CVS to lay off 2,900 workers amidst talk of breaking up the company

CVS Health will lay off 2,900 workers in an effort to slash costs, the retailer confirmed 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,” a spokesperson said in a statement.

The spokesperson added that impacted positions are primarily corporate roles.

The layoffs represent less than 1% of CVS’ workforce.

The layoffs come during a potentially tumultuous time for the retailer. On Monday, CVS management, including CEO Karen Lynch, met with major shareholder Glenview Capital  to discuss the company’s deficits and a severely depressed stock price, CNBC reported.

A breakup of CVS’ insurance and retail businesses is one of the options being considered, CNBC reported. 

In May, CVS lowered its outlook for profit growth in 2024, citing ongoing pressures in the health care benefits segment of its business. In the first quarter, the company said its overall operating income fell 34.1%, to about $2.27 billion.

A few months later, in August, the retail pharmacy giant announced that it would slash $2 billion in expenses over several years.

CVS is not the only retail pharmacist facing difficulties. Deerfield, Ill.-based Walgreens Boots Alliance has also been struggling to find a formula that works amidst a challenging operating environment. In June, Walgreens said it planned to close a “significant number” of its underperforming U.S. retail locations.

That announcement followed the closure of several hundred Walgreens locations during the last few years, including 150 announced last year. The retailer has also made multiple rounds of corporate layoffs this year.

“We are at a point where the current retail pharmacy model is not sustainable,” Walgreens CEO Tim Wentworth said at the time, citing not only pressures on consumer spending but also a challenging pharmacy pricing environment.

Monday also saw California CVS pharmacy workers debating whether to strike over contract negotiations. UFCW locals in California filed unfair labor practice complaints with the National Labor Relations Board in August, alleging that CVS engaged in unlawful surveillance of workers, retaliation for union activity, and prohibiting employees from engaging in union activity.

CVS said it has met five times with union officials since the group’s contract expired in June.