CVS Health announced Friday that CEO Karen Lynch has resigned, after the pharmacy chain once again warned that earnings would fall short of Wall Street expectations. Lynch will be succeeded by CVS Caremark President David Joyner, who will seek to steer the medical giant through a deteriorating environment of soaring medical costs.
CVS, which cut its earnings forecast for the third time in August, announced on Friday that third-quarter profit will be lower than expected.
Shares fell $6.27, or 9.9%, to $57.40 in pre-market trading, a decline that comes after the stock has already fallen 19% this year.
Earlier this month, CVS announced that it plans to: Cut 2,900 workers Cost-cutting efforts come as shoppers struggle with savings from inflation-weary consumers and financial pressures from pharmacies, including spending less on non-prescription items.
Mr. Joyner will also join the company’s board of directors and 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 areas. Joyner has 37 years of experience in medical and pharmacy benefits management.
CVS Health also announced Friday that Chairman Roger Farrar will become executive chairman.
“David and his deep understanding of our integrated business will allow us to directly address the challenges facing our industry, accelerate the operational improvements we need, and create opportunities that are unique to our company,” Farrar said in a statement. I believe that we can fully realize the value that we can.” .
lack of revenue
Preliminary forecasts for the Woonsocket, Rhode Island, company call for adjusted earnings of $1.05 to $1.10 per share in the third quarter, citing stronger-than-expected medical cost trends. Analysts surveyed by FactSet expected earnings of $1.69 per share.
In August, CVS Health changed leadership of its health insurance business as it continues to address rising costs. At the time, the company named Lynch to lead its insurance division, replacing executive vice president Brian Cain, who was retiring after about a year with the company.
Rising claims from the company’s Medicare Advantage coverage hurt CVS Health for much of this year, contributing to repeated downgrades to its 2024 outlook. Medicare Advantage plans are the private version of the federal government’s coverage program primarily for people age 65 and older.
CVS Health also said in August that it was being hurt by declining quality ratings for those plans and pressure from Medicaid coverage in several states it manages.
