Hedge Fund Glenview Capital Pushes for Changes at CVS Health

Hedge fund mogul Larry Robbins seeks overhaul at CVS: report

Hedge fund mogul Larry Robbins will meet with executives at struggling drugstore chain CVS on Monday to present a turnaround plan that the Glenview Capital founder hopes will improve the firm's operations, according to a report. Robbins, 55, made his name with a 2012 bet on health companies that he thought would benefit from Obamacare and his fund specializes in healthcare investments. Glenview has built up a large position in CVS that represents about $700 million of Robbins' $2.5 billion fund, according to The Wall Street Journal reported, which first reported on the meeting. The Journal quoted people familiar with the matter that Glenview's large stake is a sign of Robbins' belief in the company's potential and his confidence that he can get executives to sign up to his ideas to boost profitability. But the report did not outline any of the details of Robbins' blueprint to overhaul CVS's operations Glenview did not return The Post's calls seeking comment. CVS shares have been in free fall since the start of this year, dropping by nearly 24%, after it repeatedly slashed its full-year profit outlook. Shares rose nearly 1.6%, to $62.40, in midday trading Monday. The company's insurance coverage arm, Aetna, has seen higher medical costs eat away at its bottom line and last month CVS chief executive Karen Lynch took the step of firing Aetna president Brian Kane after less than a year on the job. Speculation has mounted among fund managers that an activist investor may swoop in to push CVS to make changes that would boost its share price. Investment firm Sachem Head Capital Management built a new 0.2% stake in the company during the second quarter, according to a regulatory filing in August. As many as 2,900 people are set to be laid off as part of previously-announced job cuts, or roughly 1% of the drugstore giant's overall workforce. A CVS spokesman said the layoffs "will not impact front-line jobs in our stores, pharmacies and distribution centers." Earlier in August, CVS cut its annual profit forecast to $6.40 to $6.65 per share from its prior view of at least $7, marking the third time CVS lowered its outlook for the year. It also announced a multi-year plan to save $2 billion in costs through measures such as streamlining operations and using artificial intelligence and automation across its business. The company also saw its woes mount with a recent lawsuit brought by the Federal Trade Commission. The FTC accused CVS Health's Caremark, the firm's prescription drug benefit manager (PBM), and rivals Optum Rx and Express scripts of artificially inflating the prices of insulin drugs. PBMs work with insurance companies to negotiate discounted prices from drug companies in exchange for including the drugs in their coverage. In theory, they are supposed to save patients money. Glenview is based in Manhattan, but founder Robbins announced his move to Florida in April, following other notable hedge fund titans such as Ken Griffin of Citadel. He told Bloomberg at the time that that he was leaving New York because of its high income taxes. "I know of no business that has generated long term success by driving away its highest paying customers," he told the outlet on April 10.

Glenview to meet top CVS execs, propose operational improvements, WSJ reports

(Reuters) -Healthcare-focused Glenview Capital Management will meet top executives at struggling healthcare company CVS Health on Monday to propose ways it can improve operations, The Wall Street Journal reported on Sunday. The hedge fund's founder, Larry Robbins, has built a large position in CVS, which amounts to about $700 million of his $2.5 billion hedge fund, the report said, citing a person familiar with the matter. CVS said it "maintains a regular dialogue with the investment community as part of our robust shareholder and analyst engagement program," and said it can't comment on engagement with specific firms or individuals. Glenview did not immediately respond to a Reuters' request for comment. Speculation has mounted among fund managers that an activist investor may swoop in to push CVS to make changes that would boost its share price. Investment firm Sachem Head Capital Management built a new 0.2% stake in the company during the second quarter, according to a regulatory filing in August. Earlier in August, CVS cut its annual profit forecast to $6.40 to $6.65 per share from its prior view of at least $7.00, marking at least the fourth time CVS lowered its outlook for the year. It also announced a multi-year plan to save $2 billion in costs through measures such as streamlining operations and using artificial intelligence and automation across its business. (Reporting by Urvi Dugar; Additional reporting by Harshita Meenaktshi; Editing by Leslie Adler and Marguerita Choy)

