Amazon's PillPack Deal Scares Investors From Health Provider ETF

(Bloomberg) -- Even exchange-traded fund investors are afraid of Amazon.com Inc.

Health-care stocks plunged as much as 6 percent on Thursday, led by declines in retail pharmacies and drug distributors, after Amazon agreed to acquire online dose-sorting pharmacy PillPack Inc. That spurred massive trading volumes in an exchange-traded fund stuffed with pharmaceutical middlemen, as investors pulled their cash off the table.

The iShares U.S. Healthcare Provider ETF, or IHF, absorbed over $255 million worth of trades on Thursday, the most in almost a decade and a whopping 46 times the average daily turnover for the past year. Investors also pulled more than $44 million from the fund, the most since October.

This is the second time IHF investors have been rattled this week. Comments about how to cut costs from the health system from the newly appointed chief executive officer of the health-care venture started by Amazon, Berkshire Hathaway Inc. and JPMorgan Chase & Co. on Saturday also triggered heavy trading, since the new venture may pressure the profits of health insurers, pharmacy-benefits managers and distributors.

UnitedHealth Group Inc., the biggest health insurer in the U.S., and Express Scripts Holding Co., one of the largest pharmacy firms, make up 20 percent of IHF’s holdings. Insurance giants Anthem Inc., Aetna Inc. and Cigna Corp. round out its heaviest weightings.

--With assistance from Bailey Lipschultz and Olivia Schaber.

To contact the reporter on this story: Carolina Wilson in New York City at cwilson166@bloomberg.net

To contact the editors responsible for this story: Courtney Dentch at cdentch1@bloomberg.net, Eric J. Weiner, Andrew Dunn

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