Report: CVS Health exploring possible break-up; laying off nearly 3,000 employees
CVS Health is reportedly exploring its options.
The CVS board has engaged advisors to conduct a strategic review of its business, reported CNBC, with one the options being considered a break-up of the company’s retail pharmacy and insurance businesses. (CVS bought health insurance giant Aetna in late 2018 for about $70 billion.)
“CVS Health’s management team and board of directors are continually exploring ways to create shareholder value,” CVS spokesman David Whitrap told CNBC. “We remain focused on driving performance and delivering high quality healthcare products and services enabled by our unmatched scale and integrated model.”
The report comes as CVS is under pressure from rising medical costs. In August, the company lowered its full-year outlook and announced a plan to cut $2 billion in expenses during the next several years. CVS said it planned to streamline its business operations and “rationalize” its business portfolio.
"CVS Health is facing intense investor pressure," said Rajiv Leventhal, senior analyst, Emarketer. "The strategic review will likely reveal that the company’s recent acquisitions and investments in the healthcare space are not paying off as promised. While there’s no guarantee it will happen, any company split would acknowledge that CVS can’t be the integrated healthcare powerhouse it once thought."
On Monday, CVS said it planned to cut about 2,900 employees as part of its cost-cutting plan. The layoffs represent about less than 1% of its workforce.
“Impacted positions are primarily corporate roles,” a company representative told CNN. “The reductions will not impact front-line jobs in our stores, pharmacies and distribution centers.”
The job cuts comes as CVS, Walgreens and Rite Aid have also been closing stores. In November 2021, CVS it would close approximately 900 stores annually (for a total of about 900 locations) during the next three years “to reduce store density in certain locations.”
“CVS Health’s management team and Board of Directors are continually exploring ways to create shareholder value,” CVS spokesman David Whitrap told CNBC. “We remain focused on driving performance and delivering high quality healthcare products and services enabled by our unmatched scale and integrated model.”
Based in Woonsocket, R.I., CVS Health has 300,000-plus employees, including more than 40,000 physicians, pharmacists, nurses and nurse practitioners.
