CVS Health CEO Karen Lynch resigns, replaced by David Joyner, after stock falls 19%

CVS Health said CEO Karen Lynch resigned Friday after the pharmacy chain again warned that its revenue would fall short of Wall Street forecasts. Lynch will be replaced by CVS Caremark President David Joyner, who will try to steer the healthcare giant through an environment of rising medical costs.

CVS, which cut financial expectations for the third time in August, said Friday that its third-quarter earnings would fall short of expectations.

Shares fell $6.27, or 9.9%, to $57.40 in pre-market trading, a decline after the stock had already fallen 19% this year.

Earlier this month, CVS said it planned to do so 2,900 layoffs To cut costs As it grapples with cutbacks from inflation-weary customers, shoppers are fighting financial pressure on the pharmacy side of the business as they cut their spending on non-prescription items.

Joiner, who will also join the company's board, most recently served as executive vice president of CVS Health and president of CVS Caremark. He leads the Pharmacy Services business, which provides solutions to employers, health plans and government agencies and serves approximately 90 million members through Caremark, CVS Specialty and other segments. Joiner has 37 years of experience in healthcare and pharmacy benefits management.

CVS Health also announced Friday that Chairman Roger Farah will now become executive chairman.

“We believe David and his deep understanding of our integrated business can help us more directly address the challenges facing our industry, accelerate the operational improvements our company needs, and fully realize the value we uniquely create,” Farah said in a statement. can understand.” .

Income shortfall

The Woonsocket, Rhode Island company's preliminary forecast is for third-quarter adjusted earnings of $1.05 to $1.10 per share, citing expected medical spending trends. Analysts polled by FactSet had forecast earnings of $1.69 per share.

CVS Health changed the leadership of its health insurance business in August as it continues to deal with rising costs. At the time, the company named Lynch to lead its insurance division, replacing executive vice president Brian Kane, who left the company about a year after arriving.

Rising claims from the company's Medicare Advantage coverage have hurt CVS Health for much of this year and contributed to repeated layoffs in its outlook for 2024. Medicare Advantage plans are essentially privately managed versions of the federal government's coverage program for people age 65 and older.

CVS Health also said in August that it operated in several states due to declining quality ratings and pressure on Medicaid coverage for these plans.