CVS has withdrawn its guidance for this year and offered investors no outlook for the next amid struggles in both the pharmacy and insurance businesses. In September, CVS executives met with Glenview, which had accumulated a stake of about $700 million and was pushing for change. The next month saw the departure of former Chief Executive Officer Karen Lynch.
Robbins is one of four new members who will bring the board’s number of directors to 16, the drugstore chain said in a statement. CVS shares rose as much as 5.9 percent Monday in New York after losing about a third of their value this year through Friday.
CVS Health Corp. named Glenview Capital Management founder Larry Robbins to its board as part of an agreement with the activist firm that’s been pressuring the company for change.
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Robbins also wants CVS to bring down its debt and doesn’t think the company needs any more acquisitions, he said in an interview on CNBC.
Revenue had fallen at CVS Health’s Medicare Advantage plans, private versions of the US Medicare health program for seniors, because of restrictions on government payments tied in part to lower quality ratings, called stars. CVS has already fixed some of those problems, but it will take time for the payments to go back up.
“It will take a couple of pricing cycles, but the cavalry and the help is already along the way,” Robbins said.
Also named to CVS’s board Monday were Leslie Norwalk, who counsels health-care companies at Epstein Becker Green and other firms; Guy Sansone, CEO of rehabilitation services provider H2 Health; and Doug Shulman, CEO of OneMain Holdings, a lender.
In an interview, Norwalk said that CVS’s main businesses are doing well, and that the financial health of the company is the major issue. “With operating margins not where they need to be, it’s really just turning around the balance sheet,” she said.
The new board members bring health expertise that “should add comfort to investors” around the future of CVS’s insurance business as well as the long-term outlook of the company, Evercore ISI analysts said in a note to clients.
With assistance from Antonia Mufarech and Rthvika Suvarna.
CVS adds Glenview’s Robbins to board under activist pressure
