CVS Health CEO and president Karen Lynch has stepped down and will be replaced by David Joyner effective Oct. 17.
Here are 10 things to know:
1. Mr. Joyner most recently served as CVS Health's executive vice president and CVS Caremark's president. He also led the pharmacy services business, which serves about 90 million members through Caremark, CVS Specialty and other areas.
2. With the promotion, Mr. Joyner also joined the board of directors, and Board Chair Roger Farah was named executive chair.
3. "The board believes this is the right time to make a change," Mr. Farah said in an Oct. 18 news release. "We believe David and his 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."
4. The move comes as CVS Health, one of the biggest players in the battle to acquire physicians, faces major financial struggles. CVS Health's Coram is planning to close or sell 29 regional pharmacies and discontinue its infusion services offerings for antibiotics, inotropic medications, total parenteral nutrition and other acute home infusion therapies.
5. CVS Health's board of directors have retained bankers to review the company, possibly leading to a split, according to The Wall Street Journal. The company share price has fallen 24% in 2024 and CVS has cut its earnings guidance multiple times during the year.
6. In August, Ms. Lynch assumed leadership of Aetna following a challenging financial year, with revenue dropping 40% year-over-year in the second quarter. Becker’s has contacted CVS for details on Aetna’s new leadership structure.
7. According to an Oct. 18 SEC filing, CVS and Ms. Lynch have agreed on a letter outlining her compensation and a six-month advisory role with the company. She will receive $375,000 per month and security services provided by the company. CVS also extended her restrictive covenant agreement, lengthening the non-compete and non-solicitation provisions to 30 months after her departure
8. As part of the leadership transition, CVS issued preliminary guidance for the third quarter, with diluted earnings per share projected at $0.03 to $0.08, and adjusted EPS estimated between $1.05 and $1.10.
9. "Results for the third quarter include charges to record premium deficiency reserves, primarily related to the company's Medicare and individual exchange businesses inside its healthcare benefits segment, of approximately $1.1 billion, which lowered third quarter 2024 adjusted EPS by $0.63," the company said in the news release. "The PDRs are expected to be substantially released during the fourth quarter of 2024, benefiting results in that period."
10. CVS' financial results also account for a $1.2 billion restructuring charge tied to store closures planned for 2025 and other cost-cutting measures.