Tags: cnbc | jim cramer | amazon | bezos | health

CNBC's Jim Cramer: Bezos' Amazon Prime Could Upend Health System


By    |   Tuesday, 30 January 2018 02:21 PM

CNBC's Jim Cramer warned savvy investors that Amazon.com CEO Jeff Bezos could end up changing the health-care system just as the Seattle online giant revolutionized the retail industry.

Cramer spoke shortly after Amazon, Berkshire Hathaway and JPMorgan Chase said they will form a healthcare company aimed at cutting costs for their U.S. employees.

The company will not aim to make a profit and initially focus on technology to provide what they called “simplified, high-quality and transparent healthcare” for their more than 500,000 U.S. employees, Reuters explained.

“The ballooning costs of healthcare act as a hungry tapeworm on the American economy,” said Berkshire Hathaway Chairman and Chief Executive Officer Warren Buffett. “Our group does not come to this problem with answers. But we also do not accept it as inevitable.”

The announcement comes as investors in the healthcare sector worry that technology and retailing behemoth Amazon could become a healthcare competitor and eat away at sector profits, just as it has done in retailing.

Amazon has been looking at the pharmacy business and pharmacy distribution, according to numerous media reports and Wall Street analysts. It is unclear if the company has plans beyond this initiative.

Cramer speculated whether Bezos could come up with a pricing model for prescription drugs, charging only a $50 fee on Amazon Prime subscriptions. Prime service currently grants perks for its users, including faster shipping and access to Amazon Video, CNBC.com reported.

"Amazon Prime could make it so you pay a lot less for a lot of drugs," Cramer told CNBC.

Cramer cited Bezos' impact on other sectors, most notably retail.

"Think about what he did to every other business. How about that? Would you pay that to your premium because he's going to be the biggest buying group?" said Cramer, the host of CNBC's "Mad Money."

Health-care stocks from Express Scripts Holding Co. to CVS Health Corp. were roiled by the news, Bloomberg explained. 

The “Amazon boogie-man” hit pharmacy benefit managers and insurers the hardest as the news spoiled investor sentiment. However, the group’s decision is “more bark than bite at this point,” Cantor Fitzgerald analyst Steven Halper wrote in a note.

Piper Jaffray health services analyst, Sarah James, views the partnership as "noise," adding that today’s selloff is a buying opportunity for "high quality leaders" such as UNH.

"Many have tried, but few have succeeded," she wrote. "We do not expect this JV to be a meaningful disruptor to the industry, despite the stock reaction indicating that it is."

Cantor Fitzgerald health services analyst, Steven Halper said it's “too early to cede victory,” but does not want to discount the clout the companies bring to the table.

Halper sees group’s effort as “more bark than bite at this point.”

(Newsmax wire services contributed to this report).

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CNBC's Jim Cramer warned savvy investors that Amazon CEO Jeff Bezos could end up changing the health-care system just as the Seattle online giant revolutionized the retail industry.
cnbc, jim cramer, amazon, bezos, health
Tuesday, 30 January 2018 02:21 PM
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