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This year, health care stocks are leading the S&P 500 for the first time in well over a decade. It's a vote of confidence in a landscape that's changing around the Affordable Care Act. While the more speculative biotech industry gets attention from The Fool elsewhere, here’s a look at the top stories from the less-sung parts of health care.
As we begin the last mini-week of the month, the news was as mixed as the Northeast weather. A drug store made a distribution power play. An insurer fell on Medicare nervousness. And a health care information technology company branched out with a new acquisition.
Walgreen (NASDAQ: WBA ) announced that it was signing a 10-year contract with drug distributor AmerisourceBergen (NYSE: ABC ) , and had an option of buying a 7% stake. That left its former primary distributor Cardinal Health out in the cold, and shares dropped accordingly. The move will increase the drugstore chain’s prices on both branded and generic drugs, which should lead to higher profit margins.
Also coming along for the ride was European chain Alliance Boots, which Walgreen's partially acquired last year. Combined, the moves will improve Walgreen's market position and perhaps its bargaining power with pharmacy benefit managers such as Express Scripts (NASDAQ: ESRX ) .
Turning towards the health plan side of things...
Humana (NYSE: HUM ) closed the week down almost 4% after a Susquehanna analyst lowered the company’s rating from "Positive" to "Neutral," citing concerns with potential Medicare Advantage rate cuts. The company's shares had dropped 10% last month when the Centers for Medicare and Medicaid Services' announced its proposed rates, which could lead to losses of $11 billion across Advantage providers. Humana is one of the segment leaders, with 2 million Advantage customers. Expect further volatility in health care plans this week since the final rate decision is due next Monday.
And rounding out the week's review, Cerner Corporation (NASDAQ: CERN ) acquired Labotix Automation, which provides automation solutions in clinical testing environments. The details weren't disclosed. It's the latest in a string of acquisitions for Cerner, which is diversifying its business as the spending boost from the 2009 stimulus winds down and the ACA kicks in. Cerner finished the week up less than 1%, but this is a stock meant for the long haul.
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