CVS Health Considers Splitting Retail and Insurance Divisions

CVS Health (NYSE:CVS) is reportedly considering options, including breaking up its retail and insurance divisions, according to a Reuters report.

Sources indicate that CVS Health has been discussing several possibilities, including a split, with their financial advisors recently. This topic has been part of conversations among the company’s board of directors, although no decision has been made on the best path forward.

Furthermore, it was noted that these plans are not finalized, and CVS Health may still explore other strategies.

In premarket trading on Tuesday, CVS Health shares edged higher, despite a year-to-date decline of over 22%. The stock rose 2.4% after a report from The Wall Street Journal about a hedge fund investor’s plans to meet with CVS Health executives to discuss potential improvements in the company’s performance.

This hedge fund, Glenview Capital Management, is led by founder Larry Robbins, who has significantly invested in CVS. The WSJ report states that CVS constitutes about $700 million of Robbins’ $2.5 billion hedge fund, with Glenview owning around 1% of the company’s outstanding shares.

A spokesperson for CVS Health confirmed that the company maintains regular discussions with the investment community but did not provide specific comments on interactions with particular firms.

In August, CVS Health lowered its full-year profit forecast to between $6.40 and $6.65 per share, a reduction from a previous estimate of at least $7.00, marking the fourth time it has adjusted guidance this year. CVS Health is pursuing $2 billion in cost savings by streamlining operations and leveraging technologies such as artificial intelligence and automation.

(Reuters contributed reporting.)