Amid layoffs and poor stock performance, America’s largest drug-store chain replaced CEO Karen Lynch with David Joyner, a longtime former executive who returned to the company from retirement last year.
The company also withdrew its 2024 forecast and gave an outlook for third-quarter earnings far below analyst estimates.
CVS shares were down 7 percent on Oct. 18, and down by nearly half from their 2022 highs, when the company benefited from COVID vaccine and CPR test sales. But stiff competition in retail pharmacy and rising costs in CVS’s large healthcare insurance business, among other things, have put the company in a tight spot.
“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 CVS board chairman Roger Farah in a statement.
Farah thanked outgoing CEO Lynch, who two years ago oversaw CVS’s $8 billion record acquisition of home healthcare services company Signify Health.
“We are grateful for her consistent, customer-focused leadership, especially during the COVID-19 pandemic when our pharmacies provided needed tests and vaccines.”
The shakeup happened after a particularly challenging year for the company, including pressure from activist investor Glenview Capital, a major shareholder who welcomed the board’s decision.
“We believe the company’s culture, governance and leadership should be strengthened by those with both appropriate industry experience as well as fresh perspectives and that the company would be best served through prompt board evolution,” Glenview said in a statement released on Friday.
“Shareholders need to play an active role in demanding immediate board refreshment to both support and challenge management and to recruit and fortify a world class leadership team,” Glenview said.
“This will best serve the long-term interests of the 300,000 employees and 120 million customers of CVS who deserve better now.”
Earlier this month, CVS said it would lay off 2,900 workers in corporate positions as part of a $2 billion cost-saving restructuring, after slashing 5,000 in August 2023.
The gravity of the company’s financial woes became apparent in late 2021, when it announced the closure of 10 percent of its locations—roughly 900 stores at a rate of 300 stores per year, starting in 2022. During the third quarter of 2024, CVS decided to close 271 additional retail stores, according to the press statement.
On Friday, CVS said it expected adjusted profit of $1.05 to $1.10 per share for this year’s third quarter, well below analysts’ estimates of $1.70, according to data compiled by LSEG.
CVS is one of the largest pharmacy companies in the United States, CVS operates more than 9,000 retail locations and 1,100 walk-in clinics nationwide.
Reuters contributed to this article.
From NTD News
