CVS Replaces CEO as the Drugstore Chain Tries To Stop Downward Slide

As the drugstore industry experiences continued pressure from higher medical costs and government reimbursement issues, CVS Heath has been especially hit hard. The healthcare conglomerate is predicting adjusted gross profit to land between $1.05 to $1.10 a share for the last quarter, way below analysts’ expectations of $1.70.

Both company leadership and shareholders know CVS Health needs to make some drastic shifts to turn things around. With that, one big change has already occurred — Karen Lynch stepped down as the company’s CEO, and David Joyner, a CVS veteran who originally retired and then returned to the company in 2023, stepped into the role.

“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,” said Chairman Roger Farah, per Reuters.

With the purchase of health insurer Aetna in 2017, CVS was expanding rapidly beyond just retail pharmacies, with the acquisition giving the company leverage to cut costs and effectively compete against rivals like Amazon. About the time CVS was heavily involved in providing vaccines during the COVID-19 pandemic, Lynch, a former Aetna executive, took on the CEO position in 2021.

CVS Layoffs and Store Closures

Unfortunately, Karen Lynch’s management did not pan out as expected. Since taking over, CVS has been on a roller-coaster ride trying to make adjustments, with tough decisions that have directly impacted employees during Lynch’s tenure.

Earlier this month, CVS announced it was laying off 2,900 workers, roughly 1% of the company’s staff. The job cuts, which will mostly affect corporate positions, are part of a $2 billion cost-savings plan.

The recent announcement is just another round for CVS. In 2023, the pharmacy giant cut 5,000 jobs, also mostly corporate roles, and closed hundreds of U.S. stores.

With David Joyner at the helm, CVS will likely remain one company while it attempts to fix its issues. Previously serving as the executive vice president of CVS Health, Joyner has 37 years of experience in healthcare and pharmacy benefit management.

“This move was brewing for some time, as CVS has struggled under Lynch’s leadership following the failed Aetna merger,” said Oppenheimer analyst Michael Wiederhorn.