News CVS Health plans to shed 5,000 jobs across the country comes in the wake of the retail drugstore giant’s billions of dollars in spending to add healthcare services to its stores and medical care provider networks.
Several national and Rhode Island news outlets Monday night reported that the drugstore giant, which has more than 300,000 employees across the country, would be notifying the 5,000 impacted employees in the coming weeks, according to a memo sent to workers on Monday. In a statement Tuesday, CVS said the company and the industry are “evolving to adapt to new consumer health needs and expectations.”
“As part of an enterprise initiative to reprioritize our investments around care delivery and technology, we must take difficult steps to reduce expenses,” the company said. “This unfortunately includes the need to eliminate a number of non-customer facing positions across the company. We do not expect there to be any impact to our customer-facing colleagues in our stores, pharmacies, clinics, or customer services centers.”
CVS, which is based in Woonsocket, Rhode Island, and is that state’s biggest company, reports second quarter earnings on Wednesday. The company is expected to disclose more details about the cost-cutting plan in its earnings report.
CVS, which owns the nation’s third-largest health insurer in Aetna, has in the last year taken even more steps to transform into a major provider of healthcare services in markets it already serves as a retail drugstore and community pharmacy.
CVS has made two huge acquisitions this year. In May, the company completed its $10.6 billion acquisition of Oak Street Health, adding a large network of doctor-staffed clinics primarily used by seniors. CVS reportedly beat out several other suitors for Oak Street.
And CVS Health in March of this year closed its $8 billion acquisition of Signify Health, bringing the drugstore giant in-home medical services from a national network of clinicians.
CVS isn’t the only retailer making big investments in healthcare that is also shedding jobs and cutting costs. Rival Walgreens, too, is spending billions of dollars on everything from doctor-staffed clinics via its investment in VillageMD to home care and technology.
But to maintain growth and improve operations, Walgreens in June said it is taking “immediate actions” that include another $600 million in cost-cutting across the company. Thus, Walgreens “transformational cost management program” target is now $4.1 billion by fiscal 2024 compared to an earlier goal of $3.5 billion, executives said.
Walgreens this year has cut hundreds of jobs, including more than 500 positions in its corporate offices, the company disclosed earlier this year.