CVS Health plans to lay off 632 employees from their headquarters in Woonsocket, the health company announced in a notice to the Rhode Island Department of Labor and Training earlier this month.
CVS will implement the layoff between Dec. 8 and Dec. 21. The decision is part of a nationwide termination of nearly 2900 workers announced last month, which follows the company’s 5000-employee layoff last summer.
“We’ve embarked on a multi-year initiative to deliver $2 billion in cost savings by reducing expenses and investing in technologies to enhance how we work,” CVS Spokesperson Kara Page wrote in an email to The Herald.
The layoffs will primarily affect corporate and non-consumer-facing workers, according to Page. “Front-line jobs in our stores, pharmacies and distribution centers” will remain largely unimpacted, she wrote.
Only about 70 of the in-person employees are Rhode Island residents. Many of the terminated employees commute from Massachusetts or work remotely.
“Although people are getting laid off, we’re happy to hear that it's not a very large number of people from Rhode Island,” State Rep. Stephen Casey (D-Woonsocket) said.
“When a major U.S. corporation experiences an unexpected shock, C-suite executives and upper-level management look to cut costs,” Professor of Economics Kenneth Chay wrote in an email to The Herald.
Chay speculated that declining profit margins in private insurance, alongside the Inflation Reduction Act’s drug negotiation program, might have impacted CVS profits. Some have also connected CVS’s declining financial performance with the recent downturn of insurance company Aetna, which was acquired in 2018.
In a July press release, CVS revealed that total revenues decreased 8.8% in the second quarter of 2024. This is in line with broader industry trends — many pharmacies and health insurers have struggled financially in recent months. CVS also plans to shut down 315 retail store locations in 2024.
“The easiest place in the short-run to cut costs is in labor,” he added.
“Our industry faces continued disruption, regulatory pressures and evolving consumer needs and expectations,” Page wrote. “So it is critical that we remain competitive and operate at peak performance.”
The layoffs come amid rumors of a company breakup and headquarter relocation. Other companies, like toy supergiant Hasbro, have also considered moving their headquarters away from Rhode Island, The Herald previously reported.
There “is no plan in the future, at this point, to move the headquarters anywhere,” Casey said.
“We need to keep a business-friendly environment so that these larger companies … can stay here, can continue to grow and prosper,” Casey added. He emphasized cultivating a “symbiotic relationship” between the state, large corporations and the small businesses that constitute much of the local economy.
Additional reporting by Maya Kelly
Megan is a Senior Staff Writer covering community and activism in Providence. Born and raised in Hong Kong, she spends her free time drinking coffee and wishing she was Meg Ryan in a Nora Ephron movie.
