CVS Health is parting ways with CEO Karen Lynch as the pharmacy giant continues to struggle with problems in its insurance business.
The company said Friday that it named David Joyner, the president of CVS’ pharmacy benefit management unit, to replace her in the top role, effective Oct. 17.
“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,” CVS chairman Roger Farah, who will become executive chair, said in a news release.
The switch comes after a string of disappointing financial results for CVS, and after hedge fund Glenview Capital Management was reported to be pushing for changes at the company. CVS was also reported to be considering options to turn around its business, including by breaking up the company.
In a statement Friday, Glenview said it supports Lynch’s resignation, and suggested that more board changes are coming.
“We believe the Company’s culture, governance and leadership should be strengthened by those with both appropriate industry experience as well as fresh perspectives and that the Company would be best served through prompt Board evolution,” Glenview said.
CVS has lowered its earnings projections for 2024 three times already, and on Friday said investors should no longer rely on guidance issued in August.
Among the biggest challenges CVS faces is managing medical costs in its insurance business Aetna. On Friday, the company signaled that those costs remain a problem. It expects to report a medical loss ratio, which represents the percentage of premiums spent on medical care, of 95.2% for the third quarter — far higher than the 80% to 85% insurers usually shoot for. CVS reports third-quarter results on Nov. 6.
Under Lynch, who led Aetna before becoming CVS CEO in 2021, the company sought to expand beyond pharmacy and insurance to providing care directly to patients. She oversaw CVS’ 2023 acquisitions of primary care chain Oak Street Health for $10.6 billion and home health company Signify Health for $8 billion.
Editor’s note: This article has been updated to include a statement from Glenview Capital Management.
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