CVS will cut almost 3,000 jobs as it plans AI investments — and considers breaking up

CVS Health Corporation (CVS) is set to cut approximately 2,900 jobs as part of a multiyear, $2 billion cost-saving initiative aimed at reducing expenses and increasing investments in technology.

“To achieve this goal and position ourselves for sustainable growth, we will reduce our workforce by less than 1 percent — approximately 2,900 colleagues across CVS Health,” a company spokesperson told Quartz in an emailed statement.

The spokesperson added that affected positions will primarily target corporate roles and will not affect frontline jobs in the company’s stores, pharmacies, and distribution centers. Employees hit by the layoffs will be notified this week and will receive severance and benefits.

The news comes as the company is reportedly conducting a strategic review of its operations that includes a possible split between its retail and insurance businesses, Bloomberg reported, citing a person familiar with the matter.

“CVS Health’s management team and Board of Directors are continually exploring ways to create shareholder value,” the spokesperson said about the review.

The healthcare conglomerate includes the CVS chain of pharmacy stores, the insurer Aetna, and the pharmacy benefit manager (PBM) CVS Caremark.

The company has been struggling with increasing challenges due to rising operational costs at its drugstore chain and growing medical expenses within its Aetna health insurance division.

The Wall Street Journal reported that CVS executives are set to meet with Glenview Capital Management this week to discuss strategies for improving operations in response to a decline in share value.

The company’s stock price has fallen over 22% since the start of the year.

In August, CVS announced the head of its insurance business was leaving the healthcare giant, as its health benefits unit dragged down the rest of the company during the second quarter of 2024.

During a call to investors, CVS CEO Karen Lynch broke the news that she would replace former Aetna president Brian Kane, who assumed the role just last year.

Lynch also announced CVS is planning a multiyear, $2 billion cost-savings initiative that relies, in part, on accelerating its adoption of AI.

“These savings will be driven by further streamlining and optimizing our operations and processes, continuing to rationalize our business portfolio and accelerating the use of artificial intelligence and automation across the enterprise as we consolidate and integrate platforms,” Lynch said at the time.

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