CVS Health Corp. named David Joyner as its new CEO, ending current CEO Karen Lynch’s tumultuous tenure at the pharmaceutical giant.
Longtime executive Joyner, 60, took over on Thursday, according to Friday’s release. This move came after the company repeatedly failed to achieve its revenue targets, triggering unrest among shareholders that emerged publicly in recent weeks.
CVS said its third-quarter results are expected to miss Wall Street expectations and the company will withdraw its 2024 revenue guidance, warning investors not to rely on the company’s previous forecasts “given continued rising medical cost pressures” at the health company. benefit segment.
The company’s shares fell 13% in pre-market trading in New York. Shares had fallen 20% so far this year as of Thursday, compared with a 22% rise in the S&P 500.
The company reported preliminary adjusted earnings of $1.05 to $1.10 per share in the third quarter. The health benefits business forecast a medical loss ratio of 95.2% in the third quarter, well above Wall Street estimates. The results also reflect a charge of $1.1 billion in premium shortfall reserves to cover excess medical costs.
Executives plan to provide investors with the latest information during its third-quarter earnings report in November.
CVS has been reviewing its strategic options for months, including a potential split, Bloomberg News reported, as rising medical costs at insurance unit Aetna weigh on the health care conglomerate.
The entry of hedge fund Glenview Capital Management, which approached the company to strengthen its business, made the talks public and increased the pressure on Lynch, 62.
CVS shares have lost about 10% since Lynch became CEO in February 2021 as he struggled to create a one-stop shop for medical services amid a government crackdown on spending, rising health costs at the insurance unit and increasing post-pandemic pressure on retail stores.
On Friday, the company said the decision to fire Lynch was made by its board of directors. “The board believes this is the right time to make changes,” said Roger Farah, who was appointed executive chairman of the board as part of the move. “David and his deep understanding of our integrated businesses can help us address the challenges facing our industry more directly.”
Joyner, who began his career at Aetna as an employee benefits representative, most recently served as executive vice president of CVS Health and president of CVS Caremark. He leads the pharmacy services business, which works with employers, health plans and government entities.
The Wall Street Journal previously reported Lynch’s exit.
