• CVS Health's board has engaged advisors to conduct a strategic review of its business, according to people familiar with the matter.
• The review has been ongoing for some time, said the people, but there is no certainty on what actions, if any, the company will take.

CVS Health's board has engaged advisors to conduct a strategic review of its business, according to people familiar with the matter, as the company contends with potential activist pressure and a severely depressed stock price.

The review has been ongoing for some time, said the people, but there is no certainty on what actions, if any, the company will take. A break up of the insurance and retail businesses is one of the options being weighed, the people say.

CVS management, including CEO Karen Lynch, met with major shareholder Glenview Capital Monday to discuss the company's lagging prospects and Glenview's plans to revive the stock, CNBC previously reported.

In a statement, CVS spokesman David Whitrap told CNBC: "CVS Health's management team and Board of Directors are continually exploring ways to create shareholder value. We remain focused on driving performance and delivering high quality healthcare products and services enabled by our unmatched scale and integrated model."

CVS shares rose about 1% in premarket trading Tuesday on the news, which was first reported by Reuters on Monday.

Lynch has to contend with an insurance business hammered by heightened medical costs, which drove a leadership turnover earlier this year. Lynch assumed direct leadership of CVS's insurance unit in August, displacing then-president Brian Kane.

The company in August also announced a new plan to slash $2 billion in expenses over several years. On Monday, CVS said that would involve cutting less than 1% of its workforce, or around 2,900 workers.

The company owns health insurer Aetna, which includes plans for the Affordable are Act, Medicare Advantage and Medicaid, as well as dental and vision.

Medical costs from Medicare Advantage patients in particular have jumped over the last year for insurers such as CVS, UnitedHealth Group and Humana as more seniors return to hospitals to undergo procedures they had delayed during the Covid pandemic, such as hip and joint replacements. 

Medicare Advantage, a privately run health insurance plan contracted by Medicare, has long been a key source of growth and profits for the broader insurance sector. More than half of Medicare beneficiaries are enrolled in those plans as of 2024, enticed by lower monthly premiums and extra benefits not covered by traditional Medicare, according to health policy research organization KFF. 

But Wall Street has grown concerned about the runaway costs from Medicare Advantage plans, which insurers warn may not come down anytime soon. 

In August, CVS said its lowered full-year outlook reflected a decline in the company's 2024 Medicare Advantage star ratings. Those ratings are critical as they help patients compare the quality of Medicare health and drug plans and determine how much an insurer receives in bonus payments from the Centers for Medicare and Medicaid Services.

CVS last year projected it would lose up to $1 billion in 2024 due to lower star ratings, the company disclosed in a securities filing. 

Unlike insurers such as Humana, CVS has two other business units – its retail pharmacy and health services segments – that could help dampen the hit from higher medical costs. 

The company's pharmacy and consumer wellness division saw year-over-year sales growth in the second quarter in part due to increased prescription volume. The unit dispenses prescriptions in more than 9,000 retail pharmacies across the U.S. and provides other pharmacy services, such as vaccinations and diagnostic testing. 

But the company said falling reimbursement rates for prescription drugs and decreased volume at the front of the retail store, where it sells everything from pantry staples to makeup and cleaning supplies, weighed on the unit's sales for the quarter. 

Inflation, softer consumer spending, theft and competition from Amazon and grocery giants are putting pressure on the retail side. CVS in August said same-store sales at the front of the store were down roughly 4% during the second quarter from the same period a year ago, which reflects a "general softening of consumer demand."

CVS is betting on its private-label products to lure in shoppers who have traded down from national brands to beat inflation.

— CNBC's Bertha Coombs contributed to this story