CVS Health's board of directors have retained bankers for a strategic review of the company, possibly leading to a split, according to The Wall Street Journal.
Four details:
1. The management team and board of directors are "exploring" how they can create more shareholder value and drive better financial performance, according to the report. The company's shares have dropped around 20% this year, partially due to its insurance arm, Aetna. The company expanded Medicare Advantage plans, and reimbursement hasn't kept up with the higher costs.
2. A company breakup is one option on the table, according to the report. The strategic review began weeks ago and yesterday CVS Health's executive team met with hedge fund investor Glenview Capital Management to examine strategies for boosting operations.
3. CVS plans to change its approach to Medicare Advantage plans next year and is executing on a $2 billion cost cut announced in August. The company also laid off around 2,900 people at the end of September.
4. On the physician side of the business, CVS Health spent $10.6 billion to acquire Oak Street Health, a primary care company focused on older adults, in mid-2023. The Journal described Oak Street as a "money-losing asset" so far.