CVS replaces CEO, pulls profit forecast as investor pressure mounts

(Reuters) -CVS Health withdrew its 2024 profit forecast on Friday and announced company veteran David Joyner will replace Karen Lynch as CEO, handing him the steep challenge of reversing the healthcare conglomerate’s weak performance.

Shares fell 11% in premarket trading, adding to this year’s losses, as CVS also forecast quarterly adjusted profit below estimates. Shareholders have become increasingly nervous about repeated profit forecast cuts this year as its drugstores face reimbursement pressures and high costs hit the health insurance industry.

Glenview Capital is among the investors pushing for changes at the company to help improve operations as it faces one of the most challenging periods in its six-decade history.

Lynch stepped down from her position in agreement with CVS Health’s board, the company said.

Joyner, who is the president of the company’s pharmacy benefit manager CVS Caremark, takes over as president and CEO from Friday.

“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.

CVS forecast third-quarter adjusted profit of $1.05 to $1.10 per share, much lower than the average of analysts’ estimates of $1.70, according to data compiled by LSEG.

The healthcare giant is also exiting its core infusion services business and plans to either close or sell 29 related regional pharmacies in the coming months, Reuters reported earlier this week.

The Wall Street Journal first reported the news of Joyner’s appointment on Friday.

(Reporting by Leroy Leo and Sriparna Roy in Bengaluru; Editing by Maju Samuel and Devika Syamnath)