Glenview plans activist stance in push for changes at CVS, WSJ reports

(Reuters) - Healthcare-focused Glenview Capital Management has established a large position in CVS Health and will meet top executives at the struggling healthcare company on Monday to propose ways it can improve its operations, The Wall Street Journal reported on Sunday. The hedge fund's founder Larry Robbins plans for the potential start of an activist stance as CVS amounts to about $700 million of his $2.5 billion hedge fund, the report added citing a person familiar with the matter. Glenview's position is a sign of Robbins's belief in the company's potential and his confidence he can get executives to pursue a new path, as per WSJ. CVS and Glenview did not immediately respond to a Reuters' request for comment. Speculation has mounted among fund managers that an activist investor may swoop in to push CVS to make changes that would boost its share price. Investment firm Sachem Head Capital Management built a new 0.2% stake in the company during the second quarter, according to a regulatory filing in August. Earlier in August, CVS took down its annual profit forecast to $6.40 to $6.65 per share from its prior view of at least $7.00, marking at least the fourth time the healthcare conglomerate lowered its outlook for the year. It also announced a multi-year plan to save $2 billion in costs through measures such as streamlining its operations and using artificial intelligence and automation across its business. (Reporting by Urvi Dugar; Editing by Leslie Adler and Marguerita Choy)

CVS Health Stock Gains on Report of Planned Meeting With Glenview Capital

The paper also reported CVS told employees it would be implementing layoffs, representing less than 1% of the workforce, as part of a previously announced cost-cutting plan. CVS Health (CVS) shares rose Monday on a report that major investor hedge fund Glenview Capital Management was planning to hold a meeting today with executives of the pharmacy and health care firm about making changes to its operations. The Wall Street Journal said the move could potentially be the start of an activist investor intervention against CVS, which has struggled because of higher expenses, lower reimbursements, and changing consumer habits. Shares of CVS rose nearly 3% Monday afternoon but have lost about 20% of their value this year. In August, CVS slashed its full-year earnings outlook, and Chief Executive Officer (CEO) Karen Lynch announced a $2 billion cost-cutting plan by "further streamlining and optimizing our operations and processes, continuing to rationalize our business portfolio and accelerating the use of artificial intelligence and automation." The Journal also reported that as part of that effort, CVS advised employees today that it would be implementing layoffs, representing less than 1% of the workforce. The paper noted that Glenview, which was founded by CEO Larry Robbins, has about $700 million of its $2.5 billion fund invested in CVS, and holds approximately a 1% stake. It added that the large position is an indication that Robbins believes in the company's potential and is confident he can get the leadership to change course. When reached by Investopedia, a spokesperson for CVS neither confirmed nor denied the report, saying only that the company "maintains a regular dialogue with the investment community as part of our robust shareholder and analyst engagement program."

Major CVS shareholder plans activist push, will meet with management, sources say

CVS Pharmacy logo is seen at store in Florida Keys, United States on May 7, 2024. Glenview Capital, a major CVS Health shareholder, is expected to meet with company leadership on Monday to lay out proposed fixes for the struggling business, according to people familiar with the matter, a potential precursor to an activist push. The hedge fund has established a sizable position in the company, said some of the people. Glenview invests in a variety of sectors, but its most recent regulatory filings show it holds positions in Centene, CVS and Teva Pharmaceuticals among other names. Specifics about Glenview's proposals could not be learned. The Wall Street Journal first reported that Glenview would be meeting with CVS management, including CEO Karen Lynch. A CVS spokesperson said the company "maintains a regular dialogue with the investment community as part of our robust shareholder and analyst engagement program." "Beyond that, we cannot comment on engagement with specific firms or individuals," the spokesperson said." CVS shares are down 22% year-to-date. The meeting with Glenview is not CVS' first brush with an activist. Earlier this year, Sachem Head Capital Management, the well-known activist fund run by Scott Ferguson, disclosed via regulatory filings that it had amassed a position in the company. Jeff Smith's Starboard Value also built a stake in the company in 2019, and engaged in discussion with the company's leadership as well. Investor confidence in CVS has soured after three straight quarters of full-year guidance cuts. The company's bottom line is getting battered by higher medical costs in its insurance segment - an issue dogging the broader health-care industry as more seniors undergo procedures they had delayed during the Covid-19 pandemic. CVS owns Aetna, the nation's third-largest health insurer by market share, according to The American Medical Association. The company's insurance unit includes plans by Aetna for the Affordable Care Act, Medicare Advantage and Medicaid, along with dental and vision. In its second-quarter results in August, CVS announced a leadership shakeup based on the performance and outlook of its insurance unit. The company said CEO Lynch would replace the president of the segment, Brian Kane, effective immediately. Meanwhile, CVS faces increased pressure in its retail pharmacy business. Reimbursement rates for prescription drugs have plunged over the last several years, while inflation and softer consumer spending are making it difficult for CVS locations to turn a profit at the front of the store. CVS in August unveiled a new plan to cut $2 billion in expenses over several years, which will involve streamlining its operations and increasing the use of artificial intelligence, among other efforts. The company is also wrapping up a three-year plan to close 900 of its stores, with 851 locations closed as of August.

