WHAT IT MEANS AND WHY IT'S IMPORTANT — The fact that Wall Street is reversing its position on a breakup of CVS Caremark is important because — while we may hate to toot our own horn, we are going to do it anyway — DSN was right.
(THE NEWS: Wall Street analysts recant prediction of CVS Caremark split. For the full story, click here)
When analysts began with their sky-is-falling predictions back in 2009 and Caremark came off a tricky PBM selling season, DSN editor-in-chief Rob Eder suggested in November 2009 that those people just don't know how the game was scored.
"If you judge CVS Caremark too harshly based solely on the handful of PBM contracts it lost in the short-term, as many investors did in the wake of the company's Nov. 5 earnings call, then you might not even really understand how this game is scored. Kind of like trying to score a baseball game using tennis' wacky 'Love-15-30-40-Game' point system," Eder wrote in his column "Understanding how the game is scored," which ran in the Nov. 15, 2009, issue of Drug Store News.
Eder went on the say, "If you have been watching this game as closely as I have, you know there's still plenty of time on the clock for CVS Caremark to turn things around in time for the 2010 PBM selling season. And if it does, it's going to be a whole new ballgame in 2011."
Well, here we are two years later and CVS has turned the PBM business from a decline in operating profit in the first half of 2011 to growth in the back half.
It's a whole new ballgame indeed.