They knew it was coming, but they didn't know when, where, how, and who with...

Today Amazon (NASDAQ: AMZN) rocked the healthcare sector after announcing that it has partnered with Warren Buffett's Berkshire Hathaway (NYSE: BRK-A) and Jamie Dimon's JPMorgan Chase & Co. (NYSE: JPM) to start a new company to address rising healthcare costs for their U.S. employees, that may potentially be rolled out to all Americans.

The new entity will be an independent company that will be "free from profit-making incentives and constraints". Its initial focus will be on technology solutions that will provide U.S. employees and their families with simplified, high-quality and transparent healthcare at a reasonable cost.

Mr. Buffett said "ballooning" healthcare costs are like a "hungry tapeworm" on the economy. Amazon's CEO, Jeff Bezos, admits while the task will be "hard", give the complex healthcare system, they enter "open-eyed about the degree of difficulty" and improved outcomes for employees and their families would be "worth the effort."

The companies said the venture is in the early planning stages, with the initial formation of the company jointly spearheaded by Todd Combs, an investment officer of Berkshire Hathaway; Marvelle Sullivan Berchtold, a Managing Director of JPMorgan Chase; and Beth Galetti, a Senior Vice President at Amazon. The longer-term management team, headquarters location and key operational details will be communicated at a later date.

While sparse on details, the news has reverberated throughout various health-related sectors on Wall Street. Amazon is known for destroying sectors it enters - books, electronics, general retail, and most recently the grocery sector with its purchase of Whole Foods.

Loop Capital analyst Anthony Chukumba views the trio as a "potentially formidable combination." Chukumba notes profitability will not be a priority for the new company and highlighted one of Bezos' favorite sayings: "Your margin is my opportunity." While none of the companies has healthcare experience, the new company will combine Amazon's technological expertise, Berkshire Hathaway's operational experience, and JPMorgan Chase's deep pockets, the analyst noted.

Taking the brunt of the selling pressure on Wall Street today is managed care, PBM and pharmacy stocks. In managed care, CIGNA (NYSE: CI) is down 6.1%, Anthem (NASDAQ: ANTM) is down 5.9%, UnitedHealth (NYSE: UNH) is down 3.5%, Humana (NYSE: HUM) is down 3.1%, and Aetna (NYSE: AET) is down 2.6%. In PBMs, Express Scripts (NASDAQ: ESRX) is down 6.3% and CVS (NYSE: CVS) is down 4.8%. Pharmacy Walgreens Boots (NYSE: WBA) is down 4.9% while Rite Aid (NYSE: RAD), which was also seen a potential takeover target for Amazon, is down 6.5%.

Some analyst defended managed care stocks amid the sell-off. Evercore ISI said the initiative is many years from presenting a real competitive threat, if ever, and there is no obvious competitive advantage.

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