CVS Health in Focus as Activist Investor Prepares for High-Level Talks - CVS Health (NYSE:CVS)

CVS had heavily invested in attracting seniors to its Aetna Medicare plans, but the move backfired, squeezing margins. CVS Health Corp CVS is set to face renewed pressure as hedge fund Glenview Capital Management, led by founder Larry Robbins, plans to meet top executives, including CEO Karen Lynch, to discuss operational improvements. The meeting with Glenview comes as part of Robbins' broader strategy to push for change, the Wall Street Journal reports. Also Read: Pharmacy Chains Like CVS Health, Walgreens Boots Alliance Confront Shifting Consumer Habits And Profit Pressures. Robbins, who has built a substantial $700 million position in CVS, sees potential for the company to revitalize its struggling business without resorting to a breakup. Robbins is expected to propose cost-cutting and restructuring strategies but will not push for a breakup of CVS. Another hedge fund has also built a notable position in the company, hinting at further pressure from investors. CVS, one of the largest healthcare companies in the U.S., has seen its stock tumble 24% year-to-date amid multiple earnings downgrades. In the second quarter, the pharmacy chain reported adjusted EPS of $1.83 decreased from $2.21 in the prior year, beating the consensus of $1.73. The fall is primarily due to a decline in the Health Care Benefits segment's operating results, which reflect continued utilization pressure and the unfavorable impact of the company's Medicare Advantage star ratings for the 2024 payment year within the Medicare product line. CVS Health revised its adjusted EPS guidance to $6.40-$6.65 from at least $7.00 versus the consensus of $6.98, reflecting continued pressure in the Health Care Benefits segment. The Wall Street report adds that CVS had heavily invested in attracting seniors to its Aetna Medicare plans, but the move backfired, squeezing margins. The company is now revising its Medicare approach for 2025 to address these issues. CVS Health decided to make leadership changes based on the current performance and outlook for the Health Care Benefits segment. Brian Kane quit, and Karen Lynch, the CEO, assumed direct leadership of the Health Care Benefits segment. Karen and Tom Cowhey, CVS Health's CFO, oversee the business's day-to-day management. Recently, the Federal Trade Commission (FTC) filed a formal complaint against three major pharmacy benefit managers (PBMs) -- CVS Health's Caremark, Cigna Corp's CI Express Scripts, and UnitedHealth Group Inc's UNH Optum -- for allegedly engaging in unfair and anti-competitive practices that have inflated the list price of insulin medications. The FTC has also highlighted significant concerns regarding consolidating pharmacies and health insurance companies, focusing on the influence of a few dominant PBMs on prescription drug prices. Price Action: CVS stock is up 3.27% at $63.39 during the premarket session at last check on Monday. Read Next: Udemy Downgrade: Analyst Warns Of Negative Risk/Reward Profile While Demand Is Weak. Photo: Around the World Photos via Shutterstock This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. Market News and Data brought to you by Benzinga APIs