CVS Health is reevaluating its role in healthcare as financial pressures mount. The company, along with other major retailers, is scaling back its healthcare ambitions in response to economic and operational challenges.
In 2024, CVS reported total revenues of $173.6 billion for its health services segment, reflecting a 7.1% decline year over year. Fourth-quarter revenue stood at $47 billion.
The company’s financial difficulties are partially attributed to its 2023 acquisition of primary care company Oak Street Health for $10.6 billion, which has since been deemed a “money-losing asset,” according to The Wall Street Journal.
According to the Journal, shares in the company fell 24% in 2024, and CVS has cut its earnings guidance multiple times during the year. Rising costs within Aetna’s Medicare Advantage business have played a significant role in these cuts, with CVS anticipating up to a 10% decline in its MA membership in 2025.
In an effort to streamline operations, CVS announced a series of layoffs, which are part of CVS’ broader initiative to reduce costs by $2 billion.:
- In September, the company laid off 2,900 employees, primarily in corporate roles.
- An October WARN filing revealed 416 job cuts at Aetna’s Hartford, Conn., headquarters and 632 layoffs at CVS’ corporate headquarters in Woonsocket, R.I.
- In March, CVS announced plans for laying off an additional 183 employees in Wellesley, Mass.
CVS Health’s board of directors has retained bankers to evaluate a potential company split, aiming to enhance shareholder value and improve financial performance, according to the Journal. The board has engaged hedge fund investor Glenview Capital Management to explore strategic options.
However, a split may present challenges, according to the Journal. CVS has invested over $88 billion in acquisitions over the last six years to transition from a traditional retail pharmacy to a comprehensive healthcare provider. Analysts warn that dismantling the company could leave some divisions struggling independently, risking customer retention and revenue streams.
CVS is adjusting its retail strategy to address financial difficulties and industry challenges:
- The company is rolling out a dozen new pharmacy-focused stores while reducing retail offerings in response to declining retail sales.
- The company exited its Medicare shared savings program, selling the business to Wellvana in March 2025.
- In October 2024, CVS discontinued its infusion services business.
Other retail pharmacies, including Walgreens and Walmart, have struggled due to competition from discount retailers and increased theft. Rite Aid filed for bankruptcy in 2023, closing 500 of its 2,000 stores, while Walgreens has been gradually shutting down locations since 2019.
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