Massive layoffs are coming to CVS.
The pharmacy chain announced plans to lay off around 5,000 employees on Tuesday to cut costs and focus on providing customers more comprehensive health services.
According to the Wall Street Journal, which first reported the news, the layoffs will reportedly primarily impact the company’s corporate staff and will not impact its consumer-facing retail positions.
In a staff memo obtained by the paper, CEO Karen Lynch said the goal of the layoffs was to help enable the company to “be at the forefront of a once-in-a-generation transformation in healthcare.”
Reached for comment, CVS spokesperson Mike DeAngelis told Fast Company by email that customers have new expectations as the consumer-health industry has evolved, and that CVS is adapting to meet those needs. He cited “care delivery” and technology as two areas of investment, and reiterated that the company does not expect an impact to consumer-facing retail roles, or to customers.
“We do not anticipate there will be any impact to our clients and customers as we remain focused on our mission—continuing to provide the exceptional care and support our customers, patients and communities deserve and depend on,” CVS said in a statement. “Throughout our company’s history, we’ve continuously adapted to market dynamics to lead the industry. The difficult decision we are making will set the company up for long-term success.”
Transformation has been ongoing for the company over the past several years.
Last year, CVS closed hundreds of its retail locations across the United States. In November 2021 the company announced plans to close 300 locations each year for the following three years, 900 in total, to reduce store density in some areas.
As part of that effort, the company said it planned to remodel some of its existing stores to include additional health services, including primary care physicians and an “enhanced version” of the company’s HeathHub layout, which allows it to treat customers with chronic conditions and more advanced medical issues beyond what can be handled by the company’s 1,100 MinuteClinics.
In 2017, CVS acquired health insurer Aetna for a reported $69 billion, and in February it announced plans to purchase Oak Street Heath, a network of senior-focused clinics.
In addition to the layoffs, the company is also reportedly cutting down on its use of consultants and vendors, and reducing travel expenses.
Those who are laid off by the company this week will receive severance as well as help finding a new position elsewhere.
The layoffs come one day before the company’s quarterly earnings call.
This post has been updated with a response from CVS.
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