Drugstore chain giant CVS Health, which is already shutting stores to reduce costs, now plans layoffs of about 2,900 employees. The CVS job cuts is a belt-tightening measure aimed at helping it slash $2 billion a company spokesperson confirmed Monday.
(Image Credit: shutterstock)The Woonsocket, Rhode Island-based company, CVS Health, also facing shareholders unhappy with its performance, on Monday informed its workers about the planned job cuts. CVS said the layoffs will reduce its workforce by less than 1%.
CVS layoffs
“Our industry faces continued disruption, regulatory pressures, and evolving consumer needs and expectations, so it is critical that we remain competitive and operate at peak performance,” as per a CVS spokesman. “As we previously disclosed, we’ve embarked on a multi-year initiative to deliver $2 billion in cost savings by reducing expenses and investing in technologies to enhance how we work.”
CVS job reductions impact
The layoffs at CVS shall primarily impact corporate jobs, and will help the drugstore chain “to achieve this goal and position ourselves for sustainable growth,” according to the company spokesman. “The reductions will not impact front-line jobs in our stores, pharmacies and distribution centers,” he said.
Challenges for pharmacy sector
All the major pharmacy store operators not only CVS but Rite Aid and Walgreens Boots Alliance have been trying to weather financial challenges. And all three have been closing stores.
Philadelphia-based Rite Aid emerged from Chapter 11 in early September with a downsized store fleet. In November 2021, CVS said it planned to shutter 900 stores in the next few years. This year alone, it aims to shutter 315 locations, according to Coresight Research. So far 72 have happened, while 243 are not yet confirmed to have closed, Coresight said.
Drugstore chains have been plagued by shifting consumer habits, lower reimbursement rates, and heightened competition from rivals such as Amazon and Walmart.
Glenview suggesting changes at CVS
The company was slated to meet with one of its major shareholders, hedge fund Glenview Capital Management, on Monday, the Wall Street Journal reported earlier. The firm’s founder, Larry Robbins, reportedly wanted to suggest ways to improve operations.
Glenview did not immediately respond on the news and CVS declined to comment on discussions with the hedge fund.
“CVS Health maintains a regular dialogue with the investment community as part of our robust shareholder and analyst engagement program,” the company spokesman said. “Beyond that, we cannot comment on engagement with specific firms or individuals.”
CVS on job cuts
Regarding the job cuts, he added, “Before taking this step, we prioritized finding cost saving everywhere we could, including closing open job postings. Decisions on which positions to eliminate were extremely difficult and do not diminish the value that impacted colleagues have brought to the company.”
CVS planning break-up
CVS Health is exploring options that could include a break-up of the company to separate its retail and insurance units, as the struggling healthcare services company looks to turn around its fortunes amid pressure from investors, as per people familiar with the matter.
Stock update
CVS Health stock rose 2% Monday on news that investor Glenview Capital Management would meet with top executives to propose improvements for it. Shares, which ended the regular session up 2.4% at $62.88, rise 2.7%, to $64.59, in after-hours trading.
The stock has fallen nearly 23% this year, resulting in a $26 billion drop in market cap. The company has cut its full-year earnings guidance for three straight quarters, with the most recent number in August coming in 23% lower than the original figure given in December.
