Glenview Capital Management — a hedge fund that has been subject of certain media reports that it was pushing CVS Health management to break up the healthcare giant — denies it is “pushing for a break-up.”
The Wall Street Journal Monday published a two-byline “exclusive” story headlined, “Glenview Capital Plans Push for Changes at CVS.” In the story, the newspaper described Glenview as a “major hedge-fund investor” that planned to meet top executives of CVS Health on Monday to “propose ways the struggling healthcare company can improve its operations.” The New York-based publication cited “people close to the matter” as its sources.
By Tuesday afternoon, the hedge fund said this: “Press reports have represented that Glenview is pushing for a break-up of CVS Health – this is false,” Glenview Management said in a statement issued Tuesday afternoon.
For its part, CVS did confirm on Monday plans to pare about 2,900 jobs, or less than 1% of its total workforce, as the diversified provider of medical care, pharmacy services and health insurance works through a previously announced strategic review. CVS includes the large chain of CVS drugstores; Caremark, one of the nation’s largest pharmacy benefit management companies; and Aetna, the nation’s third largest health insurance company.
“Our industry faces continued disruption, regulatory pressures, and evolving consumer needs and expectations, so it is critical that we remain competitive and operate at peak performance,” CVS said in a memo to employees Monday. “As we previously disclosed, we’ve embarked on a multi-year initiative to deliver $2 billion in cost savings by reducing expenses and investing in technologies to enhance how we work.”
CVS said the positions impacted 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 everywhere we could, including closing open job postings,” CVS said.
It’s the latest effort by CVS to make improvements in company operations. In August, the company said CVS Health Chief Executive Karen S. Lynch would take over “day-to-day management” of the company’s Aetna health insurance business after its latest poor performance. Aetna, like some of its rivals in the health insurance business, has been grappling with higher than expected medical costs in its Medicare Advantage plans.
Lynch, who successfully ran Aetna for several years before she was promoted to become CVS president and chief executive 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 healthcare accessible, affordable and convenient for more than 120 million members and customers,” Glenview said in its statement Tuesday afternoon.
Glenview said it is “having conversations” with CVS executives but didn’t say who they were with describing the talks as “private,” according to the hedge fund’s statement.
“CVS Health is a systemically important healthcare institution whose consistency, quality and acumen has the potential to enhance wellness and health security for one in three Americans,” Glenview’s statement added. “While the company has tremendous assets across medical and pharmacy benefit management, specialty pharmacy, provider services and drug retail, the company is operating well below its potential and has fallen short in its investment and actuarial approach in recent years, creating economic losses and volatility that pressures its people, its customers and its shareholders.”
For its part, CVS Health wouldn’t confirm any talks with Glenview. Hedge funds, institutional investors and shareholders are known, however, to have conversations with company executives and investor relations employees reguarly.
“CVS Health maintains a regular dialogue with the investment community as part of our robust shareholder and analyst engagement program,” CVS said in a statement Tuesday evening.
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