CVS Health Reportedly Mulls Breakup, To Cut 2,900 Jobs

(RTTNews) – CVS Health Corp. is conducting a strategic review of options including a possible breakup amid issues from its drugstore chain and Aetna health insurance arm, reports said citing person familiar with the matter. The company also plans to reduce its workforce by less than 1 percent, which would affect around 2,900 employees, as part of its cost-cutting efforts.

The multi-year initiative is projected to deliver $2 billion in cost savings by reducing expenses and investing in technologies.

As per the reports, the company retained bankers to facilitate the ongoing review that has been ongoing for weeks. The options under consideration include the various forms of a potential breakup, including a separation of the company’s retail and insurance businesses.

In the proposed job cuts, impacted positions are said to be primarily corporate roles, while the reductions will not impact front-line jobs in stores, pharmacies, and distribution centers.

The healthcare firm, while reporting weak second- quarter earnings in August, had slashed its fiscal 2024 earnings and adjusted earnings guidance, below the Wall Street estimates.

The company then said it revised its annual guidance to reflect continued pressure in the Health Care Benefits segment, partially offset by strong performance in the Health Services and Pharmacy & Consumer Wellness segments.

Recently, The Federal Trade Commission or FTC filed an action against CVS Health’s prescription drug benefit manager or PBM, Caremark Rx, along with Cigna’s Express Scripts, and United Health Group’s OptumRx. These companies allegedly engaged in anticompetitive and unfair rebating practices that have artificially inflated the list prices of insulin drugs, restricted patient access to lower-priced options, and shifted the burden of high insulin costs onto vulnerable patients.

On the NYSE, CVS shares are currently trading at $61.77, down 1.77%.

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