CVS Health Friday said chief executive officer Karen Lynch has stepped down as the company’s top executive and will be replaced by David Joyner who has been in charge of the company’s Caremark pharmacy benefit company.
The news comes as CVS Health has struggled to control healthcare costs in its health insurance businesses and its retail pharmacies have struggled, contributing to the company’s sagging share price.
CVS said Lynch, who is 62 years old, “stepped down from her position in agreement with the company’s board of directors.” CVS also said Joyner joined the company’s board of directors and current board chairman, Roger Farah, 71, and a former executive at jewelry retailer Tiffany and luxury fashion company Ralph Lauren will now be “Executive Chairman.”
Joyner, 60, who has been executive vice president, CVS Health, and president, CVS Caremark, “led the pharmacy services business, which provides solutions to employers, health plans and government entities and serves approximately 90 million members through Caremark, CVS Specialty, and other areas.”
The move comes just two months after Lynch took over “day-to-day management” of the company’s Aetna health insurance business after its latest poor performance. Lynch, who successfully ran Aetna for several years before she was promoted to become CVS president and chief executive in 2021, began in August to oversee the nation’s third-largest health insurer with CVS Health chief financial officer Tom Cowhey. Leaving CVS at that time was Brian Kane, who was hired last year as Executive Vice President and President at Aetna following a stint consulting to private equity firms focused on healthcare services and working as health insurer Humana’s chief financial officer before that.
Prior to becoming CVS Health’s CEO, Lynch was executive vice president and president of Aetna, which was acquired by CVS for nearly $70 billion in 2018, merging one of the nation’s largest drugstore chains and pharmacy benefit operators with one of the country’s largest health insurers.
In making the CEO change, CVS board chair Farah said the company’s board “believes this is the right time to make a change, and we are confident that David is the right person to lead our company for the benefit of all stakeholders, including customers, employees, patients, and shareholders.”
CVS said Joyner, who began his career at Aetna as an employee benefit representative before joining Caremark Prescription Services as a regional sales manager, has 37 years of “health care and pharmacy benefit management experience, and has also served on the boards of several private equity-backed health care companies.”
“There is no greater honor than to lead a company whose mission and purpose are completely focused on improving health,” Joyner said in a statement.
“I came back to CVS Health in 2023 because I believed I could give more to the company, and I take this opportunity today for the same reason,” Joyner said. “I am proud to continue working side by side with our 300,000 colleagues who are building a world of health around every consumer. Every day, CVS Health expands access, drives greater affordability, and achieves better health outcomes for more than 186 million people. Aligned with our management team and our Board, I believe in the future of our company and I am committed to delivering our best every day to everyone we serve.”
Under Lynch, CVS spent more than $20 billion last year acquiring senior primary care centers via its acquisition of Oak Street Health and a homecare company, Signify Health.
Farah praised Joyner’s “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.”
Along with the announcement about the executive change, CVS said the company has “continued to experience medical cost trends in excess of those projected in its prior outlook.”
CVS, which is scheduled to report third quarter earnings next month, provided preliminary guidance for third quarter 2024 “GAAP diluted EPS 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 (PDRs), primarily related to the company’s Medicare and Individual Exchange businesses inside its Health Care Benefits segment, of approximately $1.1 billion, which lowered third quarter 2024 Adjusted EPS by $0.63,” the company said. “The PDRs are expected to be substantially released during the fourth quarter of 2024, benefiting results in that period. The Company’s GAAP results also include a restructuring charge of approximately $1.2 billion, related to incremental store closures in 2025, as well as cost reduction actions discussed on the second quarter 2024 earnings call.”
