Glenview Capital, a significant CVS Health The shareholder is anticipated to satisfy with company leadership on Monday to propose solutions to the troubled company, people aware of the matter say, a possible precursor to an activist push.
The hedge fund has built a large position in the corporate, some people said. Glenview invests in a wide range of sectors, but its most up-to-date regulatory filings show that the corporate holds positions in these sectors HundredsCVS and Teva Pharmaceuticals under other names.
Details of Glenview's proposals couldn’t be learned. The Wall Street Journal first reported that Glenview would meet with CVS management, including CEO Karen Lynch.
A CVS spokesman said the corporate “maintains a regular dialogue with the investment community as part of our comprehensive shareholder and analyst engagement program.”
“Furthermore, we cannot comment on engagement with specific companies or individuals,” the spokesperson said.
Shares of CVS rose about 2% in early trading Monday. Before Monday's open, the stock had fallen about 22% for the reason that start of the yr.
The meeting with Glenview is just not CVS's first encounter with an activist. Earlier this yr, Sachem Head Capital Management, the outstanding activist fund led by Scott Ferguson, disclosed in regulatory filings that it had built a stake in the corporate.
Jeff Smith's Starboard Value also built a stake in the corporate in 2019 and likewise held discussions with management.
Investor confidence in CVS has fallen after three straight quarters of full-year forecast cuts.
The company's bottom line is being hurt by higher medical costs in its insurance segment – a problem plaguing all the healthcare industry as more seniors undergo procedures that they had delayed throughout the Covid-19 pandemic.
CVS owns Aetna, the nation third largest health insurer by market share, in accordance with the American Medical Association. The company's insurance unit includes Aetna's Affordable Care Act, Medicare Advantage and Medicaid plans, in addition to dental and vision insurance.
In its second-quarter leads to August, CVS unveiled a brand new plan to chop spending by $2 billion over several years, which would come with streamlining operations and increasing the usage of artificial intelligence. The company can also be finalizing a three-year plan to shut 900 of its stores, with 851 locations scheduled to shut by August.
CVS is cutting lower than 1% of its workforce, or about 2,900 jobs, as a part of the brand new cost-cutting plan, an organization spokesman said in an announcement Monday. The spokesman said the cuts would primarily impact corporate functions, not employees at the corporate's retail stores, pharmacies and distribution centers.
The majority of affected employees might be notified this week and can receive severance and other advantages, the spokesman said. Aside from layoffs, CVS has closed some open positions, they said.
“Our industry faces ongoing disruption, regulatory pressures and changing consumer needs and expectations. Therefore, it is critical that we remain competitive and deliver excellence,” the spokesperson told CNBC.
First, the Wall Street Journal reported the cuts on Monday.
Also in August, CVS announced a leadership change based on the performance and prospects of its insurance division. The company said CEO Lynch will replace segment president Brian Kane, effective immediately.
Meanwhile, CVS is under increased pressure in its pharmacy retail business. Reimbursement rates for prescribed drugs have fallen lately, while inflation and weaker consumer spending have made it harder for CVS locations to show a profit in stores.
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