CVS jumps on report it will add to board in deal with hedge fund Glenview

Investing.com -- Shares of CVS Health (NYSE:CVS) rose 2.8% in premarket trading on Monday following a report from the Wall Street Journal that the company will expand its board as part of an agreement with Glenview Capital Management, a hedge fund advocating for changes at the company.

CVS will add four new board members, including Glenview CEO Larry Robbins, in a move aimed at improving its relationship with investors.

This will bring the board’s total membership to 16. The new appointees also include Leslie Norwalk, a former acting administrator at the Centers for Medicare and Medicaid Services; Guy Sansone, CEO of H2 Health; and Doug Shulman, a former IRS commissioner and executive at BNY Mellon (NYSE:BK), the WSJ reported.

CVS Executive Chairman Roger Farah is said to have emphasized the collaborative nature of the agreement, saying, “The board members that are joining bring unique skills, they’ll be additive to the existing board, and we expect to work collaboratively.”

The announcement comes as CVS faces mounting pressure from investors after a 34% decline in its stock price this year. Challenges have been tied to its insurance unit, Aetna, which has struggled with rising medical costs, particularly in its Medicare plans.

David Joyner, who recently replaced Karen Lynch as CEO, is focusing on reorganization efforts and improvements at Aetna, which he has described as unacceptable, said the WSJ.

Robbins noted that the changes aim to enhance CVS’s operational execution and profitability while prioritizing debt reduction to stabilize its balance sheet.

He also highlighted the value the new board members bring, saying their networks could help bolster CVS’s management at various levels, according to the WSJ.

The agreement with Glenview is seen as a step toward rebuilding investor confidence as CVS executes its strategic reset.