“They needed to defend the business through encroachment by Amazon,” RBC Capital Markets analyst George Hill told CNBC. “Amazon’s ability to impact the business over the near to mid term is usually low, although the ability to impact the stock is usually high.”
CVS would likely lose the ability to control its own destiny if This kind of didn’t do something, Hill added. “This kind of could be $260 billion in revenue [in 2019].”
CVS has already been trying to establish greater control in its corner of the health care industry. In 2007, the company acquired Caremark pharmacy benefit manager, which has more than 75 million plan members.
Aetna shares closed Thursday 11.5 percent higher at $178.60 a share after The Wall Street Journal posted its report. CVS shares fell about 3 percent.
“The key here is usually you’re going to control the health-care participants in a much greater way,” said CFRA senior analyst Joseph Agnese. By acquiring Aetna, CVS could offer customers lower co-pays within the drug stores.
“that will will incentivize 23 million people to come to CVS rather than Walgreens,” Agnese said. He carries a hold recommendation on CVS Health. “I find This kind of very difficult to imagine how Amazon will enter the space without creating big acquisitions.”
Amazon did not immediate respond to CNBC’s request for comment.
CNBC reported in May that will Amazon has been recruiting health insurance experts to develop an internal pharmacy benefits manager for Amazon employees.
However, RBC’s Hill expects that will, if Amazon were to announce an online pharmacy, This kind of would likely still take the internet commerce behemoth a decade to get even 10 percent of market share.
In September, Hill had predicted an “inflection point” ahead for CVS should the company transform itself by acquiring a managed care organization like Aetna. Such a move, Hill said at the time, “could transform itself along with the space more broadly.”
Hill told CNBC on Thursday he was optimistic how This kind of appeared that will CVS was right now pursuing the right strategy. “A year into This kind of transaction, not only do you have a company with formidable offerings [in health care, although] maybe only United could compete.”