CVS Health has struggled financially this year and investors are taking action, according to The Wall Street Journal.
Shares in the company have fallen around 24% this year, according to the report, and CVS announced plans to lay off 2,900 employees – less than 1% of the company – who serve primarily in corporate roles. The healthcare giant cut its earnings guidance multiple times in the last 12 months, partially due to rising costs with Aetna's Medicare business, according to The Journal.
The company's pharmacy benefit unit also has issues. The FTC is scrutinizing CVS Caremark over alleged insulin price inflation.
Four notes:
1. Senior executives from CVS Health are meeting with the leaders of Glenview Capital Management, a hedge fund investor. Glenview's founder, Larry Robbins, owns around 1% of CVS's outstanding shares. Mr. Robbins and Karen Lynch, CEO of CVS Health, will discuss ways to improve operations.
2. The meeting could launch Glenview's activist stance, according to the report. Mr. Robbins has a reputation as an activist investor and has pressured changes at Tenet Healthcare, among others. Mr. Robbins' team told The Journal he intends to present "ways to energize the company, but not break up the company."
3. One other hedge fund has concerns about CVS, according to the report, and they could place additional pressure on the company.
4. In August, Ms. Lynch unveiled plans for $2 billion cost cuts and parted ways with Aetna's president. Ms. Lynch, along with CVS CFO Tom Cowhey are managing the insurance company.