NBC 10 I-Team: CVS cuts hundreds of positions in RI, other states
There is a massive layoff at CVS Health, sources tell the NBC 10 I-Team. Some employees have already been told that their position has been eliminated.
CVS Health, which has more than 240,000 people in the nation, has cut aproximately 600 positions located primarily in its corporate facilities in Rhode Island, Illinois and Arizona, according to Michael DeAngelis, a company spokesperson. A total of 250 of those positions, were in Rhode Island and 20 were in Massachusetts.
"CVS Health is committed to Rhode Island and we are proud to be part of this community," he told NBC 10. "While approximately 250 positions will be affected here, we will continue to employ more than 7,600 people throughout Rhode Island."
Many of the layoffs will be at CVS's main headquarters at One CVS Drive in Woonsocket, and some cuts were made to national positions, sources tell the I-Team.
Sources told the NBC 10 I-Team that many of the Rhode Island cuts were in the company's corporate office, which the company later confirmed.
"Several different departments in our corporate offices were affected," DeAngelis said. The corporate office houses IT, call center department, real estate/lease and human resources.
The entire accounts payable department was impacted by the layoffs, as were employees in the risk department, the I-Team has learned. Sources tell the I-Team the plan is to outsource both departments.
Sources also told NBC 10 that the layoffs impacted Omnicare general management positions. CVS acquired Omnicare in a $12.7 billion deal in 2015. Omnicare, a provider of pharmacy services to long term care facilities, had 13,000 employees at 160 locations in 47 states across the U.S. at that time.
It's been an emotional day for employees at CVS headquarters, sources tell NBC 10. Employees are crying and there's an overall panic among those who wonder if they will have a job after today. Some have already been notified.
"Colleagues whose positions are affected are being informed and we are working closely with them during this transition," DeAngelis wrote in a statement. "Colleagues will have the opportunity to apply for other positions within CVS Health for which they may be qualified."
Those who are not placed in other positions within the company will be eligible to receive severence package to cover financial and health benefits, support and career counseling, according to the company.
“The Department of Labor and Training is here to help CVS workers affected by the layoffs however we can," said DLT Director Scott Jensen. "At the company’s invitation, we will visit the workplace soon and offer Rapid Response services."
With rapid response services, the DLT will provide information about re-employement, training and unemployment insurance.
Jensen went on to say that the DLT worked closely with the company after a similar layoff last November.
The layoffs come after the company cut a number positions in some states and warned of additional cuts in other states in the last year.
- Nearly 100 employees will be cut in Tampa, Fla. later this month, according to a Worker Adjustment and Retraining Notification (WARN notice) filed with Florida's Department of Economic Opportunity and its Division of Workforce Services.
- The company filed a WARN notice to permanently cut 152 workers with the California Employment Development Department before the end of September 2016.
- A total of 66 CVS employees were cut in Toledo, Ohio, between April and May 2016, according to a March 2016 WARN notice.
- More than 230 employees were cut at Omnicare's corporate headquarters in Cincinnati in late 2015.
CVS Health did not provide any notice to the state of the impending cuts, because it didn't have to, according to the DLT.
"CVS did not have an obligation to notify DLT about this layoff because it employs about 7,600 workers in Rhode Island, 247 workers are being laid off, and The Worker Adjustment and Retraining Notifications (WARN) Act would only be triggered if this number (247) constituted at least one-third of the total workforce at a single site of employment," said Mike Healy, a DLT spokesperson.
While fed law states a company laying off 50 to 499 employees, would have to provide notice, the law also states that the layoffs would have to have constituted at least 33 percent of the total workforce at a single site of employment. In this instance, it did not.
Net revenues for the company increased approximately $6.6 billion, or 17.6 percent, compared to the same period last year, according to the company's Q2 results
That increase was a result of CVS Health's acquisitions of Omnicare in August 2015 and the December 2015 acquisiton of Target's clinics and pharmacies.
Gross profit as a percentage of net revenues dropped 120 basis points during the quarter ending June 30, 2016 compared to the same period last year.
The gross profit decrease was based on two things said the company, a change in the mix of business within both the pharmacy services and retail segments and continued pricing and reimbursement pressure and an increase in generic sales. Generic prescriptions have a lower selling price than the brand name prescriptions, according to CVS.
CVS is slated to release its third quarter report on Tuesday, Nov. 8.
Stay with NBC 10 News as the story develops and refresh this page throughout the day for up to the minute details.