Shares of insurer UnitedHealth Group and other health-care related stocks dropped on Tuesday after Amazon, J.P. Morgan, and Berkshire Hathaway announced a partnership to improve U.S. employee health.

The three companies, led by Jeff Bezos, Jamie Dimon and Warren Buffett respectively, plan to develop ways to improve the health of their employees, with the goal of improving customer satisfaction and reducing costs.

“The three companies, which bring their scale and complementary expertise to this long-term effort, will pursue this objective through an independent company that is free from profit-making incentives and constraints,” said the press release.

Details of the new company were still unclear, but that didn’t stop traders from sending these shares reeling in early trading on the notion that the involvement of these three titans of business would shine a light on where these companies would need to do better.

UnitedHealth Group dropped 7 percent in premarket trading Tuesday. Cigna was off by 5 percent and Aetna fell by 2 percent.

CVS Health plunged by 6 percent in early trading. Walgreens Boots Alliance fell 3 percent.

Drug distributor Express Scripts fell 7 percent.

“The comments in the press release suggest that these leaders view this as an endeavor that is complex, challenging and thorny and that will take time to bear fruit,” Ana Gupte, analyst at Leerink Partners, wrote Tuesday. “It is unclear if this means Amazon will accelerate its entry into the pharmacy supply chain, though the quest for transparency, which is lacking currently in drug pricing and also in broader healthcare delivery in America, would point to a more transformative effort by the new entity.”

The announcement comes amid months of speculation that Jeff Bezos, Amazon founder and CEO, would lead the e-commerce giant into the health care space.

“The healthcare system is complex, and we enter into this challenge open-eyed about the degree of difficulty,” said Bezos in the release. “Hard as it might be, reducing healthcare’s burden on the economy while improving outcomes for employees and their families would be worth the effort.”

CEOs Buffett and Dimon also commented on the new company in the press release.

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

“Our people want transparency, knowledge and control when it comes to managing their healthcare,” said Jamie Dimon, Chairman and CEO of JPMorgan Chase. “The three of our companies have extraordinary resources, and our goal is to create solutions that benefit our U.S. employees.”

Source: Investment Cnbc
UnitedHealth, CVS plunge on Bezos, Buffett and Dimon plan to improve U.S. health care