CVS Health appointed David Joyner president and CEO, effective Oct. 17, replacing Karen Lynch, who stepped down from the position.
Mr. Joyner most recently served as executive vice president of CVS Health and president of CVS Caremark. He led the pharmacy services business, which serves about 90 million members through Caremark, CVS Specialty and other areas. He also joined the board of directors, and Board Chair Roger Farah was named executive chair.
The CEO move comes as CVS has struggled to control costs in its health insurance businesses and its retail pharmacies have struggled. Shares in the company dropped by about 24% this year, according to The Wall Street Journal.
"The board believes this is the right time to make a change," Mr. Farah said in an Oct. 18 news release. "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."
Ms. Lynch recently took over leadership of Aetna after a difficult year for the insurer; revenue in CVS' healthcare benefits segment dropped 40% year over year in the second quarter. Brian Kane, former president of Aetna, left the company in August.
Becker's has reached out to CVS for information about Aetna's new leadership structure.
Before her departure, CVS and Ms. Lynch agreed on a letter outlining her benefits and a six-month term during which she will provide advisory services for the company, according to an Oct. 18 filing with the SEC. In return, she will receive $375,000 a month and company-provided security services. CVS also amended her restrictive covenant agreement, extending the non-compete and non-solicitation provisions to 30 months after her departure.
"The board also recognizes the many contributions Karen made to our company, both during her tenure at Aetna and then as President and CEO of CVS Health," Mr. Farah said. We are grateful for her consistent, customer-focused leadership, especially during the COVID-19 pandemic when our pharmacies provided needed tests and vaccines."
In connection with the leadership change, CVS also provided preliminary guidance for the third quarter with diluted earnings per share of $0.03 to $0.08 and adjusted EPS of $1.05 to $1.10.
"Results for the third quarter include charges to record premium deficiency reserves, primarily related to the company's Medicare and individual exchange businesses inside its healthcare benefits segment, of approximately $1.1 billion, which lowered third quarter 2024 adjusted EPS by $0.63," the company said in the news release. "The PDRs are expected to be substantially released during the fourth quarter of 2024, benefiting results in that period."
CVS' financial results also include a restructuring charge of about $1.2 billion related to store closures in 2025 and other cost-cutting measures.
Last month, CVS announced plans to lay off 2,900 employees — less than 1% of the company — who serve primarily in corporate roles. The company also cut its earnings guidance several times in the last 12 months, partially due to rising costs with Aetna's Medicare business. Its pharmacy benefit unit also faces challenges, with the FTC scrutinizing CVS Caremark over alleged insulin price inflation.
CVS said it plans to update investors on its third quarter earnings call, scheduled for Nov. 6.