Longtime CVS Health executive David Joyner has replaced Karen Lynch as CEO, as the company struggles to drive higher profits and stock performance, CVS announced Friday.
The move, effective Thursday, the day before the announcement, comes as CVS shares have fallen nearly 20% this year. Shares plunged about 13% in premarket trading Friday.
CVS has faced challenges as higher medical costs weigh on its insurance unit, Aetna, and consumer spending drops at its retail pharmacies. In August, the company slashed its full-year profit guidance and said it would cut $2 billion in costs over the next several years.
In its release Friday, CVS also said it expects adjusted earnings of between $1.05 and $1.10 per share in its third quarter. It anticipates higher medical costs than previously expected, with a so-called medical benefit ratio of 95.2% in the quarter.
“In light of continued elevated medical cost pressures in the Health Care Benefits segment, investors should no longer rely on the Company’s previous guidance provided on its second quarter 2024 earnings call on August 7, 2024,” CVS said in the release.
The company is set to report third-quarter earnings on Nov. 6.
Last month, major CVS shareholder Glenview Capital began a significant push for changes at the company, CNBC previously reported.
CNBC reported last month that CVS’ board had engaged strategic advisors to weigh its options, including the potential of a breakup of its insurance and retail businesses.
Joyner most recently oversaw the company’s pharmacy services business as president of CVS Caremark, a similar position to the one Lynch held before she assumed the top job in February 2021. He began his career at Aetna in pharmacy benefit services and previously held the role of executive 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 rapidly advance the operational improvements our company requires, and fully realize the value we can uniquely create,” Chairman Roger Farah said in a statement.
Lynch also stepped down from the company’s board of directors this week, the company said Friday. Joyner will take a seat on the board, and Farah will assume the role of executive chairman.