CVS Health has announced a leadership change, replacing CEO Karen Lynch with David Joyner, a long-time executive in the company’s pharmacy benefits management division.
The decision comes as CVS continues to grapple with declining profits, a nearly 20% drop in its share price this year, and ongoing financial challenges across its various business units.
The leadership transition, effective as of Thursday, was revealed in a statement on Friday. CVS has faced growing financial pressure due to rising medical costs in its Aetna insurance unit and softening consumer spending in its retail pharmacy business. In August, the company cut its full-year profit forecast for the third consecutive quarter and outlined plans to reduce costs by $2 billion over the next several years.
Joyner, 60, brings extensive experience in healthcare and pharmacy benefits management to his new role as CEO. He previously served as president of CVS’s pharmacy benefits manager, Caremark, and was involved in integrating Caremark with CVS after its acquisition in 2007. He retired from CVS in 2019 but returned in early 2023 to helm Caremark once again. Joyner succeeds Lynch, who stepped down after a tenure marked by major acquisitions, including CVS’s $10.6 billion purchase of Oak Street Health and its $8 billion acquisition of home healthcare company Signify Health.
Joyner’s appointment follows mounting pressure from investors for change at the company. Last month, major shareholder Glenview Capital pushed for strategic shifts at CVS, including the potential breakup of its insurance and retail businesses. While CVS’s board considered this option, it has decided to move forward with its integrated business model intact.
The company is set to report third-quarter earnings on November 6, with expectations that results will fall short of earlier projections. CVS now anticipates adjusted earnings of between $1.05 and $1.10 per share for the quarter, a significant downgrade from the $1.69 per share analysts had expected.
Roger Farah, CVS board chairman and now executive chairman, expressed confidence in Joyner’s ability to navigate the company through its current challenges, citing his deep understanding of CVS’s integrated operations. Farah acknowledged the difficulty of the decision to replace Lynch but said it was necessary to drive the improvements CVS requires.
As CEO, Joyner will face significant challenges, including addressing rising medical costs from Medicare Advantage patients and navigating increased scrutiny of pharmacy benefit managers like Caremark by the Federal Trade Commission. He will also be tasked with stabilizing Aetna’s performance and improving profitability across CVS’s diverse healthcare operations.
CVS’s shares fell 11% in premarket trading on Friday following the announcement of the leadership change and the company’s financial forecast adjustments.
With input from CNBC, Forbes, the Wall Street Journal.
