A general view shows a sign of CVS Health Customer Support Center in CVS headquarters of CVS Health Corp in Woonsocket, Rhode Island, U.S. October 30, 2023.
Faith Ninivaggi | Reuters
CVS Health said on Monday it added four new members to its board including hedge fund Glenview Capital’s chief executive Larry Robbins as part of a standstill agreement with the activist investor.
Shares of CVS rose 2% to $54.30 in premarket trading.
The Rhode Island-based company, which has been facing pressure from investors including Glenview, is looking to improve its operations and shareholder value even as it combats with increased medical costs at its health insurance business.
Glenview, which has a 0.95% stake in the company as of Sept. 30, said its agreement with CVS included other confidential provisions. Two other activist shareholders, Third Point and Sachem Capital, also have stakes of 0.13% and 0.28%, respectively, in the company as of Sept. 30.
“While having additional expertise as part of the company/Board is never a bad thing, we don’t think this really changes anything beyond where we think CVS had already started to point the ship,” said Michael Cherny, analyst at Leerink Partners.
CVS had earlier this month named Steve Nelson, a former UnitedHealth insurance head, to run its Aetna business.
This came a few weeks after the conglomerate replaced Karen Lynch as its CEO with David Joyner, as higher medical costs continued to plague its health insurance unit Aetna, and also executed a strategic review. Glenview had said at the time it supported the resignation of Lynch.
Robbins, who likes to be called a constructivist shareholder, had recently met with executives to push for changes. He did not call for a breakup of CVS.
Three other executives from Glenview – Leslie Norwalk, Guy Sansone and Doug Shulman – will join Robbins on the CVS board, bringing the total members to 16.
