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Key takeaways
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CVS Health is reportedly considering separating its retail pharmacies and health insurance operations from Aetna.
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The company's board is reviewing a number of options as it seeks to improve its profitability after CVS in recent quarters lowered its full-year outlook. Reuters and The Wall Street Journal reported.
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The chain's management reportedly met Monday with hedge fund Glenview Capital Management, which owns about 1% of CVS stock, to discuss ideas to improve the business.
CVS Health (CVS) is reportedly considering splitting its retail pharmacies and Aetna health insurance unit amid tough results and investor pressure, according to Reuters and The Wall Street Journal.
Reports say no plans have been finalized and CVS' board of directors is still reviewing how a breakup would work financially and whether its CVS Caremark pharmacy benefit management unit it would be combined with the retail pharmacies or insurance part of the business.
CVS completed its nearly $70 billion acquisition of Aetna in November 2018.
CVS executives reportedly met with the hedge fund on Monday
CVS management supposedly met with Glenview Capital Management on Monday, as the hedge fund with a roughly 1% stake in the company sought to voice its opinion on how it could improve, according to the Diary. Separately, on Monday, the company informed employees of layoffs affecting approximately 2,900 jobs, largely at the corporate level, as part of its broader cost-cutting efforts, the Diary reported.
“CVS Health's management team and board continually explore ways to create value for shareholders,” a CVS spokesperson said in a statement emailed to Investopedia. “We remain focused on driving performance and delivering high-quality healthcare products and services thanks to our unmatched scale and integrated model.”
The reported consideration of material changes comes as the company has reduced its full-year guidance to three consecutive quarters like him medicare segment Aetna's business has seen costs rise more than expected and recently reported pressure from investors.
CVS shares, which rose 2.4% on Monday following the meeting with Glenview Capital, rose another 2.2% to $64.27 in premarket trading. Still, they are down approximately 19% so far this year.
Read the original article at investopedia.