Glenview Capital, a prominent shareholder in CVS Health, is preparing to meet with the company’s top executives to present a plan aimed at improving its business, according to sources familiar with the matter, CNBC reports.
This move is seen as a possible precursor to an activist campaign, as Glenview seeks to address the struggles CVS has faced in recent quarters.
The hedge fund, which has built a substantial stake in CVS, is expected to meet with CVS leadership, including CEO Karen Lynch, on Monday. While the details of Glenview’s proposals remain undisclosed, the meeting highlights growing investor concerns about the company’s performance, with CVS shares down 22% year-to-date.
CVS has been facing several challenges, particularly in its insurance segment, which has been hit by rising medical costs as seniors undergo postponed procedures from the pandemic. The company owns Aetna, one of the largest health insurers in the US, and its recent financial results have disappointed investors. In August, CVS announced a leadership change in the insurance unit, with CEO Karen Lynch taking over from Brian Kane as president of the segment.
Additionally, CVS is grappling with declining reimbursement rates in its retail pharmacy business and challenges from inflation and reduced consumer spending. In response, the company unveiled a plan to cut $2 billion in expenses, focusing on streamlining operations and adopting artificial intelligence. CVS is also nearing the completion of a three-year plan to close 900 stores, with 851 locations already shuttered as of August.
This is not CVS’s first encounter with activist investors. Earlier this year, Sachem Head Capital Management disclosed a stake in the company, and in 2019, Starboard Value also engaged with CVS leadership. As Glenview prepares to outline its vision for the company, CVS continues to face mounting pressure to stabilize its business and restore investor confidence.
A CVS spokesperson emphasized the company’s regular engagement with the investment community but declined to comment on specific interactions with Glenview.
