMX' implosion. No company can withstand the loss of billions in business and say "it doesn't matter." So, cash tsunami/bashersuit and now bullmarket, IMHO you have proven wise and the fact that you are a CVSer notwithstanding. At $29, however, I think we should become "players" once again. This does not mean I forsee $29, but maybe Santa will visit us early in 2010. Be well and prosper. c