CVS layoffs: Pharmacy to cut 2,900 workers amid breakup rumors, AI tech investments

CVS plans to lay off 2,900 workers, the company announced this week. The move comes as the pharmacy has been struggling with costs in a tough economy, and is considering breaking the company into two separate businesses, as Reuters reported.

CVS spokesperson Mike DeAngelis told WPRI that the layoffs will not affect “front-line” workers. DeAngelis explained that the cuts will help the chain save $2 billion, and enable the company to invest in technology.

The company already uses artificial intelligence technology, but according to its latest annual report, it will be adding more automated options “to reduce cost and improve the experience for all of its constituents.”

The layoffs, which represent less than 1% of the company’s workforce, are not the first that it has enacted in recent years. In August 2023, the Rhode Island-based chain let go of 5,000 employees in non-customer-facing positions. At the time, 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.”

In 2021, the company announced it would close 900 stores over two years.

On Tuesday, Reuters reported that the company has also been discussing other potential money-saving routes, such as breaking the pharmacy into pieces, separating its retail and insurance units.

“CVS’s management team and Board of Directors are continually exploring ways to create shareholder value,” a spokesperson said per Reuters. “We remain focused on driving performance and delivering high quality healthcare products and services enabled by our unmatched scale and integrated model.”

CVS has faced massive challenges in recent years. It has struggled amid inflation, seeing customers turn to budget shopping chains like Walmart and Dollar General for household staples. It has also faced falling reimbursement rates for the pharmacy on prescription drugs.

DeAngelis told WPRI that employees impacted by the latest round of layoffs will be notified this week. “We are committed to supporting these colleagues, who will receive severance pay and benefits, including access to outplacement services,” DeAngelis said.