Dive Brief:
- CVS is shedding 5,000 jobs as part of ongoing expense reduction measures as the company faces cost pressures integrating recent multi-billion-dollar deals.
- Affected jobs are mostly corporate positions. Customer-facing jobs, like store or clinic employees, will not be affected, according to a spokesperson for the healthcare giant.
- CVS is also taking other steps to reduce expenses, including minimizing the use of consultants and vendors and stopping select business initiatives that don’t align with its current corporate strategy.
Dive Insight:
The layoffs, first reported by The Wall Street Journal and confirmed to sister publication Healthcare Dive, represent under 2% of CVS’ workforce.
CVS employed more than 300,000 workers as of the end of last year, roughly three-fourths of them full-time, according to a filing with the SEC.
Rhode Island-based CVS is one of the largest healthcare companies in the U.S., operating major health insurer Aetna and CVS Caremark, the biggest pharmacy benefits manager in the country. CVS also has a significant retail footprint, with a network of more than 9,000 locations and 1,100 walk-in clinics nationwide, according to the annual filing.
CVS reported rising revenue in the first quarter, but the company faces significant integration costs from recent M&A activity as it focuses more on direct healthcare delivery. CVS lowered its 2023 earnings outlook as a result.
Earlier this summer, CVS purchased value-based medical clinic Oak Street Health for $10.6 billion. CVS completed its $8 billion acquisition of home health provider Signify in March.
CVS faces a number of other headwinds this year, including drugmakers restricting sales of discount drugs in the 340B program, creating challenges to its pharmacy benefits segment, and COVID-19 contributions dissipating more rapidly than expected, management said in discussions of first-quarter results.
CVS also decided to close its fledgling clinical trials business in May, saying it didn’t align with CVS’ overall corporate strategy. The company is also continuing to pare back on its retail drugstore footprint.
The layoffs reflect CVS’ effort to reprioritize investments around care delivery and technology, and to adapt to market dynamics, including changing consumer health needs and expectations, CVS corporate communications director Michael DeAngelis told Healthcare Dive.
“The difficult decision we are making will set the company up for long-term success,” DeAngelis said in a statement.
CVS employees who lose their jobs will receive severance pay and benefits, along with help finding new roles, according to the company.
CVS will release second-quarter earnings results on Wednesday.
