CVS Health surprised Wall Street with a surprise corporate leadership shakeup last month when it named David Joyner as its new president and CEO. Joyner will replace Karen Lynch, who has served as CEO since February 2021 and resigned by agreement with the company’s board of directors.
“To strengthen our position of strength,” executive chairman Roger Farah said at the time of the announcement, “we believe David and his deep understanding of our integrated business can help us more directly address the challenges facing our industry, more quickly driving operational improvements to our demands.” company, and fully realize the value we can create.”
Joyner, who most recently served as executive vice president of CVS Health and president of CVS Caremark, has 37 years of medical and pharmacy benefits management experience.
He could not take the top position at a more critical time for a company whose shares have fallen by about a third this year. The decline began with CVS Health’s February announcement that the company was cutting its full-year profit forecast due to rising Medicare-related costs and lower consumer spending on over-the-counter products, followed by further cuts in May and August. Then, on October 13, the company warned of disappointing third-quarter earnings and that investors should not rely on the company’s August guidance.
Glenview Capital Management, a hedge fund and healthcare-focused shareholder, met with CVS Health executives in late September to discuss ways to improve the company’s performance, The Wall Street Journal reported. In the weeks before Lynch’s abrupt departure, the company was reportedly planning to cut 2,900 employee positions, or about 1% of its workforce, in a cost-cutting effort. CVS Health has already cut 5,000 non-customer service positions in 2023.
These low numbers raise the question of whether pharmacies, insurance companies and health care providers are offering enough synergy under one roof, if any.
CVS Health exited the pharmacy space with its $69 billion acquisition of health insurer Aetna in 2018 under then-CEO Larry Merlo, Lynch’s predecessor. Lynch moved the company into other new areas when the company acquired money-losing primary care provider Oak Street Health in February 2023 for $9.5 billion in cash. Seven months later, CVS Health acquired home care provider Signify Health for $8 billion. in cash. Regardless of which direction he goes, Joyner has a tough road ahead of him.