Shares of CVS Health (CVS) and other health-related companies lost more than 5% on Wednesday after a bipartisan group of senators announced sponsorship of legislation to break up the relationship between health insurers and pharmacy companies.
The bill introduced by Senators Elizabeth Warren and Josh Hawley would seek to force companies that owned health insurers or pharmacy benefit managers to divest their businesses pharmacy companies within three years.
CVS acquire its pharmacy benefits manager company, Caremark, in 2007 beginning the nation's leading pharmacy-benefits manager.
Over the last year, shares of CVS have shed nearly 30% of their value as the company has run into several challenges.
Increased Medicare utilization and a drop in the company’s in Medicare Advantage star ratings caused CVS’ costs to rise while also reducing revenue.
The company also faced challenges in the Board room as the CEO stepped down in October amidst pressure from activist investors who obtained four seats on the company’s Board.
From a chart perspective, CVS shares are trading in a long-term bear market trend.
The stock crossed into this trend in January 2023. That trend held the stock in a negative momentum state through a six month rally that started in August 2023 only to be revered lower in January 2024.
Today, the stock moved below the $52.50 level, posting its lowest close since 2020.
With a bearish trend in CVS’ 50- and 200-day moving averages, the stock is likely to maintain its bearish momentum to a price target of $40.
