CVS has replaced CEO Karen Lynch as it struggles to repair its healthcare business.
David Joyner, president of the company’s pharmacy benefit management unit Caremark, has been appointed as the new chief executive, CVS announced Friday (Oct. 18).
“The 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,” Roger Farah, executive chairman of the CVS board, said in a news release.
The release also pointed to some of the pressures facing CVS, noting that in the third quarter, the company has “continued to experience medical cost trends in excess of those projected in its prior outlook.”
“In light of continued elevated medical cost pressures in the health care benefits segment, investors should no longer rely on the company’s previous guidance provided on its second quarter 2024 earnings call on August 7, 2024.”
CVS says it will offer a further update for investors when it hosts its third-quarter earnings call, scheduled for early next month.
The CEO shift comes at a time when, as PYMNTS wrote earlier this month, “CVS Health finds itself at a crossroads, navigating turbulent waters amid investor pressures and a stock price that seems to be on a downward spiral.”
The company recently launched a strategic review, one that included the idea of splitting its insurance and retail divisions. The company also recently announced it was cutting close to 2,900 corporate jobs, part of a broader effort to trim $2 billion in expenses.
“With rising medical costs threatening to overshadow its insurance segment and retail sales stalling in an uncertain economy, CVS needs to find ways to attract budget-conscious shoppers and reassure investors,” that report said.
In an interview with PYMNTS, Greg Zakowicz, senior eCommerce expert at Omnisend, said CVS is in a “difficult situation” because the traditional drug store model has evolved because of rising competition from both brick-and-mortar and online retailers when it comes to prescription medication and retail goods.
“And while they’ve been looking at their private labels to increase sales,” Zakowicz said, “the store model itself isn’t necessarily a go-to for consumers. I think their in-store retail sales will continue to be more convenient for those already in-store, which isn’t great for sustainable long-term growth. Layer on constantly increasing insurance costs and downgraded star rating from Medicare Advantage, and it’s difficult to see a clear way forward.”
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