CVS Caremark (CVS) Will Come Out A Winner in Aetna/Coventry Deal

August 20, 2012 8:24 AM EDT Send to a Friend
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Moving higher Monday morning is CVS Caremark (NYSE: CVS). The rise comes following the net $5.6 billion deal for Aetna (NYSE: AET) to acquire Coventry Health (NYSE: CVH), as announced earlier.

Analyst firm ISI pointed out how CVS is the provider of pharmacy-benefit management (PBM) services for Aetna, while Express Scripts' (Nasdaq: ESRX) Medco Health does the same for Coventry. Given that Aetna will buy Coventry, its assumed that PBM services will consolidate under CVS when Coventry's contracts with Medco expire in 2015 and 2016.

ISI sees the contracts at $2.5 billion to $3.5 billion and a switch could impact Express Scripts' earnings by about 2 percent. Though any switch would show up in today's session.

Ahead of the bell, CVS is up about 0.7 percent while Express Scripts is down 1.5 percent.


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