CVS Health will lay off nearly 3,000 employees due to cost cuts

London
CNN
—

CVS Health plans to cut about 2,900 jobs in an effort to reduce costs, the U.S. health care company said Tuesday.

“We have embarked on a multi-year initiative to deliver $2 billion in cost savings by reducing costs and investing in technologies to improve the way we work,” a spokesperson said in a statement.

The layoffs represent less than 1% of CVS Health’s (CVS) workforce.

“Affected positions are primarily corporate roles. The cuts will not impact frontline jobs in our stores, pharmacies and distribution centres,” the spokesperson added.

The job losses at the company, which manages a network of pharmacies in the United States, is in addition to the approximately 5,000 layoffs announced last year. In 2021, CVS Health announced it would close approximately 900 stores between 2022 and 2024.

“Our industry faces continued disruption, regulatory pressures and changing consumer needs and expectations,” the spokesperson said on Tuesday.

U.S. drugstore chains are struggling because of declining prescription drug reimbursements, according to analysts covering the industry.

At the same time, the drugstore front, which sells snacks and household items, has become less profitable as consumers buy more of these items online at Amazon and at major chains such as Walmart, Target and Costco. Dollar General’s growth has also affected drugstore chains in rural areas.

CVS Health, which already uses artificial intelligence in some of its operations, is making additional investments in the increasingly popular technology, as well as in robotics, “to further automate, reduce costs and improve the experience for all its constituents” , according to its latest annual report.