Investing.com — Shares of CVS Health fell on Friday as the company reported preliminary third-quarter financial results and a change in leadership, sending shares down 11%.
David Joyner has been appointed as the new President and Chief Executive Officer, effective immediately, following the departure of Karen Lynch. Joyner, a longtime executive at CVS, will also join the company's Board of Directors.
In addition to Joyner's appointment, Roger Farah, the current Chairman of the Board, will assume the role of Executive Chairman. Farah said the leadership change is aimed at improving efficiency and better positioning the company amid industry challenges.
“We believe that David and his deep understanding of our integrated business can help us face the challenges our industry is facing,” said Farah.
Joyner brings 37 years of experience in pharmacy and health care benefits management. He rejoined CVS in 2023 and previously led the company's Caremark division.
CVS Health (NYSE: ) also provided a preliminary forecast for its third-quarter 2024 earnings, disappointing investors.
The company's adjusted EPS is estimated between $1.05 and $1.10, well below consensus of $1.70.
Results were weighed down by a $1.1 billion charge related to premium deficiency reserves (PDRs) in its Medicare and health exchange businesses, which shaved $0.63 from adjusted EPS.
Additionally, CVS received a $1.2 billion restructuring charge associated with planned store closings in 2025.
CVS said medical costs continued to exceed estimates, with the company's Medical Benefit Ratio (MBR) reaching 95.2% in the third quarter, reflecting higher costs in its Healthcare Benefits segment.
The company also warned investors not to rely on previous financial guidance from August, citing continued cost pressures.
Despite the challenges, CVS has indicated that PDR costs will be released significantly in the fourth quarter.
