CVS Health Corp. recorded an ascent in its share value after activist investment firm Starboard Value LP bought a stake in the healthcare company. The Wall Street Journal reported that the investment firm was in talks with CVS’s top management. The news had a positive impact on drugstore chain’s shares, which rose up by 1.7% this Monday.
According to the report, Starboard Value has acquired only a small stake in CVS. The WSJ report claimed that both the companies have entered into a friendly discussion. However, neither of the companies made any comments to confirm the speculations.
Starboard’s reason for acquiring a stake in CVS
Starboard might be eyeing CVS for its impressive market value. It owns a market value of $99.6 billion with 10,000 pharmacies in the states. It is publicly known that Starboard has big plans for the future and CVS fits perfectly in its current prospects. The New York based hedge fund also acquired a modest position in Bristol-Myers Squibb Co. However, it could not influence their decision to buy Celgene Corp.
The company’s stock has taken a beating at the stock market since the beginning of the year. At current prices, it is up by 17% year-to-date. However, the stock hasn’t managed to move up by even 2% in the past 12 months, showing signs of trouble. The company warned about several headwinds in the first quarter, like problems with its deep-routed care business. But it has overcome the majority of the issues and has released a plan for the coming years with a prominent role for Aetna.
Health clubs by CVS
CVS now plans to transform itself into a vertically integrated healthcare company. It will also focus on a pharmacy benefit management unit created in partnership with health insurance providing company Aetna. Some of its stores are being transformed into health clubs to provide extra medical services.
Karen Lynch, President of Aetna, discussed the future of their much-awaited health clubs with the Hartford Business Journal. She informed that CVS would be inaugurating the first health club in Hartford in the first quarter of 2020.
However, she did not disclose the site for the club. Lynch asserted that CVS and Aetna would be opening 1,500 health destinations by 2021. CVS currently manages half a dozen locations in the capital city. She said that the “front door” to health care would have nurse practitioners, immunizations, a team of caretakers and services/products to treat minor injuries and illnesses. The health clubs will also house counseling and treatment of diabetes with regular health checks.