According to reports, hedge fund tycoon Larry Robbins met with executives of struggling drugstore chain CVS on Monday to discuss a revitalization plan that the Glenview Capital founder hopes will improve the company's operations. He plans to present it.
Mr. Robbins, 55, made his name in 2012 by betting on health care companies he thought would benefit from Obamacare, and his fund focuses on health care investments.
Glenview has a large position in CVS, worth about $700 million of Robins' $2.5 billion in funding, according to the Wall Street Journal. reportedfirst reported on this conference.
The paper quoted people familiar with the matter as saying Robbins believes in the company's potential and is confident that executives will buy into his ideas to boost profitability. I told it as a story.
But the report provides no details about Robbins' blueprint for overhauling CVS operations.
Glenview did not return calls from The Post seeking comment.
CVS stock has plummeted since the beginning of this year, dropping nearly 24% after the company repeatedly revised down its full-year profit forecast. Shares rose nearly 1.6% to $62.40 in midday trading Monday.
The company's insurance division, Aetna, has seen its profits squeezed by rising medical costs, prompting CVS CEO Karen Lynch to fire Aetna president Brian Cain last month after less than a year on the job. We took the following steps.
Speculation is growing among fund managers Activist investors could swoop in and force CVS to make changes that would boost its stock price.
Investment company Sachem Head Capital Management built The company plans to acquire an additional 0.2% stake in the company during the second quarter, according to a regulatory filing in August.
As part of previously announced job cuts, up to 2,900 people will be laid off, representing about 1% of the drugstore giant's total workforce.
A CVS spokesperson said the layoffs “do not affect front-line jobs in our stores, pharmacies or distribution centers.”
In early August, CVS lowered its full-year earnings forecast to $6.40 to $6.65 per share from its previous forecast of at least $7 per share, marking the third time CVS has revised its full-year earnings forecast downward.
The company also announced a multi-year plan to reduce costs by $2 billion through measures such as streamlining operations and leveraging artificial intelligence and automation across the business.
The company also found its woes compounded by a recent lawsuit filed by the Federal Trade Commission.
The FTC has accused CVS Health's prescription drug benefit manager (PBM), Caremark, and competitors 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 drug in their insurance coverage. In theory, they should save patients money.
Glenview is based in Manhattan, but founder Robbins announced his move to Florida in April, following in the footsteps of other prominent hedge fund giants such as Citadel's Ken Griffin.
At the time, he told Bloomberg he planned to leave New York because of high income taxes.
“I don't know of any company that has achieved long-term success by getting rid of their highest paying customers,” he told the show on April 10.
