CVS Appoints David Joyner as New CEO, Succeeding Karen Lynch Amid Profit Declines

CVS has appointed David Joyner as its new CEO, replacing Karen Lynch as the company faces challenges in boosting profits and improving its stock performance. The leadership change, which took effect Thursday, comes as CVS shares have dropped nearly 20% this year, with a significant 13% decline observed in premarket trading on Friday.

The company has encountered difficulties, particularly due to rising medical costs affecting its insurance division, Aetna, and decreased consumer spending at its retail pharmacies. In August, CVS reduced its full-year profit forecast and announced plans to cut $2 billion in expenses over the coming years.

In a recent announcement, CVS projected adjusted earnings for the third quarter to be between $1.05 and $1.10 per share. It also anticipates higher-than-expected medical costs, projecting a medical benefit ratio of 95.2% for the quarter.

"Given the persistent pressure from elevated medical costs in the Health Care Benefits sector, investors should not rely on the previous guidance provided during the second-quarter earnings call on August 7, 2024," the company stated.

CVS is scheduled to release its third-quarter earnings report on November 6.

Additionally, last month, major shareholder Glenview Capital began advocating for significant changes within the company. Reports indicated that CVS's board had engaged strategic advisors to explore various options, including the potential separation of its insurance and retail divisions.

David Joyner, who recently led the pharmacy services division as president of CVS Caremark, has a background in pharmacy benefit services at Aetna and has previously served as executive vice president of sales and marketing at CVS Health.

Chairman Roger Farah expressed confidence in Joyner's leadership: "His deep understanding of our integrated business will help us address the challenges in our industry, accelerate necessary operational improvements, and maximize our unique value."

Karen Lynch has also resigned from the board of directors this week, and Joyner will join the board, while Farah will take on the role of executive chairman.