DB: CVS, CI, etc. would be severely impacted if the US Congress advances PBM reform

Deutsche Bank believes CVS Health (CVS.US), Cigna (CI.US) and Humana (HUM.US) would all be significantly impacted if the US Congress passes legislation requiring health insurance and pharmacy benefit managers (PBM) to divest their pharmacy businesses.

In a recent report, the bank said it expects CVS Health to be most impacted as it may be forced to separate its Caremark PBM from its retail pharmacies as well as its Caremark mail and specialty pharmacy businesses. Deutsche Bank estimates that such a split could result in CVS Health losing more than 50% of its consolidated operating profit.

Cigna's mail and specialty pharmacy businesses could also be similarly impacted, Deutsche Bank estimates these businesses account for about 40% of the company's total operating profit.

The bank noted that while Humana has a large PBM business, "most of this business is underwritten through its health insurance segment."

As for UnitedHealth (UNH.US), Deutsche Bank believes potential asset sales would not have a significant impact on its earnings, estimating that less than $200 million of the company's $30 billion operating profit is at risk.

However, Deutsche Bank noted that CVS Health, Cigna and UnitedHealth "could face additional risks as they would lose the ability to vertically integrate their biopharmaceutical PBM, fulfillment and manufacturing through companies such as Cordavis and Quallent."

Despite concerns about the potential divestiture of these companies' pharmacy businesses, Deutsche Bank maintained its "buy" rating on UnitedHealth, CVS Health and Cigna and maintained its "hold" rating on Humana.