David Joyner will take over as the company heads in a new direction to stabilize its finances.
CVS Health’s reshuffling has reached the highest level of the organization, with the healthcare giant moving to replace its CEO as it searches for a new formula.
The national chain announced that Karen Lynch “stepped down from her position in agreement with the company’s Board of Directors,” giving way to David Joyner, who most recently served as president of CVS’ pharmacy benefit manager Caremark.
Lynch had held the role since 2021, joining the company when it acquired insurer Aetna. Joyner, who has been with CVS since 2023 and brings 37 years of healthcare and pharmacy benefit management experience, will also join the board of directors. Additionally, the current chair of the board, Roger Farah will now be executive chairman.
In a statement as part of the announcement, Farah expressed the board’s confidence in Joyner and that he “believes this is the right time to make a change.”
“CVS Health is responsible for improving health for millions of people across the U.S., and our integrated businesses work together to deliver on our purpose and mission every day,” Farah said in a statement. “To build on our position of strength, 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.”
Coming in the wake of several significant strategic moves by CVS to kick-start its struggling performance, the decision to oust Lynch isn’t entirely unexpected.
Earlier this month, there were multiple reports that CVS was conducting a strategic review and considering splitting up its retail and insurance businesses. The turbulent financial performance of Aetna, which suffered a 39% decrease in operating income in the second quarter, caused the company to let go of the insurer’s president, Brian Kane, and pursue a $2 billion cost-cutting plan.
In its retail business, CVS has doubled down on Oak Street Health, which it acquired for $10.6 billion last year. The company said it would open 25 more Oak Street clinics by the end of 2024 despite other retailers pulling back or exiting the primary care market due to its lack of profitability.
Alongside announcing the CEO change, CVS also cautioned against relying on its guidance that it provided in the previous quarter. The company is projecting its medical loss ratio to be approximately 95.2% in the third quarter, which will include a $1.1 billion charge for a premium deficiency reserve due to its Medicare and Individual Exchange businesses.
CVS will update investors on its earnings call, scheduled for November 6.
Jay Asser is the CEO editor for HealthLeaders.
KEY TAKEAWAYS
A new CEO is charge of CVS Health after the organization parted ways with Karen Lynch and moved Caremark president David Joyner into the role.
It’s the biggest move yet for the company’s leadership after CVS recently moved on from Aetna president Brian Kane in August due to the poor financial performance of its insurance arm.
CVS also said investors should not rely on its guidance for the third quarter, which is expected to fall short of expectations.