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An Ailing HMO's Impact (or Lack Thereof) on CVS

Also, playing a game of semantics with THQ.

Tuesday thwack:

Prescription pitfalls:

Can't help but wonder about the impact on


(CVS) - Get CVS Health Corporation Report

, the drug store chain, from the recent financial debacle involving

Harvard Pilgrim Health Care

. Harvard Pilgrim, the largest HMO in Massachusetts, was placed into receivership several weeks ago. According to last year's 10-K, Massachusetts is CVS' third-largest market, and in the promotional text of its glossy 1997 annual report, its Harvard Pilgrim relationship was mentioned several times.

As part of being placed in receivership, Harvard Pilgrim will give priority to bills owed after it went into receivership rather those owed before going into receivership. The HMO also has launched a drive to control prescription-drug costs.

How much biz does CVS do with Harvard Pilgrim? Has it been stiffed by Harvard Pilgrim? Will its Harvard Pilgrim revenue go down as a result of Harvard Pilgrim's new cost-cutting drive?

A spokesman for CVS says, "We are current

with Harvard Pilgrim and expect to stay current."

You can bet CVS short-sellers will be paying close attention to receivables when the company reports earnings Feb. 8.

CVS was most recently mentioned

here for extending its fiscal year by a week.

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The darn

Hostile React-o-Meter

almost broke after spinning outta control after

last week's item on



. THQites emailed allegations of this, that and the usual garbage.

What really galled them, however, was the sentence that said: "Data from

NPD Group's

TRSTS report show that, as of the end of December, there were still large amounts of unsold THQ titles in the channel." However, as many THQites were quick to point out, the TRSTS reports don't show how much inventory is in the channel; they only show how much product was sold at retail. What I wrote, in other words, was "factually incorrect," says a very nonhostile Peter Dille, THQ's marketing chief.

Indeed, it was wrong to write that the TRSTS reports show that there was a large amount of inventory in the channel.

However (yep, here it comes; get those poison pens ready), we're talking about semantics. There's no excuse for a semantics error, and I clearly erred in the name of trying to keep it simple.

Had I not kept it simple, it would've gone something like this: "According to short-sellers, at the end of December there were still large amounts of unsold THQ titles in the channel. They reached that conclusion after reviewing the December TRSTS data and revenue from specific THQ titles, which were disclosed in the company's third-quarter 10-Q. They then compared that data with fourth-quarter forecasts from analysts, who presumably had received guidance by THQ. (It may not be official, but it's the closest anybody can get to the real picture.)"

THQ, it should be noted, did not dispute (at least not to me) any issues in the column other than the way I portrayed the TRSTS data. Asked about the inventory, Dille said that THQ is "comfortable with the rate of sale, where we are vis a vis industry trends and where we are with the rest of the world. We reserve accordingly."

Oh, and if you intend to send more hostile reactions my way, save them for my

message boards at

; otherwise the only response you'll get from me is the canned "boinnggg" that has greeted all of my emailers for the past two years.

Herb Greenberg writes daily for In keeping with TSC's editorial policy, he doesn't own or short individual stocks, though he owns stock in He also doesn't invest in hedge funds or other private investment partnerships. He welcomes your feedback at Greenberg also writes a monthly column for Fortune.

Mark Martinez assisted with the reporting of this column.