CVS Health Plans To Ax 5,000 Jobs In “Once-In-A-Generation Transformation”

Update:

CVS Health confirmed layoffs are happening: “A number of non-customer-facing positions across the company.”

• CVS: ‘WE MUST TAKE DIFFICULT STEPS TO REDUCE EXPENSES’

• CVS SAYS CUTTING ‘A NUMBER OF NON-CUSTOMER FACING POSITIONS’

• CVS SAYS REPRIORITIZING INVESTMENTS AROUND CARE DELIVERY, TECH

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The first half of 2023 was euphoric, stocks roared to near-record highs, talks about a ‘hard landing’ dissipated, hype about ‘Bidenomics’ sparked new hopes about economic revival, and consumers splurged on travel. But the second half might be a different story as the signs of companies continuing to reduce costs indicate dangers lurk ahead. 

The latest evidence of cost-cutting due to mounting macroeconomic uncertainty is a report from The Wall Street Journal revealing CVS Health plans to reduce its total workforce by 5,000 employees. 

“The company on Monday said in a statement that the jobs affected are primarily corporate positions. CVS said it doesn’t expect customer-oriented roles in stores, pharmacies and clinics will be affected in the layoff plan,” The Journal said. 

In a memo to staff, CEO Karen Lynch said the layoffs would allow CVS to “be at the forefront of a once-in-a-generation transformation in health care.” 

Lynch continued in the memo by explaining travel and the use of consultants and vendors would also be limited to reduce spending. Other cost-cutting measures include winding down “certain business initiatives and using technology to increase productivity,” The Journal noted.

At the end of 2022, CVS employed over 300,000 workers in the US. Most layoffs are expected to be in corporate — and those folks will receive severance pay, benefits, and job placement help. 

The layoffs come months after CVS acquired Oak Street Health for $10.6 billion, picking up about 169 medical centers in 21 states. It plans to broaden CVS Health’s value-based primary care platform and clinics for the aging population. In March, CVS bought Signify Health, a home-healthcare firm, for $8 billion. 

Also, CVS is expected to release its quarterly earnings report on Wednesday. It reported a rise in revenue for the quarter ending in March compared with a year ago but downgraded its 2023 outlook because of surging costs related to recent acquisitions.