CVS Health surprised Wall Street with an unexpected change in corporate leadership last month when it named David Joyner its newest president and CEO. Joyner replaces Karen Lynch, who had served as CEO since February 2021 and stepped down in an agreement with the company’s board of directors.
“To build on our position of strength,” Executive Chairman Roger Farah said during the announcement, “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.”
Joyner, who was most recently executive vice president of CVS Health and president of CVS Caremark, has 37 years of experience managing health care and pharmacy benefits.
He could not be assuming the top slot at a more critical time for the company, whose stock has dropped by approximately a third this year. The slide commenced with CVS Health’s February announcement that it was cutting its annual profit forecast due to rising Medicare-related costs and lower consumer spending on non-prescription items, which was 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 health-care-focused hedge fund and shareholder, met with CVS Health executives in late September to discuss ways to improve the company’s performance, The Wall Street Journal reported. Weeks before Lynch’s sudden departure, the company reportedly had plans to eliminate 2,900 employee positions, or about 1% of its workforce, in a cost-cutting measure. CVS Health already cut 5,000 non-customer-facing positions in 2023.
Such poor performance raises the question whether pharmacies, insurance companies, and health-care providers offer enough, if any, synergies under one roof.
CVS Health stepped out of the pharmacy lane with its $69 billion cash acquisition of health insurer Aetna in 2018 under then-CEO Larry Merlo, Lynch’s predecessor. Lynch moved the company into other new fields when the company acquired money-losing primary care provider Oak Street Health for $9.5 billion in a cash transaction in February 2023. Seven months later, CVS Health purchased a home care provider, Signify Health, for $8 billion in cash. No matter the direction he takes, Joyner has a rough road ahead of him.
