Aetna parent CVS Health plans 2,900 layoffs

HBJ PHOTO | STEVE LASCHEVER Karen Lynch is the former CEO of CVS Health.

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CVS Health, parent company of Hartford health insurer Aetna, told employees Monday it will cut 1% of its workforce, or about 2,900 employees.

The job cuts will mostly impact corporate jobs, according to the Wall Street Journal, and are part of a broader $2 billion cost-cutting effort.

This is the latest round of layoffs for CVS and Aetna. Just over a year ago, CVS said it would cut about 5,000 jobs nationwide, including hundreds of jobs at Aetna.

The Journal reported that a major investor was scheduled to meet with CVS Health officials on Monday to propose changes to help the underperforming healthcare company improve its operations.

According to the Journal, Larry Robbins, founder of healthcare-focused hedge fund Glenview Capital Management in New York, was scheduled to meet with CVS CEO Karen Lynch and other company officials.

Lynch took over control of Hartford health insurer Aetna in August, after she suddenly dismissed former Aetna President Brian Kane. Lynch cited Aetna’s underperformance in making the move.

CVS in August lowered its 2024 adjusted earnings outlook to between $6.40 and $6.65 per share, down from previous guidance of at least $7 per share.
It was the third consecutive quarter that the company lowered its 2024 profit guidance.
Robbins is expected to present ways to energize, but not to break up, the company, the Journal said, citing “people close to the matter.”

Robbins has a large stake in CVS, with the company making up about $700 million, or 28%, of his $2.5 billion hedge fund, the Journal reported.

The meeting is scheduled at a time when investors are growing restless with CVS, which has seen its shares fall 24% so far this year, the newspaper reported. Glenview owns about 1% of CVS’s shares outstanding, it said.

A CVS spokesman told the Journal the company “maintains a regular dialogue with the investment community as part of our robust shareholder and analyst engagement program. Beyond that, we cannot comment on engagement with specific firms or individuals.”

CVS Health is one of the largest healthcare companies in the U.S. In addition to its pharmacies, it is the parent of insurer Aetna Inc., as well as the nation’s largest pharmacy-benefit manager.