With the company preparing to announce its third quarter earnings next week, CVS Health Corp. is laying off 600 headquarters employees in Illinois, Arizona and Rhode Island, where it is headquartered.
The move is to save money and better serve customers, the company told media outlets. In response to a HomeWorld Business inquiry, the company said market conditions and competition required CVS to operate more efficiently, leading to the decision to trim staff.
In an August second quarter conference call, CVS executives said profits would be weighted toward the back half of the year as it addressed with industry issues, including generic drug introductions. The company also noted that it was dealing with acquisition and integration costs. CVS acquired 1,667 Target pharmacies last year as well as 79 clinics, and the company purchased Omnicare, a pharmacy services provider to long-term care facilities, in 2015.
In the second quarter, CVS GAAP earnings decreased from $1.27 billion to $924 million, year over year, primarily driven by a loss on early extinguishment of debt and acquisition-related integration costs, the company indicated. Comparable store sales increased 2.1% in the quarter year over year but front store comps, including general merchandise, decreased 2.5%. Softer customer traffic also hit front store comps, partially offset by an increase in basket size, the company noted.
In regards to the HomeWorld Business inquiry about the layoffs, CVS spokesperson Michael DeAngelis responded: “CVS Health continually reviews its operations in all of its markets and facilities across the U.S. to enhance efficiencies and ensure the company remains in the best competitive position to improve the health outcomes of its patients and clients while lowering their overall health costs. Following a thorough evaluation process, we have determined that changing market dynamics and the increasingly competitive environment require us to operate as a more lean and efficient organization. As a result, we are eliminating a small percentage of positions at CVS Health in November and December 2016 in order to focus roles and resources on driving the greatest value for our business while maintaining customer satisfaction. CVS Health employs more than 240,000 people across the U.S. Approximately 600 positions located primarily in our corporate facilities in Rhode Island, Illinois and Arizona will be affected by this difficult decision. Colleagues whose positions are affected are being informed, and we are working closely with them during this transition. Colleagues will have the opportunity to apply for other positions within CVS Health for which they may be qualified. Those who are not placed in other positions within the company will be eligible to receive a transition package to cover financial and health benefits, outplacement support and career counseling.”