CVS Health, the parent company of long-term care pharmacy Omnicare, is planning to lay off approximately 2,900 employees as it faces “continued disruption, regulatory pressures and evolving consumer needs and expectations,” a company spokesman told McKnight’s Senior Living on Tuesday.
The layoffs account for less than 1% of the company’s total workforce, Mike DeAngelis said. “Impacted positions are primarily corporate roles,” he added.
DeAngelis did not address whether any of the layoffs would affect Omnicare employees, only saying that “[t]he reductions will not impact front-line jobs in our stores, pharmacies and distribution centers.”
The action is part of a “multi-year initiative to deliver $2 billion in cost savings by reducing expenses and investing in technologies to enhance how we work,” he said.
“Before taking this step, we prioritized finding cost savings everywhere we could, including closing open job postings,” DeAngelis said. “Decisions on which positions to eliminate were extremely difficult and do not diminish the value that impacted colleagues have brought to the company.”
Most affected employees will be notified this week, he said, adding that they will receive severance pay and benefits, including access to outplacement services.
“We remain focused on our mission: continuing to provide the exceptional care and support our patients, members, clients and customers deserve and depend on,” DeAngelis said.
Reuters reported Monday that CVS Health is considering splitting the company into separate retail and insurance divisions, although it said that a final decision on a strategy had not been reached. The Wall Street Journal reported that Glenview Capital Management and other investors are proposing ways that the company can improve its operations.
“[I]t is critical that we remain competitive and operate at peak performance,” DeAngelis said Tuesday.
Cincinnati-based Omnicare, which serves senior living communities, skilled nursing facilities and Programs of All-Inclusive Care for the Elderly, is a business unit of Woonsocket, RI-based CVS Health.
The latest layoff news follows an announcement by CVS in January that it planned layoffs at Omnicare as a result of a review of operations “and other market dynamics.” The number of people affected was not disclosed at the time, and DeAngelis did not elaborate on Tuesday.
That announcement followed one in August 2023 in which CVS said that it would be laying off 5,000 employees, although it did not specify then whether any of those layoffs would be occurring at Omnicare. DeAngelis did not answer a question on Tuesday about whether or how many Omnicare employees were affected by that layoff.
CVS has been seeking to sell its long-term care pharmacy business since 2022. In November of that year, President and CEO Karen Lynch said the unit “was no longer a strategic asset” for the company. A year later, in November 2023, however, CVS said in a filing with the Securities and Exchange Commission that a sale of Omnicare wasn’t expected “in the near term.”
CVS had acquired Omnicare less than a decade before, in 2015, for $10.4 billion plus the assumption of $2.3 billion in Omnicare debt, according to published sources.
CVS reported a $2.5 billion loss related to the long-term care pharmacy business in the third quarter of 2022, and in the first quarter of 2023 it recorded a $349 million loss “to write-down the carrying value of the LTC business to the Company’s best estimate of the ultimate selling price which reflects its estimated fair value less costs to sell,” the company said an SEC filing at the time.
