CVS Health, the parent company of Hartford-based health insurer Aetna, has announced plans to lay off approximately 2,900 employees. This move is part of a broader effort to cut $2 billion in corporate costs.
The layoffs, which represent less than 1% of the company's global workforce, will primarily impact corporate jobs. Front-line positions at stores, pharmacies, and distribution centers will not be affected by these cuts.
Background and Context
This is not the first round of layoffs for CVS Health. Just over a year ago, the company announced it would cut about 5,000 jobs nationwide, including hundreds of positions at Aetna. The recent layoffs are part of an ongoing strategy to streamline operations and reduce costs.
In August, CVS Health lowered its 2024 adjusted earnings outlook to between $6.40 and $6.65 per share, down from the previous guidance of at least $7 per share. This marks the third consecutive quarter that the company has reduced its profit guidance.
Impact on Local Communities
Some of the layoffs are expected to affect employees in Connecticut, particularly those working at Aetna's Hartford offices. This development follows recent changes in leadership at Aetna, with CVS Health CEO Karen Lynch taking over control in August and dismissing former Aetna President Brian Kane due to the company's underperformance.
Investor Concerns and Company Response
The layoffs come at a time when investors are growing increasingly restless with CVS Health. The company's shares have fallen by 24% so far this year. Larry Robbins, founder of healthcare-focused hedge fund Glenview Capital Management, is scheduled to meet with CVS Health officials to propose changes aimed at improving the company's operations without breaking it up.
Glenview Capital Management has a significant stake in CVS Health, with the company making up about $700 million, or 28%, of its $2.5 billion hedge fund. The meeting underscores the ongoing dialogue between CVS Health and its investors as part of the company's robust shareholder and analyst engagement program.
