A general view shows the CVS Health Customer Support Center sign at CVS Health Corp's CVS headquarters in Woonsocket, Rhode Island, US on October 30, 2023.
Faith Ninevagi | Reuters
A long time ago CVS Health CVS announced Friday that CEO David Joyner has replaced Karen Lynch as CEO, as the company struggles to deliver higher earnings and stock performance.
The move, which takes effect on Thursday, the day before the announcement, comes with CVS shares down nearly 20% this year. Shares fell about 11% in pre-market trading on Friday.
CVS has faced challenges as rising medical costs affected its insurance unit, Aetna, and lower consumer spending at retail pharmacies. In August, the company cut its full-year earnings guidance and said it would cut costs by $2 billion over the next few years.
In its statement Friday, CVS also said it expects adjusted earnings of between $1.05 and $1.10 per share in the third quarter. It expects higher medical costs than previously expected, with a so-called medical benefit ratio of 95.2% in the quarter.
“In light of continued high medical cost pressures in the healthcare benefits sector, investors should no longer rely on the company's prior guidance provided in its Q2 2024 earnings call on August 7, 2024,” CVS said in the statement.
Last month, CVS's major shareholder, Glenview Capital, began a major push to make changes at the company, CNBC previously reported.
CNBC reported last month that CVS's board had hired strategic advisers to evaluate its options, including potentially spinning off its insurance and retail businesses.
Joyner most recently oversaw the company's pharmacy services business as president of CVS Caremark, a position similar to the one Lynch held before taking the top job in February 2021. He began his career at Aetna in pharmacy benefits services and previously served as CEO. Vice President of Sales and Marketing at CVS Health.
“We believe David and his deep understanding of our integrated business can help us more directly address the challenges our industry faces, more quickly advance the operational improvements our company requires, and fully realize the value we can uniquely create,” said Roger Farah, Chairman of the Board of Directors. statement.
Lynch also resigned from the company's board of directors this week, the company said Friday. Joyner will hold a seat on the board of directors, and Farah will assume the role of CEO.
This is breaking news. Please refresh for updates.
