CVS Health
is cutting about 5,000 jobs in a cost-saving drive. The healthcare giant is looking to save costs after making significant acquisitions to expand into primary care.
CVS
(ticker: CVS) on Tuesday said the jobs affected are primarily corporate positions and it doesn’t expect customer-oriented roles to be affected, The Wall Street Journal reported, citing a company statement. CVS employed more than 300,000 workers as of the end of last year.
CVS didn’t immediately respond to a request for comment from Barron’s early on Tuesday.
Shares of CVS were flat in premarket trading at $74.68 and are down 20% this year so far.
The move comes shortly after CVS closed the $10.6 billion acquisition of Oak Street Health, as well as last year’s purchase of health-and-technology services provider Signify Health for about $8 billion.
The deals are part of CVS’s move to expand in healthcare delivery. However, they come with a cost. Oak Street’s business model of employing its own healthcare providers and opening its own medical centers is more expensive than some rivals.
The layoff announcement comes ahead of CVS’s quarterly earnings report on Wednesday. CVS lowered its full-year earnings guidance after its first quarter, saying in part it was due to to costs associated with its two acquisitions. Analysts at Mizuho Securities said in a note ahead of the earnings they expect CVS to reiterate the earnings guidance but attention will be on its progress in ramping up the new investments.
Write to Adam Clark at [email protected]
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