CVS ousts CEO Karen Lynch and names Caremark boss as new boss

According to a press release on Friday, long-time managing director Joyner, 60, took over the position on Thursday. The move comes after the company repeatedly missed its profit targets, sparking unrest among shareholders that became public in recent weeks.

CVS said third-quarter results are expected to fall short of Wall Street's expectations and that the company will withdraw its 2024 profit forecast, warning investors to rely on previous estimates “given continued elevated medical cost pressures” in the health care industry to leave the company's performance segment.

The company's shares fell 13% in premarket trading in New York. Through Thursday, stocks had fallen 20% this year, compared with a 22% gain for the S&P 500.

The company reported preliminary third-quarter adjusted earnings of $1.05 to $1.10 per share. The health care company expected a third-quarter medical loss ratio of 95.2%, well above Wall Street's estimate. The results also reflect a $1.1 billion charge for a premium loss reserve to cover excess medical costs.

Executives plan to update investors during its third-quarter earnings conference call in November.

CVS had been considering its strategic options for months, including a possible breakup, Bloomberg News reported, as rising medical costs at its Aetna insurance arm weighed on the health care conglomerate.

The entry of hedge fund Glenview Capital Management, which approached the company to strengthen the business, made the conversation public and increased pressure on the 62-year-old Lynch.

CVS shares had lost about 10% since Lynch became CEO in February 2021, as she sought to create a one-stop shop for medical services while the government cracked down on spending, health care spending rose in the insurance division and post-pandemic pressure increased 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 for a change,” said Roger Farah, who was named board chairman as part of the move. “David and his deep understanding of our integrated business can help us more directly address the challenges facing our industry.”

Joyner, who began his career at Aetna as an employee benefits representative, most recently served as 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 agencies.

The Wall Street Journal previously reported Lynch's departure.