CVS Health is eliminating 600 jobs from its corporate offices in Rhode Island, Arizona and Illinois over the next two months as the company feels the effects of an “increasingly competitive” health care environment.
It is unclear which departments the jobs will come from, but CVS will give all affected employees the chance to apply for other positions at the company. The pharmacy will give a severance package to those who don’t get hired to a new position. CVS employs more than 240,000 people in the U.S., many of which are store level positions at its 9,600 pharmacies.
Although CVS Health boosted net revenue 17.6% to $43.7 billion in Q2, with pharmacy same-store sales rising 3.9% and pharmacy same-store prescription volumes jumping 3.5%, drug price regulation has been a thorn in the brand’s side even as it continues its expansion kick.
CVS’ massive expansion took off when it acquired pharmacy services provider Omnicare for approximately $12.7 billion in 2015, giving the retail drugstore more reach into the senior care and specialty pharmacy sectors. Later in the year, the pharmacy made a gigantic retail splash buying Target’s 1,700+-location pharmacy business for $1.9 billion.
Moving into Target stores vastly expands CVS’ pharmacy footprint and shows it is serious in battling top competitor Walgreens, which itself is struggling to keep its pending $9.4 billion acquisition of Rite Aid alive.
As both CVS Health and Walgreens aim to win market share within the pharmaceutical industry, the major drugstore brands are also figuring out how to operate on a large scale as efficiently as possible. Unfortunately, expansion efforts often come with a price tag attached when overall market conditions are challenging.