The CVS Pharmacy logo is seen on a store in the Florida Keys, United States, on May 7, 2024.
Jakub Porzycki | Nurfoto | fake images
Glenview Capital, a major CVS Health The shareholder is expected to meet with company leaders on Monday to present proposed solutions for the struggling business, according to people familiar with the matter, a possible precursor to an activist initiative.
The hedge fund has built a sizable position in the company, some of the people said. Glenview invests in a variety of sectors, but its most recent regulatory filings show it maintains positions in ryeCVS and Teva Pharmaceuticals among other names.
Specific details about Glenview's proposals were not available. The Wall Street Journal first reported that Glenview would meet with CVS management, including CEO Karen Lynch.
A CVS spokesperson said the company “maintains regular dialogue with the investment community as part of our robust shareholder and analyst engagement program.”
“Beyond that, we cannot comment on engagement with specific companies or individuals,” the spokesperson said.
CVS stock is down 22% so far this year. The meeting with Glenview is not CVS's first encounter with an activist. Earlier this year, Sachem Head Capital Management, the well-known activist fund run by Scott Ferguson, disclosed through regulatory filings that it had built up a position in the company.
Jeff Smith's Starboard Value also acquired a stake in the company in 2019 and also engaged in discussions with company leaders.
Investor confidence in CVS has deteriorated after three straight quarters of cuts to its full-year forecasts.
The company's results are being hit by higher medical costs in its insurance segment, an issue affecting the broader healthcare industry as more seniors undergo procedures they had delayed during the Covid pandemic. -19.
CVS owns Aetna, the nation's third-largest health insurer by market share, according to the American Medical Association. The company's insurance unit includes Aetna plans for the Affordable Care Act, Medicare Advantage and Medicaid, as well as dental and vision services.
In its second-quarter results in August, CVS announced a leadership restructuring based on the performance and outlook of its insurance unit. The company said CEO Lynch would replace segment president Brian Kane, effective immediately.
Meanwhile, CVS faces increased pressure in its retail pharmacy business. Prescription drug reimbursement rates have plummeted in recent years, while inflation and lower consumer spending are making it difficult for CVS locations to turn a profit at the front of the store.
CVS in August unveiled a new plan to cut $2 billion in expenses over several years, which will involve streamlining its operations and increasing the use of artificial intelligence, among other efforts. The company is also wrapping up a three-year plan to close 900 of its stores, with 851 locations closed in August.
