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CVS Health is reportedly considering options that may involve separating its retail and insurance divisions, according to recent reports.
Sources cited by Reuters indicate that CVS Health has been in discussions about various strategies, including a potential split, with its financial advisors over the past few weeks. While these conversations have occurred among the company’s board members, no final decision has been made on the best path forward.
Additionally, it was noted that the plans are not yet finalized, and CVS Health could explore alternative options as well.
On Tuesday, CVS Health’s shares saw a slight increase in premarket trading. However, the stock has declined more than 22% in value this year. The previous day, shares rose by 2.4% following a report that a prominent hedge fund investor intends to meet with CVS executives to discuss strategies for improving the company’s performance.
The Wall Street Journal mentioned that this meeting may signal an active investment approach from Glenview Capital Management, which has significantly invested in CVS Health. The fund’s founder, Larry Robbins, holds a significant stake in the company, amounting to approximately $700 million of his $2.5 billion hedge fund portfolio, with Glenview owning around 1% of CVS’s outstanding shares.
A representative for CVS Health stated that the company regularly engages in discussions with the investment community as part of its shareholder and analyst outreach but did not provide comments on specific interactions with firms or individuals.
In August, CVS Health reduced its full-year profit forecast to between $6.40 and $6.65 per share, a decrease from its earlier expectation of at least $7.00. This marked at least the fourth downgrade in guidance for the year.
CVS Health has also announced plans to achieve $2 billion in cost savings through operational streamlining and the adoption of new technologies, such as artificial intelligence and automation.
