CVS Pharmacy logo is seen at store in Florida Keys, United States on May 7, 2024.
Jakub Porzycki | Nurphoto | Getty Images
Glenview Capital, a significant CVS Health shareholder, is anticipated to fulfill with company leadership on Monday to put out proposed fixes for the struggling business, based on people conversant in the matter, a possible precursor to an activist push.
The hedge fund has established a large position in the corporate, said a few of the people. Glenview invests in quite a lot of sectors, but its most up-to-date regulatory filings show it holds positions in Centene, CVS and Teva Pharmaceuticals amongst other names.
Specifics about Glenview’s proposals couldn’t be learned. The Wall Street Journal first reported that Glenview can be meeting with CVS management, including CEO Karen Lynch.
A CVS spokesperson said the corporate “maintains a daily dialogue with the investment community as a part of our robust shareholder and analyst engagement program.”
“Beyond that, we cannot comment on engagement with specific firms or individuals,” the spokesperson said.”
CVS shares are down 22% year-to-date. The meeting with Glenview will not be CVS’ first brush with an activist. Earlier this 12 months, Sachem Head Capital Management, the well-known activist fund run by Scott Ferguson, disclosed via regulatory filings that it had amassed a position in the corporate.
Jeff Smith’s Starboard Value also built a stake in the corporate in 2019, and engaged in discussion with the corporate’s leadership as well.
Investor confidence in CVS has soured after three straight quarters of full-year guidance cuts.
The corporate’s bottom line is getting battered by higher medical costs in its insurance segment – a problem dogging the broader health-care industry as more seniors undergo procedures they’d delayed in the course of the Covid-19 pandemic.
CVS owns Aetna, the nation’s third-largest health insurer by market share, based on The American Medical Association. The corporate’s insurance unit includes plans by Aetna for the Inexpensive Care Act, Medicare Advantage and Medicaid, together with dental and vision.
In its second-quarter leads to August, CVS announced a leadership shakeup based on the performance and outlook of its insurance unit. The corporate said CEO Lynch would replace the president of the segment, Brian Kane, effective immediately.
Meanwhile, CVS faces increased pressure in its retail pharmacy business. Reimbursement rates for prescribed drugs have plunged during the last several years, while inflation and softer consumer spending are making it difficult for CVS locations to show a profit on the front of the shop.
CVS in August unveiled a recent plan to chop $2 billion in expenses over several years, which can involve streamlining its operations and increasing using artificial intelligence, amongst other efforts. The corporate can also be wrapping up a three-year plan to shut 900 of its stores, with 851 locations closed as of August.
