CVS Health (NYSE:CVS) stock is taking a beating on Thursday after health insurance company Blue Shield of California revealed plans to switch away from its pharmacies.
Blue Shield, which is a nonprofit health insurer, is mostly dropping CVS Health as its preferred pharmacy. Instead, it’s replacing the pharmacy chain with Mark Cuban’s online pharmacy company Cost Plus Drug Company and Amazon’s (NASDAQ:AMZN) Amazon Pharmacy.
Blue Shield is changing its preferred pharmacies in an attempt to save more money on drug costs. It claims that doing so will result in $500 million in annual savings. However, some specialty drugs and complex medications will still be handled by CVS Health.
Mark Cuban said the following about the Blue Shield news:
“I think all payers realize that now that Cost Plus has made the price of medications transparent, providers and patients can see what prices should be, and the entire industry will have to adjust.”
What This Means for CVS Stock
Investors obviously aren’t happy about CVS Health losing a portion of its pharmacy business. That has led to heavy trading of the stock today with investors selling shares. This has some 12 million units on the move this morning, as compared to its daily average of 8.9 million shares.
Today’s news could also be an early warning for CVS stock investors. If online pharmacies continue to offer cheaper prices, it’s possible other health insurance companies will switch to them. That would likely cause further drops in CVS shares.
CVS stock is down 10.5% as of Thursday morning and down 29.9% since the start of the year.
Investors looking for more of the most recent stock market news today will want to keep reading!
We’ve got all of the hottest stock market news that traders need to know about on Thursday! That includes why shares of Hawaiian Electric (NYSE:HE) stock, Xpeng (NYSE:XPEV) stock and Adobe (NASDAQ:ADBE) stock are on the move today. All of that news is available at the following links!
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On the date of publication, William White did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
