CVS Health Inc (NYSE:CVS) is reportedly considering a major restructuring that could involve separating its retail and insurance businesses.

The move comes as the healthcare services company faces investor pressure and seeks to recover from a challenging financial period.

CVS Health is trading at an EBITDA multiple of 7x, which is significantly lower than key competitors like UnitedHealth Inc (NYSE:UNH) and Cigna Inc (NYSE:CI), which trade at multiples of 14x and 9x, respectively.

This valuation gap underscores CVS's pressure to find a viable path forward amid growing competition and investor concerns.

These talks with financial advisers explore how a potential breakup would work, although no final decisions have been made yet.

Reuters report says the discussions, which remain confidential, include the possibility of unwinding CVS Health's $70 billion acquisition of Aetna in 2017, a deal that significantly expanded the company's insurance capabilities.

Now facing mounting difficulties in its retail and insurance sectors, CVS Health is assessing various strategies, including the potential split of its business units.

If the separation occurs, CVS Health could create two publicly traded companies, but the decision is pending approval from its board of directors.

Another point of debate is whether CVS Health's pharmacy benefits manager (PBM) should remain part of the retail division or be integrated into the insurance segment.

The final structure of any split will depend on internal deliberations, Although the Reuters report adds that CVS Health could still pursue a different approach.

As per a recent WSJ report, CVS Health is set to face renewed pressure as hedge fund Glenview Capital Management, led by founder Larry Robbins, plans to meet top executives, including CEO Karen Lynch, to discuss operational improvements.

The meeting with Glenview comes as part of Robbins' broader strategy to push for change.

In the second quarter, the pharmacy chain reported adjusted EPS of $1.83 decreased from $2.21 in the prior year, beating the consensus of $1.73.

The fall is primarily due to a decline in the Health Care Benefits segment's operating results, which reflect continued utilization pressure and the unfavorable impact of the company's Medicare Advantage star ratings for the 2024 payment year within the Medicare product line.

CVS Health revised its adjusted EPS guidance to $6.40-$6.65 from at least $7.00 versus the consensus of $6.98, reflecting continued pressure in the Health Care Benefits segment.

CVS Health decided to make leadership changes based on the current performance and outlook for the Health Care Benefits segment.

Brian Kane quit, and Karen Lynch, the CEO, assumed direct leadership of the Health Care Benefits segment.

Karen and Tom Cowhey, CVS Health's CFO, oversee the business's day-to-day management.

Price Action: At last check Tuesday, CVS stock was up 2.21% at $64.27 during the premarket session.

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