CVS to Slash 5,000 Positions in Cost-Cutting Move

Bryan Jung
By Bryan Jung
August 2, 2023Business News
CVS to Slash 5,000 Positions in Cost-Cutting Move
A CVS Pharmacy drug store is seen in Washington, DC, on Dec. 21, 2016. (SAUL LOEB/AFP/Getty Images)

The pharmacy chain CVS Health is slashing 5,000 jobs in a push to cut down on costs and focus more on health care services.

According to a staff memo, most of the jobs will be cut in corporate positions, reported The Wall Street Journal on July 31.

The Woonsocket, Rhode Island-based retailer does not expect the job cuts to affect customer-support roles in stores, pharmacies, and clinics.

CVS employed about 300,000 workers at the end of 2022, according to a securities filing.

One of the largest pharmacy companies in the United States, CVS operates more than 9,000 retail locations and 1,100 walk-in clinics nationwide.

It is also the owner of one of the country’s biggest health insurers and the nation’s largest pharmacy benefit manager.

Attempt to Restructure

CEO Karen Lynch said the cuts would enable CVS to “be at the forefront of a once-in-a-generation transformation in health care,” according to the staff memo reviewed by The Wall Street Journal.

The company will be cutting down on travel expenses as well as its use of consultants and vendors, and it is also ceasing certain business initiatives and using technology to increase productivity.

The terminated employees will receive severance pay, benefits, and help with landing a new job elsewhere, said the memo.

News of the layoffs comes right before the CVS’s latest quarterly earnings report on Aug. 2.

The pharmacy chain reported revenue rise in the first quarter, to $85.28 billion from $76.83 billion from the prior year.

However, it downgraded its financial outlook for 2023 partially due to the costs to acquire and absorb its recent acquisitions.

The pharmacy chain is changing its business model to expand its role in treating patients.

CVS at the end of March completed the nearly $8 billion acquisition of Signify Health, and the company closed its $10.6 billion deal to acquire Oak Street Health in May, an operator of primary care clinics for seniors.

This was its biggest deal since the company made its nearly $70 billion takeover of Aetna in 2018.

CVS told The Wall Street Journal that it might look at further acquisitions in the future, but for now it will focus on integrating Signify and Oak Street.

In an emailed response to Reuters, a company spokesman confirmed that the company was laying off some non-customer-facing positions to cut costs, but did not comment on the number of employees affected.

The spokesperson said that CVS does not expect “any impact to our customer-facing colleagues in our stores, pharmacies, clinics, or customer services centers.”

The Epoch Times reached out to CVS for comment.

White House Looks to Pharmacies for Support

CVS executives were among the leaders from major drug and retail chains who were invited by the White House to meet with U.S. health officials last month.

The conference was part of the Biden administration’s attempt to drum up support and counter opposition from the pharmaceutical industry to help promote legislation meant to lower drug costs.

White House officials met leaders of companies including CVS , Walgreens, and Walmart in an hourlong roundtable to get support for the proposal, a Health and Human Services Department spokesperson told Bloomberg.

The controversial item in the Inflation Reduction Act is facing legal challenges from the drug industry.

The law will cap insulin prices and expand access to adult vaccines by allowing Medicare to negotiate prices down for costly drugs.

Merck, Bristol Myers Squibb, Johnson & Johnson, and the industry’s biggest lobby group have all sued the government over the law, alleging that it violates the U.S. Constitution.

Reuters contributed to this report.

From The Epoch Times

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