Pharmacy Giant Weighs Split Amid Slumping Profits and Investor Pressure
CVS Health, the parent company of CVS Pharmacy and Aetna health insurance, is exploring options to revamp its business structure in response to disappointing quarterly results and growing investor discontent. According to sources, the company’s board of directors is considering a potential separation of its retail pharmacy operations from its health insurance arm, Aetna.
The news comes on the heels of a meeting between CVS management and Glenview Capital Management, a hedge fund that owns approximately 1% of CVS shares. The meeting aimed to discuss strategies for improving the company’s performance and boosting shareholder value.
While no concrete plans have been finalized, the reported breakup would likely involve significant changes to the company’s operations. One possibility is that CVS Caremark, the company’s pharmacy benefits management unit, could be paired with either the retail pharmacies or the insurance side of the business.
The potential overhaul is seen as a response to CVS’s struggling financials, which have led to three consecutive quarters of lowered full-year guidance. The Medicare segment of Aetna’s business has been particularly hard hit, with costs rising more than expected. Meanwhile, investors have been putting pressure on the company to improve its performance.
In a related move, CVS announced layoffs affecting approximately 2,900 jobs, primarily at the corporate level, as part of its broader cost-cutting efforts. The company has emphasized its commitment to driving performance and delivering high-quality healthcare products and services.
CVS shares, which have taken a hit this year, rose 2.4% on Monday following news of the meeting with Glenview Capital. However, they remain down around 19% year-to-date.
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