CVS Health Corporation made a significant announcement on Friday, appointing David Joyner as the new CEO of the company. Joyner, who previously served as the executive vice president and president of pharmacy services at CVS Health, has taken over the role from Karen Lynch.
The decision to change leadership comes at a challenging time for CVS, as the company has been facing difficulties in increasing profits and improving its stock performance. CVS shares have experienced a significant decline of nearly 20% this year, with a 13% drop in premarket trading following the announcement of Joyner’s appointment.
One of the major issues affecting CVS’s financial performance is the rise in medical costs impacting its insurance unit, Aetna, as well as a decrease in consumer spending at its retail pharmacies. To address these challenges, CVS announced that it would be cutting $2 billion in costs over the next few years and revised its full-year profit guidance.
In addition to the change in leadership, CVS also shared its expectations for the third quarter, forecasting adjusted earnings per share between $1.05 and $1.10. The company anticipates higher medical costs than previously projected, with a medical benefit ratio of 95.2% for the quarter.
The decision to appoint Joyner as CEO comes after major CVS shareholder Glenview Capital advocated for changes within the company. Reports suggest that CVS’s board has been considering various options, including a potential breakup of its insurance and retail businesses.
Joyner’s extensive experience in the pharmacy services business, coupled with his previous roles at Aetna and CVS Health, positions him well to address the challenges facing the company. CVS Chairman Roger Farah expressed confidence in Joyner’s ability to drive operational improvements and create unique value for the company.
Following Lynch’s departure from the CEO position, she has also stepped down from the company’s board of directors. Joyner will now assume a seat on the board, while Farah will take on the role of executive chairman.
As CVS prepares to report its third-quarter earnings in November, all eyes will be on Joyner and his strategic vision for the company. With the support of the board and shareholders, Joyner aims to lead CVS through a period of transformation and growth in the ever-evolving healthcare industry.
