Sources say CVS is exploring options including potential separation

NEW YORK, Sept 30 (Reuters) – CVS Health is exploring options that could include splitting the company to separate its retail and insurance units; as the struggling healthcare company tries to reverse its fortunes under pressure from investors and the public. a person familiar with the matter told Reuters.

CVS has been discussing various options with its financial advisors in recent weeks, including how such a split would work, the sources said, asking to remain anonymous because the discussions are private.

The company’s plan to potentially split its pharmacy chain and insurance business has been discussed with the company’s board of directors, but CVS has not yet decided on the best course of action to follow, sources said, noting that the plans have not yet been implemented. is finalized and CVS may choose a different strategy.

CVS is also discussing whether its pharmacy benefit management unit, which manages drug benefits for health plans, should be housed within its retail unit or under insurance in the event of a further spin-off that could result in two publicly traded companies, the sources said. .

Such a move would effectively undo CVS’s $70 billion acquisition of health insurer Aetna in 2017 and would come as CVS struggles to navigate one of the most challenging periods in its six-decade history.

A CVS spokesman declined to comment on whether it is in discussions to explore options.

“CVS’s management team and Board of Directors continually explore ways to create shareholder value,” the spokesperson said. “We continue to focus on driving performance and delivering high-quality healthcare products and services enabled by our unique scale and integrated model.”

The latest discussions come as CVS faces growing pressure from investors such as Glenview Capital, which is said to be pushing for changes at the company to help improve its operations after it lowered its 2024 earnings outlook for the third straight quarter in August.

CVS, which has a market value of about $79 billion, in August cut its annual profit forecast to $6.40 to $6.65 per share from its previous forecast of at least $7.00 per share.

“While we view management’s adjusted EPS growth target for 2025 as achievable, we believe uncertainty regarding 2024 performance and the outcome of CVS’s 2025 Medicare Advantage offerings create an uncertain outlook for 2025 and beyond,” TD Cowen analysts wrote. he wrote in a note on August 11. (Reporting by Anirban Sen in New York; Editing by Leslie Adler)