With CVS Health’s shares falling 19% this year and the health care giant struggling on multiple fronts, CVS Health CEO Karen Lynch has resigned.
Early on Friday, CVS Health also announced that its third-quarter earnings would fall well short of Wall Street expectations.
David Joyner, an executive at CVS, will take Lynch’s place and try to steer the company through rising costs for its health insurance business, declining drugstore sales, and increasing investor pressure. Faced with competition online and elsewhere, all major pharmacy chains are attempting to navigate a drastically altered landscape.
Related: In Dallas-Fort Worth neighborhoods, some CVS stores are closing. Breaking News Get the latest news from North Texas and beyond.
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GoogleFacebook By signing up, you agree to our Terms of Service and Privacy Policy. Analyst Michael Cherny of Leerink Partners said that the leadership change was unexpected, but he understood why it was made because of “another quarter of underperformance.”
“It is hard, given the functional and stock underperformance, to say a change at the top is gratuitous,” he said in an exploration note.
Advertisement In August, CVS cut its financial expectations for the third time this year, hurt by rising Medicare Advantage coverage claims. Lynch had just assumed leadership of the insurance segment, where she had previously worked before becoming CEO.
About a year after joining the insurance division, her predecessor, Brian Kane, left the company.
CVS Health owns and operates one of the largest drugstore chains in the country as well as a significant pharmacy benefit management company that manages prescription drug coverage for employers, insurance companies, and other significant clients. Additionally, its Aetna insurance subsidiary provides coverage for nearly 27 million individuals.
Related: Glenview Capital Management stated in a statement earlier this month that Walgreens has been operating “well below its potential” and has “fallen short in its investment and actuarial approach in recent years.” As a result of its $3 billion quarterly loss, the company will close 1,200 stores.
“Suggestions to enhance the governance, culture, efficiency, sustainability, and growth of CVS Health,” the hedge fund, which owns a stake in the company, stated.
Joyner, who will also join the company’s board, most recently led CVS Health’s pharmacy benefit management (PBM) division as executive vice president. He has worked in pharmacy benefit management and health care for 37 years.
On Friday, CVS Health also made the announcement that Roger Farah, who was Chairman, will now be Executive Chairman.
According to Farah’s statement, “we believe David and his deep understanding of our integrated business can help us more directly address the challenges our industry faces, more rapidly advance the operational improvements our company requires, and fully realize the value we can uniquely create.” Farah also stated that the company believes David can assist the company in achieving its goals.
Due to rising medical costs, the Woonsocket, Rhode Island-based company anticipates adjusted third-quarter earnings of $1.05 to $1.10 per share. According to FactSet’s poll of analysts, earnings per share will be $1.69.
CVS Health’s outlook for 2024 has been repeatedly lowered as a result of rising Medicare Advantage claims throughout much of this year. Privately run versions of the federal government’s coverage program known as Medicare Advantage plans are primarily intended for people over the age of 65.
