CVS's stock rises nearly 2% on report of meeting with hedge fund Glenview Capital

By Steve Gelsi

The reported meeting signals potential changes to improve shareholder value after weak stock performance

CVS Health Corp.'s stock rose 1.7% Monday after a report surfaced of a meeting between the healthcare company and its major hedge-fund investor, Glenview Capital Management.

CVS also confirmed plans to reduce its workforce by 2,900 people as part of a previously announced cost-cutting plan.

CVS's stock (CVS) rose $1.65 to $63.03 in early trading.

Glenview Chief Executive Larry Robbins was to meet with CVS Chief Executive Karen Lynch to present proposals to energize the company but not break it up, the report in the Wall Street Journal said.

The gathering between CVS and Glenview comes after CVS's stock has fallen more than 22% this year as of Friday's close, while the S&P 500 SPX has risen about 20%.

Citing people familiar with the companies, the Wall Street Journal reported that Glenview has taken a roughly $700 million position in CVS. The investment represents a large chunk of the hedge fund, which tips the scales at $2.5 billion.

Glenview's position amounts to about 1% of CVS's stock.

Glenview had previously disclosed a $540 million ownership stake in CVS as of June 30, but it has yet to file an update for the third quarter.

CVS routinely speaks with the investment community as part of its "robust" shareholder program, a company spokesperson told the newspaper. The spokesperson declined to comment on any specific meetings.

CVS has told workers it is planning to cut 1% of its workforce, or about 2,900 positions, as part of a previously announced $2 billion cost-containment effort, a spokesperson told MarketWatch.

Most of the positions are corporate roles and will not affect "frontline" jobs in pharmacies, stores and distribution centers, CVS said.

"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," the CVS spokesperson said in an email.

While Glenview is a major name on Wall Street, CVS marks one of its few forays into the world of activist investing, along with Tenet Healthcare Corp. (THC).

For its part, CVS has been facing a downturn in its Medicare business as well as a lawsuit by the Federal Trade Commission against its CVS Caremark pharmacy-benefits business for allegedly inflating the price of insulin.

Also read: FTC sues prescription-drug middlemen over insulin prices, says drugmakers are also 'on notice'

While CVS's stock price advanced on Monday, more investors also purchased CVS's bonds, according to data from BondCliQ Media Services.

-Steve Gelsi

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

09-30-24 1206ET

Copyright (c) 2024 Dow Jones & Company, Inc.