lThe CVS Pharmacy logo appears on a sign above a CVS Health Corp. store. in Las Vegas, Nevada at … [+]
Glenview Capital Management — a hedge fund that has been the subject of several media reports that it was pushing CVS Health’s management to break up the health care giant — denies it is “pushing for a breakup.”
The Wall Street Journal published an “exclusive” two-line story on Monday titled, “Glenview Capital Plans Push for Changes at CVS.” In the article, the paper described Glenview as a “major hedge fund investor” that planned to meet with top CVS Health executives on Monday to “propose ways the struggling health care company can improve its operations.” The New York-based publication cited “people close to the matter” as its sources.
As of Tuesday afternoon, the hedge fund had this to say: “Press reports have represented that Glenview is pushing for a spin-off of CVS Health — this is false,” Glenview Management said in a statement released Tuesday afternoon.
For its part, CVS confirmed on Monday plans to cut about 2,900 jobs, or less than 1% of its total workforce, as the diversified provider of medical care, pharmacy services and health insurance faces work through a previously announced strategic review.
CVS includes the large CVS pharmacy chain; Caremark, one of the nation’s largest pharmacy benefit management companies; and Aetna, the nation’s third-largest health insurance company.
“Our industry faces constant disruption, regulatory pressures and evolving consumer needs and expectations, so it’s critical that we remain competitive and operate at peak performance,” CVS said in a memo to employees Monday. “As we’ve previously disclosed, we’ve embarked on a multi-year initiative to deliver $2 billion in cost savings by cutting costs and investing in technology to improve the way we work. To achieve this goal and position ourselves for sustainable growth, we will reduce our workforce by less than 1 percent – approximately 2,900 colleagues across CVS Health.
CVS said the affected positions are “primarily corporate roles” while “front-line jobs” in stores, pharmacies and distribution centers would be spared. “Before taking this step, we prioritized finding cost savings wherever we could, including closing open job postings,” CVS said.
It’s CVS’ latest effort to make improvements to the company’s operations. In August, the company said CVS Health Chief Executive Karen S. Lynch would take over the “day-to-day management” of Aetna’s health insurance business after recent poor performance. Aetna, like some of its rivals in the health insurance business, has faced higher-than-expected medical costs in its Medicare Advantage plans.
Lynch, who successfully led Aetna for several years before she was promoted to become president and CEO of CVS in 2021, is overseeing the nation’s third-largest health insurer with CVS Health Chief Financial Officer Tom Cowhey.
“We appreciate the skill and dedication of everyone at CVS Health and their daily efforts to make health care accessible, affordable and convenient for more than 120 million members and customers,” Glenview said in its statement Tuesday in the afternoon.
Glenview said it met with CVS executives Monday, but did not say who they were. CVS Health had no comment when reached Tuesday afternoon, but its investor relations executives are known to meet regularly with hedge funds, institutional investors and shareholders.
“CVS Health is a systemically important healthcare institution whose sustainability, quality and acumen have the potential to improve the well-being and health security of one in three Americans. While the Company has outstanding assets in medical benefits management and pharmacy, specialty pharmacy, provider services and drug retail, the Company is operating well below its potential and has failed in its investments and actuarial approach in recent years. , creating economic losses and instability that puts pressure on its people, customers and shareholders.