Struggling healthcare giant CVS Health is considering breaking up the company, including separating its pharmacy and insurance businesses, as part of a strategic review, Reuters first reported late Monday.
The news comes after the Wall Street Journal reported earlier in the day that hedge fund Glenview Capital Management bought 1% of CVS shares and was meeting with executives to discuss ways to turn the company around. The WSJ also reported that CVS plans to lay off 2,900 workers.
CVS has not confirmed reports of the strategic review.
“CVS Health’s management team and board of directors are continually exploring ways to create shareholder value. We remain focused on driving performance and delivering high quality healthcare products and services enabled by our unmatched scale and integrated model,” the company said in a statement to Endpoints News.
The company has struggled this year with its insurance business, Aetna. It aggressively expanded to enroll hundreds of thousands of new Medicare Advantage members in 2024 but failed to manage their medical costs. In August, it parted ways with the president of that unit and announced a plan to cut $2 billion in costs over time. The company is also shutting down certain health plans and reducing benefits to improve margins. CVS bought Aetna in a $69 billion deal in 2018.
Meanwhile, its attempt to transform into a healthcare provider by acquiring primary care chain Oak Street Health has so far yielded only losses. And like other chains, its retail pharmacy business is also facing pressures. CVS in 2021 announced a plan to shutter 900 stores by the end of this year.
In August, CVS lowered its full-year earnings outlook for the third time in a row. Its stock price $CVS is down about 22% this year.