Investing.com -- CVS Health shares have tumbled premarket Friday as the company announced preliminary third-quarter financial results and a change in leadership, triggering an 11% drop in its stock price.
David Joyner has been appointed as the new President and Chief Executive Officer, effective immediately, following Karen Lynch’s departure. 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 intended to drive operational improvements and better position the company amid industry challenges.
"We believe David and his deep understanding of our integrated business can help us more directly address the challenges our industry faces," Farah said.
Joyner brings 37 years of experience in pharmacy benefit management and health care. He rejoined CVS in 2023 and previously led the company’s Caremark division.
CVS Health (NYSE:CVS) also provided a preliminary forecast for its third-quarter 2024 earnings, which disappointed investors.
The company's adjusted EPS is estimated between $1.05 and $1.10, well below the $1.70 consensus.
The results were weighed down by a $1.1 billion charge related to premium deficiency reserves (PDRs) in its Medicare and individual health exchange businesses, which shaved $0.63 off the adjusted EPS.
Additionally, CVS incurred a $1.2 billion restructuring charge associated with planned store closures in 2025.
CVS said medical costs have continued to exceed projections, with the company’s Medical Benefit Ratio (MBR) reaching 95.2% in the third quarter, indicating elevated expenses in its Health Care Benefits segment.
The company also warned investors not to rely on previous financial guidance from August, citing continued cost pressures.
Despite the challenges, CVS indicated that the PDR charges would be substantially released in the fourth quarter.