CVS Health Corp. has announced a major leadership change as CEO Karen Lynch steps down. David Joyner, a longtime CVS executive and president of CVS Caremark, took over the top role effective Oct. 17. The change comes as CVS faces significant hurdles. Those challenges include declining earnings, rising medical costs and increased competition in the retail pharmacy space.

Lynch’s departure was mutually agreed upon with the company’s board of directors. As part of the transition, Joyner has also been appointed to the board.

“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,” Roger Farah, chairman of CVS Health’s board and now the newly appointed executive chairman, said in a statement.

CVS Health Corp. ranks No. 98 in Digital Commerce 360’s Top 1000 list of North America’s leading online retailers. The database ranks retailers by annual web sales. The company operates CVS Pharmacy, CVS Caremark and Aetna, among other healthcare brands. Digital Commerce 360 projects that CVS Health’s online sales will reach $972.89 billion in 2024.

CVS Health Corp. web sales by year

CVS names Joyner CEO amid rising pressures

Joyner steps into the CEO role at a time when CVS is grappling with rising medical costs, softer consumer spending and intensifying competition from online players like Amazon and Walmart. Recently, the company explored strategic shifts, including separating its insurance and retail businesses, but it confirmed to CNBC and other news outlets that it would maintain its current structure.

The leadership change coincides with CVS’s early forecast for its third-quarter earnings, projecting adjusted earnings between $1.05 and $1.10 per share — which would be below analysts expectations — due to higher-than-expected medical costs. CVS’s full earnings report is expected on Nov. 6.

In August, CVS revised its full-year profit forecast for the third consecutive quarter and outlined a plan to cut $2 billion in costs over the next few years. However, continued medical cost pressures in the company’s Health Care Benefits segment prompted the withdrawal of the guidance issued during its second-quarter earnings call in August.

Joyner’s return to CVS and focus on growth

Joyner is a seasoned executive with extensive experience in healthcare and pharmacy benefits management. He was most recently the executive vice president of CVS Health and president of CVS Caremark. There, he led the pharmacy services business, which delivers healthcare solutions to employers, health plans, and government entities, serving approximately 90 million members, per a company statement. After retiring in 2019, Joyner returned to lead Caremark in 2023.

“I came back to CVS Health in 2023 because I believed I could give more to the company, and I take this opportunity today for the same reason,” Joyner said in the statement. “I am proud to continue working side by side with our 300,000 colleagues who are building a world of health around every consumer. Every day, CVS Health expands access, drives greater affordability, and achieves better health outcomes for more than 186 million people. Aligned with our management team and our board, I believe in the future of our company and I am committed to delivering our best every day to everyone we serve.”

Lynch’s tenure and strategic investments as CEO

Lynch became chief executive officer in February 2021. As CEO, she navigated CVS through the COVID-19 pandemic and spearheaded key acquisitions aimed at expanding its healthcare services. These included the $10.6 billion purchase of Oak Street Health, which focuses on Medicare patients, and the $8 billion acquisition of Signify Health, a home health services provider.

However, challenges have persisted. The integration of CVS’s healthcare services has been difficult, with government crackdowns on Medicare spending and higher-than-expected medical costs impacting financial performance. Since Lynch took over, CVS’s stock has dropped 10%, with its insurance arm, Aetna, facing significant headwinds.

Additionally, the pharmacy benefits management (PBM) division that Joyner oversaw at Caremark is currently under scrutiny by the Federal Trade Commission, which has accused CVS and other PBMs of inflating insulin prices. Congress is also weighing new regulations on PBM practices, with potential action expected after the Nov. 5 election.

Looking forward: CVS pharmacy and retail strategies

Looking ahead, Joyner will also need to tackle ongoing issues in CVS’s retail pharmacy and non-drug operations. While the company remains a dominant player with over 9,000 stores, it faces growing competition from online retailers and other non-drug retail segments.

As part of its broader cost-cutting strategy, CVS plans to close 300 stores in 2024 and reduce its corporate workforce by 2,900 positions to achieve a $2 billion savings goal.

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