NEW YORK ( TheStreet) - It's no secret that the Supreme Court's looming decision on President Obama's Affordable Care Act looms large over the healthcare stocks. Still, investors may wise to spend their time understanding how consolidation is already reshaping the healthcare sector ahead of the June decision.
The Supreme Court will decide whether or not Medicaid is expanded, potentially having
biggest impact on Medicaid HMO's like
(CNC). Diversified healthcare providers like
(CVH) will also be watching.
Forget the SCOTUS decision, the market has already changed for healthcare stocks
As investors weigh the decision's impact on HMO and healthcare stocks, they may want to focus how recent M&A moves are already altering the drug store and pharmacy benefits manager piece of healthcare. Recent deals signal that big changes are underway, even as many - including the President -- hold their breath on the landmark court decision.
This week, the nation's largest drug store chain Walgreens (WAG) committed to what could wind up being a $27 billion acquisition of European pharmacy giant Alliance Boots by taking a 45% stake in the private equity owned chain for $6.7 billion. Walgreens shares tumbled to 52-week lows on the deal, as many questioned the company's strategy to become an international pharmacy giant, over a focus on resolving a contract standoff with Express Scripts (ESRX), one of the nation's largest pharmacy benefits managers.Walgreens decision can't be seen in isolation, and a closer look reveals the frenetic changes underway in drug stores and pharmacy prescription plans, which touches nearly every American. In April, the Federal Trade Commission approved Express Scripts' $29 billion acquisition of Medco Health Solutions (MHS), in a move to take on CVS Caremark (CVS), the nation's leading pharmacy benefits manager. In its approval, the FTC said that it allowed concentration of the sector because of a fast-changing competitive landscape. Underscoring big changes to the sector, in its approval of the merger, the FTC noted healthcare reform and the entrance of some of the nation's top health providers - currently awaiting the SCOTUS decision -- as reasons that the top three pharmacy benefits players don't control the market. "
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