CVS Cuts 2900 Jobs Amid Hedge Fund Pressure
CVS Health is reportedly meeting with a top investor on ways to enhance its business.
The pharmacy/healthcare chain was set to meet Monday (Sept. 30) with hedge fund Glenview Capital Management, the Wall Street Journal (WSJ) reported, citing sources with knowledge of the matter.
According to the WSJ, the meeting comes as investors seem to be growing restless with CVS, whose shares have fallen 24% this year. A source told the newspaper that Glenview’s founder, Larry Robbins, has a major position in CVS, which accounts for $700 million of the $2.5 billion hedge fund. In all, Glenview owns 1% of CVS.
Meanwhile, the report added, CVS told employees Monday it would undertake layoffs. Citing an internal memo, the WSJ said the cuts represent less than 1% of CVS’ workforce, or 2,900 jobs, primarily in corporate roles.
The layoffs “will not impact front-line jobs in our stores, pharmacies and distribution centers,” a spokesperson for CVS told the WSJ.
Last month, CVS Health reported a 2.6% increase in revenues, as well as mixed results among the company’s three business segments.
The Health Care Benefits segment, which provides insured and self-insured medical, pharmacy, dental and behavioral health products and services, saw its revenues climb 21.4% year over year, a change the company attributed to growth in its Medicare and Commercial product lines.
The Pharmacy & Consumer Wellness segment, which dispenses prescriptions and sells health and wellness products and general merchandise, saw its revenues climb 3.7% thanks to increased prescription volume.
And the Health Services segment, which provides pharmacy benefit management solutions, health care services and provider enablement solutions, reported an 8.8% drop in revenue due to the loss of a large client and continued pharmacy client price improvements.
In other healthcare news, PYMNTS wrote last week about the threat that inefficient payment systems pose to the health companies.
Research shows that 80% of financial leaders in the health space believe streamlining payments processes is crucial, yet only 53% have adequately automated their workflows, indicating a reliance on manual methods that result in costly errors and lost revenue.
“Consider 84% of organizations report financial losses due to outdated accounts receivable processes, and 85% recognize the urgent need to improve payment experiences, emphasizing the demand for a comprehensive overhaul,” PYMNTS wrote. “A dependency on traditional paper statements escalates collection delays. Nearly 70% of providers still use paper for patient communications, while 50% cite that as a primary concern in managing revenue cycles.”
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