CVS to lay off 5,000 employees in push to shed costs
Written by ABC AUDIO on August 1, 2023
(NEW YORK) — CVS Health is laying off 5,000 employees as part of an effort to shed costs, the retail and pharmacy chain confirmed on Tuesday.
The layoffs will primarily affect “non-customer facing positions” such as corporate roles, the company said, adding that it does not expect the move to impact brick-and-mortar stores, pharmacies and clinics.
“Our industry is evolving to adapt to new consumer health needs and expectations,” CVS told ABC News in a statement. “As part of an enterprise initiative to reprioritize our investments around care delivery and technology, we must take difficult steps to reduce expenses.”
Laid-off workers will receive severance pay and benefits, the company said, including access to “outplacement services” to help find a job elsewhere.
“We’re committed to supporting impacted colleagues,” the company said.
As of December, CVS employed roughly 300,000 workers worldwide, according to a securities filing. The just-announced layoffs will eliminate less than 2% of the company’s workforce.
The Rhode Island-based company operates more than 9,000 retail locations and 1,100 walk-in medical clinics, the securities filing said. It also owns one of the nation’s largest health insurers, Aetna, as well as the country’s largest pharmacy-benefit manager, CVS Caremark.
The move to slash workers comes as CVS pivots toward expanded healthcare services, and away from the magazine and snack aisles.
In May, the company closed a $10.6 billion acquisition of Oak Street Health, a Chicago-based primary care provider that operates more than 150 healthcare centers in 21 states.
Two months earlier, the company closed an $8 billion deal to acquire Signify Health, a New York-based home healthcare company.
In 2021, CVS announced plans to close roughly 900 stores over the ensuing three years as it evaluated population shifts, consumer buying patterns and projected needs. As part of this “strategic review” of its retail business, the company said it would “reduce store density” in certain locations.
“We do not anticipate there will be any impact to our clients and customers as we remain focused on our mission – continuing to provide the exceptional care and support our customers, patients and communities deserve and depend on,” the company said in Tuesday’s statement.
“Throughout our company’s history, we’ve continuously adapted to market dynamics to lead the industry,” the statement added. “The difficult decision we are making will set the company up for long-term success.”
CVS is set to hold their next quarterly earnings call Wednesday morning. Shares of CVS ticked down 1% in early trading on Tuesday.
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