CEO Karen Lynch Out at CVS Health, Replaced by David Joyner Amid Poor Forecasts
TL/DR –
CVS Health CEO Karen Lynch has stepped down, replaced by Caremark president David Joyner. This follows a warning from CVS that its Q3 earnings are expected to fall short of Wall Street expectations, causing a 13% drop in share value. Medical cost trends are cited as one of the main factors negatively impacting the company’s finances, with Q3 results including charges of approximately $1.1 billion related to the company’s Medicare and individual exchange businesses, and a restructuring charge of about $1.2 billion related to incremental store closures in 2025.
CEO of CVS Health, Karen Lynch, Steps Down After Q3 Financials Miss the Mark
CVS Health’s CEO, Karen Lynch, has stepped down following the release of Q3 financial guidance that missed Wall Street estimates. David Joyner, former Caremark president, has been announced as the new president and CEO as of October 17.
After the news broke, CVS Health shares declined in premarket trading on Friday, as reported by Seeking Alpha. CVS issued a warning that its forthcoming earnings would again disappoint Wall Street, resulting in a 13% drop in premarket shares, according to The Wall Street Journal.
The company has been plagued by medical cost trends, particularly in Q3, exceeding previous projections. In light of rising healthcare costs, CVS has recommended investors disregard previous guidance given during its Q2 2024 earnings call.
The Q3 results include charges of approximately $1.1 billion, primarily related to the company’s Medicare and individual exchange businesses. This has decreased Q3 2024 adjusted earnings per share by $0.63, according to CVS. However, these reserves are expected to significantly release in Q4 2024, boosting the period’s results.
The results also indicated a $1.2 billion restructuring charge due to planned store closures in 2025 and cost reduction measures discussed in the Q2 2024 earnings call.
Joyner, with 37 years of healthcare and pharmacy benefit management experience, has served on numerous private equity-backed healthcare company boards. He began his career at Aetna before transitioning to Caremark Prescription Services and eventually to CVS Health.
Furthermore, CVS announced that current board chairman, Roger Farah, will become executive chairman. In Q2, CVS announced that Brian Kane, president of CVS subsidiary Aetna, was set to leave the company, with Lynch previously overseeing day-to-day operations.
Amidst changes, David Joyner expressed his pride and honor at leading a company committed to improving health. He emphasized his determination to work alongside the 300,000 CVS Health colleagues to build a health-centric world for consumers.
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