CVS Health, one of the biggest players in the battle to acquire physicians, is facing a possible split amid major financial struggles.
In 2023, CVS Health spent $10.6 billion to acquire primary care company Oak Street Health, which has since been a "money losing asset," according to The Wall Street Journal.
Here are four major aspects of CVS Health's financial struggles:
Company shares are dropping
According to the Journal, shares in the company have fallen 24% in 2024, and CVS has cut its earnings guidance multiple times during the year.
The cuts are mainly driven by rising costs in Aetna's Medicare Advantage business, and the company anticipates it could lose up to 10% of its MA membership in 2025.
Layoffs continue
At the end of September, CVS announced plans to lay off 2,900 employees, primarily in corporate roles.
In a federal worker adjustment and retraining notification filed Oct. 6, CVS Health said it will lay off 416 employees at Aetna's headquarters in Hartford, Conn. CVS is also laying off 632 employees in its corporate headquarters in Woonsocket, R.I., according to a separate WARN.
The board is mulling a split
CVS Health's board of directors have retained bankers to review the company, possibly leading to a split, according to the Journal.
The management team and board of directors said they are examining how to create more shareholder value and drive improved financial performance. A company breakup is one option on the table, according to the Journal.
CVS Health executives met with hedge fund investor Glenview Capital Management to examine strategies for boosting operations.
A breakup might be difficult to execute
A split could be difficult for several reasons, the Journal reported Oct. 1.
The company invested more than $88 billion in acquisitions over the last six years seeking to transform itself from a traditional retail pharmacy into a comprehensive retail provider, so separating the integrated units could beget certain challenges.
Analysts have said dismantling the organization could leave certain units struggling independently, which could jeopardize customer retention and revenue streams, according to the report.
The breakup also raises concerns about a disruption of synergies between CVS pharmacy services and its pharmacy benefit manager, CVS Caremark, according to the Journal.