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WOONSOCKET, R.I. — CVS Health plans to lay off about 2,900 workers as part of a cost-cutting effort, the company confirmed on Tuesday.
The confirmation came a day after members of CVS' management team, including chief executive officer Karen Lynch, reportedly met with major shareholder Glenview Capital to discuss ways to energize the company with operational upgrades.
CVS Health Corp.'s stock rose 1.7% Monday after a report surfaced of a meeting.
"CVS Health’s management team and Board of Directors are continually exploring ways to create shareholder value," said David Whitrap, vice president of External Affairs at CVS Health. "We remain focused on driving performance and delivering high-quality healthcare products and services enabled by our unmatched scale and integrated model.
"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 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.
"To achieve this goal and position ourselves for sustainable growth, we will reduce our workforce by less than 1% (roughly 2,900 jobs). Impacted positions are primarily corporate roles; the reductions will not impact front-line jobs in our stores, pharmacies, and distribution centers.
"Before taking this step, we prioritized finding cost savings 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. We are committed to supporting these colleagues, who will receive severance pay and benefits, including access to outplacement services. The vast majority of impacted colleagues will be notified this week. We remain focused on our mission – continuing to provide the exceptional care and support our patients, members, clients and customers deserve and depend on," Whitrap concluded.
Glenview Capital, meanwhile, denies reports that it has been pushing for a breakup of CVS Health.
In a press release on Tuesday, the firm acknowledged the dedication of CVS Health employees in providing accessible and affordable healthcare to over 120 million people. While recognizing CVS as a key player in the healthcare industry, the firm nevertheless expressed concerns that it has underperformed in recent years due to shortcomings in its investment strategy and actuarial approach. These issues, they noted, have led to financial losses and instability, affecting employees, customers, and shareholders alike, despite the company's significant assets in various healthcare services.
"Glenview and CVS Leadership are engaged in good faith and constructive conversations through which Glenview is offering suggestions to enhance the governance, culture, efficiency, sustainability and growth of CVS Health," the firm stated. "This dialogue is ongoing but is private and should remain so. Press reports have represented that Glenview is pushing for a break-up of CVS Health – this is false. Our goals are those shared by all stakeholders – to work together to strengthen CVS's culture and operating performance to enhance value for customers, associates and shareholders alike."
