Monday, April 18, 2011

More CVS Caremark Break-up Chatter

Last Friday, The New York Times covered the growing buzz about a CVS Caremark (NYSE:CVS) split in Pressure Grows to Unwind CVS Merger.

The article joins CVS $25 Billion Benefit Looms With Caremark Breakup: Real M&A from Bloomberg Business Week.

The clock is ticking for management to show significant non-retail synergy. Will CVS let its PBM go?

More commentary below. And as a special bonus, I include a hilarious video with a fifth question for your Seder tonight: What if Moses had social media?

The Times highlights a new letter from five consumer groups sent to the Federal Trade Commission (FTC) last week. Click here to read the letter.

As usual, there is a lot of sour grapes and misplaced blame by the consumer advocates. Plan sponsors can choose to use a restricted network model such as Maintenance Choice in their benefit design. Blame your employer or health plan, not CVS Caremark. I made this point last March in Pepsi, CVS Caremark, and the FTC.

I think the financial markets perspective will ultimately be more successful at getting management's attention than becoming pen pals with the FTC. Both Business Week and The New York Times cite multiple buy-side investors who are questioning the financial wisdom of the combination. And as you know from Financial Analysis of a CVS Caremark Break-Up, analysts are already calculating the value of CVS and Caremark as separate companies.

My small contribution to the New York Times article:
“They now have roughly one year to make their case,” said Adam J. Fein, who runs Pembroke Consulting, a Philadelphia firm that follows the industry. He predicted that without a clear sign that customers were beginning to be persuaded that the combination delivered better results, “the clamor to separate the business will be deafening.”

If you will be breaking (unleavened) bread this evening, then have a laugh by seeing what the Exodus from Egypt would have looked like if Moses had a laptop, Google Maps and Facebook. Click here if you can't see the video below.


  1. With the CEO succesion plan now complete will we see a gradual withdrawl from public statements regarding the commitment to keep both entities together? Or are they really committed to this for long term and not focused on short term stock prices?

  2. Have a Happy and Healthy Holiday. Funny video.

  3. Absolutely hilarious. Very well done (like our brisket tonight…). Emails to Very good.

  4. Michael HowardApril 20, 2011

    As I ate the Morrer at the seder. I had the soon to be Caremark exodus from CVS in mind. "Chag Sameach"