CEO of struggling drugstore giant resigns as stock prices fall

CVS Health CEO Karen Lynch has resigned as the company's shares have fallen 19% this year and the national drugstore chain struggles.

Lynch will be replaced by David Joyner, who will try to steer the healthcare giant through a deteriorating environment of rising medical costs.

CVS lowered its financial expectations for a third time in August as all major pharmacy chains tried to navigate a drastically changed landscape and faced competition online and elsewhere.

Joyner, who will also join the company's board of directors, most recently served as executive vice president of CVS Health and president of CVS Caremark.

He led the pharmacy services business, which provides solutions to employers, health plans and government agencies and serves approximately 90 million members through Caremark, CVS Specialty and other divisions. Joyner has 37 years of experience in healthcare and pharmacy benefits management.

CVS Health also announced Friday that Chairman Roger Farah will now serve as executive chairman.

“We believe David and his deep understanding of our integrated business can help us more directly address the challenges facing our industry, accelerate the operational improvements our business requires, and fully realize the value we can uniquely create,” Farah said in a statement.

The Woonsocket, Rhode Island-based company's preliminary guidance calls for third-quarter adjusted earnings of $1.05 to $1.10 per share, with higher-than-expected medical expense trends. Analysts polled by FactSet forecast earnings of $1.69 per share.

Back in August, CVS Health changed leadership of its health insurance business as the company continued to struggle with rising costs. At that time, the company named Lynch head of its insurance segment, replacing Executive Vice President Brian Kane, who left the company about a year after his arrival.

Rising claims from the company's Medicare Advantage insurance have hurt CVS Health for much of this year and contributed to repeated cuts to its 2024 forecast. Medicare Advantage plans are privately run versions of the federal government's insurance program, primarily for people age 65 and older.

CVS Health also said in August that the company was hurt by a decline in quality ratings for those plans and pressure from Medicaid insurance, which the company administers in several states.

CVS Health shares fell nearly 13% before the market opened on Friday.