Nonfood & Pharmacy
CVS Plans to Lay Off 2,900 Employees Amid Discussions of Company Breakup
The layoffs, which were confirmed by a CVS spokesperson, will affect about 1% of CVS’ 300,000 employees.
CVS Health has announced plans to lay off 2,900 workers as part of a strategy to reduce costs, a decision confirmed by the retailer on Tuesday.
“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,” stated a spokesperson.
The layoffs will primarily affect corporate roles and represent less than 1% of CVS’s total workforce.
This decision comes at a potentially turbulent time for CVS. On Monday, company executives, including CEO Karen Lynch, met with major shareholder Glenview Capital to discuss the company’s financial struggles, including significant deficits and a depressed stock price, according to CNBC.
Among the options being considered is the potential breakup of CVS’s insurance and retail businesses, as reported by CNBC. In May, CVS revised its profit growth outlook for 2024, citing ongoing challenges in its healthcare benefits segment. In the first quarter, the company reported a 34.1% decline in overall operating income, amounting to approximately $2.27 billion.
CVS is not the only retail pharmacy facing challenges. Walgreens Boots Alliance, based in Deerfield, Ill., has also struggled to find a viable operational model amidst a tough environment. In June, Walgreens announced plans to close a “significant number” of underperforming U.S. retail locations, following the closure of hundreds of stores in recent years, including 150 locations announced last year. Walgreens has also executed multiple rounds of corporate layoffs this year.
“We are at a point where the current retail pharmacy model is not sustainable,” said Walgreens CEO Tim Wentworth, citing pressures on consumer spending and a challenging pharmacy pricing landscape.
On the same day, California CVS pharmacy workers were debating whether to strike over ongoing contract negotiations. UFCW locals in California filed unfair labor practice complaints with the National Labor Relations Board in August, alleging unlawful surveillance of workers, retaliation for union activity, and prohibiting employees from engaging in union activities.
CVS has stated that it has met with union officials five times since the group’s contract expired in June.