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WOONSOCKET, R.I. – CVS Health announced Friday that David Joyner was appointed president and chief executive officer, effective October 17, replacing Karen Lynch, who stepped down from her position in agreement with the company's board of directors. Joyner also joined the board of directors. In addition, current chairman of the board, Roger Farah, will now be executive chairman.
Joyner was most recently executive vice president, CVS Health, and president, CVS Caremark. He led the pharmacy services business, which provides solutions to employers, health plans and government entities and serves approximately 90 million members through Caremark, CVS Specialty, and other areas.
Joyner has 37 years of health care and pharmacy benefit management experience, and has also served on the boards of several private equity-backed health care companies. He began his career at Aetna as an employee benefit representative before joining Caremark Prescription Services as a regional sales manager. He then served as executive vice president of sales and account services at CVS Caremark and executive vice president of sales and marketing at CVS Health.
"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," said Farah. "CVS Health is responsible for improving health for millions of people across the U.S., and our integrated businesses work together to deliver on our purpose and mission every day. To build on our position of strength, 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."
"There is no greater honor than to lead a company whose mission and purpose are completely focused on improving health," said Joyner. "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. 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."
Farah added: "The Board also recognizes the many contributions Karen made to our company, both during her tenure at Aetna and then as President and CEO of CVS Health. We are grateful for her consistent, customer-focused leadership, especially during the COVID-19 pandemic when our pharmacies provided needed tests and vaccines. We also appreciate her work to advance CVS Health's modernization and transformation to become a diversified, connected, technology-driven health care company, allowing us to do even more for the people we are privileged to serve."
"I wanted to share with you what I sent today to my 300,000 colleagues at @CVSHealth. It has been a privilege to lead this company, and I am confident the team will continue live its mission and purpose to help people on their journey to better health," wrote Karen Lynch on her LinkedIn page.
"I am writing to express my heartfelt gratitude to each of you. Leading CVS Health has been one of the greatest honors of my career, and I am incredibly proud of what we have accomplished together. It has been my special privilege working alongside each of you to improve healthcare in this country. I have witnessed firsthand your unwavering commitment to our mission: to improve the health of those we serve."
"Your dedication to innovation, compassion, and excellence has not only transformed our organization but has also made a profound impact on the communities and people we serve. I am confident that CVS Health will continue to thrive and lead the way in healthcare. The talent, passion, and resilience within this organization are unparalleled, and I have no doubt that you will continue to drive positive change for the people and communities that depend on you," she added.
In connection with today's announcement, the Company is also providing preliminary guidance for third quarter 2024 GAAP diluted EPS of $0.03 to $0.08 and Adjusted EPS of $1.05 to $1.10. Results for the third quarter include charges to record premium deficiency reserves (PDRs), primarily related to the company's Medicare and Individual Exchange businesses inside its Health Care Benefits segment, of approximately $1.1 billion, which lowered third quarter 2024 Adjusted EPS by $0.63. The PDRs are expected to be substantially released during the fourth quarter of 2024, benefiting results in that period. The Company's GAAP results also include a restructuring charge of approximately $1.2 billion, related to incremental store closures in 2025, as well as cost reduction actions discussed on the second quarter 2024 earnings call.
In the third quarter of 2024, the Company has continued to experience medical cost trends in excess of those projected in its prior outlook. The Medical Benefit Ratio ("MBR") for the third quarter is currently expected to be approximately 95.2%, which includes a 220-basis point impact from the PDRs. The Company's other segments performed consistent with prior projections in the quarter. In light of continued elevated medical cost pressures in the Health Care Benefits segment, investors should no longer rely on the Company's previous guidance provided on its second quarter 2024 earnings call on August 7, 2024. The Company plans to further update investors on its third quarter 2024 earnings call, currently scheduled for November 6, 2024, after the company has completed its standard quarterly close processes.
The Company's preliminary financial results are based on the Company's current estimate of its results for the quarter ended September 30, 2024, and remain subject to change based on the completion of closing and review procedures and the execution of the Company's internal control over financial reporting.
