CVS Health on Friday replaced CEO Karen Lynch, who last year It welcomed CVS veteran David Joyner, who retired before returning.
The company also withdrew its forecast for 2024 and announced that its third quarter profit outlook would be significantly lower than analysts expected.
CVS stock fell 7% on Friday to $58.64.
That's down nearly half from its 2022 high, in part because profit forecasts have been lowered each quarter related to rising costs in the big health insurance business and competition for a vast network of retail pharmacies. is.
The company's third business, Pharmacy Benefit Management, is profitable and a focus of the U.S. government's efforts to lower drug prices.
The Federal Trade Commission filed suit against the company and its competitors last month.
“The board believes now is the right time to make a change and is confident that David is the right person to lead our company,” CVS Chairman Roger Farrar said in a statement.
CVS on Friday said it expects adjusted earnings of $1.05 to $1.10 per share for the quarter ending Sept. 30, compared with analysts' expectations of $1.70, according to data compiled by LSEG. did.
CVS, which had already rapidly outgrown its retail pharmacy business by the time it acquired health insurance company Aetna in 2017, is looking to rein in medical costs and face new medical competition from Amazon and other companies. The company believed that this measure was necessary.
Lynch, a former Aetna executive, took over as CEO in 2021, and the company's stock price soared as it benefited from its role in the recovery from the coronavirus pandemic.
Wall Street analysts said the company did not see any benefit from integrating the various businesses it acquired.
“This move has been in the works for some time as CVS has struggled under Lynch's leadership following the failed Aetna merger,” said Oppenheimer analyst Michael Wiederhorn.
Glenview, which went public earlier this month with concerns, is considering a strategic review that could include breaking up its core business, people familiar with the matter said.
Joyner, a member of the board of directors, said in a statement to employees that to be successful, the company must operate as “one CVS Health.”
CVS plans to remain one company under Joyner, two people familiar with the situation said.
Glenview said Friday that CVS needs to change both its management and board of directors.
“Our culture, governance and leadership should be strengthened by people with both relevant industry experience and fresh perspectives, and a rapid evolution of our board will best serve our company. We believe that,” the company said in a statement.
He said the company's Medicare insurance division, which accounts for a third of its business, is “fairly salvageable.”
Costs for insurers offering Medicare plans for people over 65 and people with disabilities have risen in the past year due to continued high demand for medical services by seniors.
CVS' third quarter healthcare ratio, the percentage of premiums spent on healthcare, was 95.2%, significantly higher than expectations of 90.95%.
The industry typically targets medical benefit rates close to 80%.
The company said Lynch has resigned from his role in agreement with the CVS Health board of directors. Joyner, president of CVS Caremark, the company's pharmacy benefit management company, will become president and CEO on Friday.
