CoverMyMeds shares how layoffs will affect Columbus staffing
CoverMyMeds released more detail Monday on the impact of last week's layoff announcements on its Columbus staff.
The healthcare technology firm said less than 200 of its approximately 1,800 Columbus employees would be impacted by the cuts.
"Columbus, Ohio remains an important location for CoverMyMeds, and it’s where we’ll strategically hire and grow the business," the company said in a statement sent to The Dispatch.
The company, a division of the healthcare giant McKesson Corp., told its staff on Wednesday that 815 positions would be eliminated, becoming the latest of several Columbus tech companies to announce layoffs.
CoverMyMeds said last week it was closing its Arizona office but otherwise did not say where the cuts would occur.
The company on Monday also said it would remain involved in its central Ohio charitable efforts.
"We are also committed to continuing our support for many incredible nonprofit organizations across Columbus through funding efforts, board service and volunteer work, in addition to our continued support for Columbus City Schools and Columbus’ Franklinton and Hilltop neighborhoods to help advance their specific initiatives," according to Monday's statement.
CoverMyMeds' tax deal challenged
CoverMyMeds' layoff announcement prompted Columbus Mayoral candidate Joe Motil to challenge the tax break received by the company for its new Franklinton headquarters.
Under the terms of the tax incentive, approved in July 2018, CoverMyMeds received a 15-year, 100% property-tax abatement worth up to $77.7 million for its new corporate campus along McKinley Avenue. The company opened the first of its two new buildings on the site in 2021 but has since sold both buildings.
As part of the deal, the city also agreed to return 30% of city income tax withholdings on new CoverMyMeds employees for up to eight years (35% for any new employee who lives in Columbus). That incentive is worth between $4.5 million and $5.3 million.
In exchange, CoverMyMeds promised to retain and relocate 592 jobs to the new headquarters and create 1,032 new jobs with payroll totaling $76.4 million within five years.
The Columbus Board of Education signed off on the deal, agreeing to forego $55.6 million in property-tax revenue in exchange for a portion of the income-tax revenue the new jobs would generate.
“These are performance-based incentives," said Columbus Mayor Andrew Ginther's spokesperson, Robin Davis. "If you don’t perform, you don’t receive the incentive. Period. Companies are audited yearly to assure they are meeting performance commitments in their incentive agreements.”
How many Columbus employees will CoverMyMeds retain?
Motil suggested that CoverMyMeds violated the terms of the agreement because the layoffs will drop its Columbus employment below the 1,624 employees required by the deal.
Citing the employment website Zippia, Motil said CoverMyMeds employed 1,336 workers in Columbus in February.
In its Monday statement, company spokesperson Angela Tavrell said the number is far higher. I addition to the 1,600 or so employees remaining in Columbus after the layoffs, some CoverMyMeds workers in Arizona and Louisville have the option to relocate to Columbus.
"Our Patient Support Center will move its primary location to Columbus. Patient Support Center employees from our Scottsdale, Arizona, office who are not impacted by a role elimination will have the opportunity to voluntarily move to Columbus with relocation support from CoverMyMeds or work from home," the company said Monday.
"Additionally, Patient Support Center employees from our Louisville, Kentucky, office who are not impacted by a role elimination will have the choice to continue with Louisville as their office location and work from home when they choose, or voluntarily move to Columbus with relocation support from CoverMyMeds."
How are tax deals reviewed?
Sheldon Goodrum, spokesperson for the city's Department of Development, said all tax incentive deals in the city are subject to review by the city's Tax Incentive Review Council. Tax deals throughout the county are also tracked by the Franklin County Tax Incentive Review Council (TIRC).
"This is why we have the tax review council," Goodrum said. "If an agreement needs to be amended or rescinded, we can do it. We can look at what the agreement calls for, and whether the terms of the agreement are being met."
The bulk of the city's tax deals are included in eight Community Reinvestment Act neighborhoods, 49 Enterprise Zones and 96 Tax Increment Finance districts, according to last year's county TIRC report. An estimated $16.5 million was foregone in taxes in the city deals last year, in addition to $45 million in diverted taxes for Tax Increment Finance districts.
The TIRC recommended last year that the city remind 25 companies with tax deals, including CoverMyMeds, of the importance of filing timely and complete reports with the city.
In addition to the city tax breaks, CoverMyMeds also received several state tax credits for its expansions, starting in 2010 with credits worth $546,055, in 2014 for credits worth $482,288; in 2018 for credits worth $19.4 million; and last year with credits worth an estimated $6.8 million.
What does CoverMyMeds do?
CoverMyMeds was founded in 2008 to provide physicians and pharmacists across the country an online service to get quick insurance approvals for new prescriptions. According to the company, the service has been used more than 200 million times.
CoverMyMeds is a profitable part of the $50 billion Texas healthcare company McKesson Corp., which bought CoverMyMeds in 2017 for $1.4 billion. For the nine months ending Dec. 31, CoverMyMeds had revenue of $3.2 billion and profits of $400 million.
In his note announcing the layoffs to employees, however, CoverMyMeds President Kevin Kettler said the company needed to make changes "to continue on a path of long-term sustainable growth."
jweiker@dispatch.com
@JimWeiker
This article originally appeared on The Columbus Dispatch: CoverMyMeds shares how layoffs will affect Columbus staffing
