Updated from April 22 Managed care investors could start singing the blues. The sector -- which has been humming along on a consolidation spree -- hit a sour note on Thursday. A major Blue Cross provider suddenly called off plans for a celebrated merger. In a terse statement issued after the market closed, WellChoice ( WC) said it has ended talks to join forces with Oxford Health ( OHP). "WellChoice, the parent company of Empire Blue Cross Blue Shield, announced today that it has terminated discussions with Oxford Health Plans regarding a potential acquisition of Oxford," the company stated. "WellChoice is issuing this statement to dispel any speculation regarding this matter." Shares of both companies had posted significant gains before the news broke late Thursday. WellChoice jumped 3.7% to $38.02, while Oxford climbed 2.4% to $55.15. Oxford's stock peaked earlier this month as investors celebrated the expected union. Analysts were clearly enthusiastic. Robert Mains of Advest felt the merger might finally bring Oxford shareholders a strong return on their money. "Oxford has long been subject to takeover rumors," Mains wrote in early April. "It is the leading HMO in an attractive but limited market ... that delivers strong performance and lots of cash but trades at a below-peer multiple. ... This could be a positive for Oxford shareholders." Citigroup analyst Charles Boorady even upgraded the stock to buy. But he also offered some now haunting words of caution. "If the deal with WellChoice to acquire OHP falls through," he stated, "it may raise concern that something may be wrong at OHP." On Friday, Oxford slid 9%, dropping $4.94 to $50.21. WellChoice rose $3 to $41.02.