CVS Health Corp. named David Joyner as its new chief executive officer, ending a tumultuous tenure for current CEO Karen Lynch at the pharmacy giant.
Longtime executive Joyner, 60, took over Thursday, according to a Friday release. The move comes after the company repeatedly missed earnings targets, setting off unrest among shareholders that spilled into public view in recent weeks.
CVS said its third-quarter results are expected to miss Wall Street’s expectations and that the company will pull its 2024 earnings guidance, warning investors not to rely on the company’s previous estimates “in light of continued elevated medical cost pressures” in its heath-care benefits segment.
Shares in the company dropped by 13% in premarket trading in New York. Shares had dropped by 20% so far this year as of Thursday, compared to a 22% increase in the S&P 500.
The company reported preliminary adjusted earnings of $1.05 to $1.10 a share in the third quarter. The health care benefits business expected medical loss ratio of 95.2% in the third quarter, far above Wall Street’s estimate. The results also reflect a $1.1 billion charge for a premium deficiency reserve to cover excess medical costs.
Executives plan to update investors during its third quarter earnings call in November.
CVS had been reviewing its strategic options for months, including a potential breakup, Bloomberg News has reported, as rising medical costs in its Aetna insurance arm weighed on the health-care conglomerate.
The entrance of hedge fund Glenview Capital Management, which approached the company about bolstering the business, made the conversation public and increased the pressure on Lynch, 62.
CVS shares had lost about 10% since Lynch became CEO in February 2021 as she struggled to create a one-stop shop for medical services amid a government crackdown on spending, increasing health expenses in the insurance unit, and ratcheted up post-pandemic pressure on retail stores.
On Friday, the company said the decision to oust Lynch was made by the board. “The Board believes this is the right time to make a change,” said Roger Farah, who was named executive chairman of the board as part of the move. “David and his deep understanding of our integrated business can help us more directly address the challenges our industry faces.”
Joyner, who began his career at Aetna as an employee benefit representative, was most recently executive vice president of CVS Health and president of CVS Caremark. He led the pharmacy services business, which works with employers, health plans and government entities.
The Wall Street Journal earlier reported Lynch’s exit.