CVS layoffs: Why is the health company cutting nearly 3,000 employees?

CVS has announced it will cutting the jobs of almost 3,000 people, a number representing less than one percent of its workforce. A statement released by the company said the layoffs are part of efforts to cut costs.

“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,” according to the statement.

CVS says they had to make the decision to lay people off to “remain competitive and operate at peak performance.”

The health care company admits the industry is struggling in the face of regulatory pressures and the changing needs and expectations of consumers.

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CVS job cuts involve mostly corporate roles

The company sought to reassure workers that the layoffs will mostly affect those in corporate roles, and not front-line employees in stores, pharmacies, and distribution centers. The people who will lose their jobs will be given severance pay and benefits.

Reuters had reported that CVS is looking into dividing the company to distinguish its retail and insurance units, as it attempts to increase profitability in the face of investor pressure.

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In August, the company revealed a multi-year plan that would include streamlining operations and the use of artificial intelligence.

Last year, CVS had already announced it was letting go of 5,000 employees who were not involved in dealing with customers. Three years ago, the company also reported it intended to close approximately 900 stores from 2022 to 2024

The company acquired health insurer Aetna in 2018, as well as medical groups Oak Street Health and Signify Health last year.