CVS Health CEO Karen Lynch has stepped down with company shares sinking 19% this year and the health care giant struggling on several fronts.
Company shares tumbled again Friday after CVS Health also warned of disappointing third-quarter earnings and said investors should not rely on guidance it laid out in August.
Lynch will be replaced by veteran CVS Health executive David Joyner, who will attempt to steer the company through rising costs to its health insurance business, slumping drugstore sales and growing investor pressure. All major pharmacy chains are attempting to navigate a drastically changed landscape, facing competition online and elsewhere.
Leerink Partners analyst Michael Cherny said the leadership change was unexpected, though he understood the rationale behind it “following another quarter of underperformance.”
“It is hard, given the operational and stock underperformance, to say a change at the top is undeserved,” he said in a research note.
CVS Health runs one of the nation’s largest drugstore chains and a huge pharmacy benefit management business that operates prescription drug coverage for employers, insurers and other big clients. It also covers nearly 27 million people through its Aetna insurance arm.
The company cut its financial expectations for a third time this year in August, hurt by growing claims from its Medicare Advantage coverage, and Lynch said then that she was taking over leadership of the insurance segment.
Her predecessor in the insurance wing, former Humana executive Brian Kane, left the company about a year after his arrival.
Barclays analyst Andrew Mok said Friday that the struggling insurance arm now has a leadership gap that the company will have to address in the near term.
CVS Health said Friday that it still was struggling with higher medical costs in that segment and, because of that, investors shouldn't rely on the guidance it provided in August.
The company has been operating “well below its potential and has fallen short in its investment and actuarial approach in recent years,” Glenview Capital Management said in a statement issued earlier this month.
The hedge fund, which holds a stake in CVS Health, said it was offering “suggestions to enhance the governance, culture, efficiency, sustainability and growth of CVS Health.”
Rising claims from the company’s Medicare Advantage coverage have hurt CVS Health for much of this year and contributed to it its repeated outlook cuts. Medicare Advantage plans are privately run versions of the federal government’s coverage program mainly for people age 65 and older.
CVS Health also said in August that it has been hurt by a drop in quality ratings for those plans and pressure from Medicaid coverage it manages in several states.
The Woonsocket, Rhode Island company said Friday that it expects third-quarter adjusted earnings to fall between $1.05 to $1.10 per share. Analysts polled by FactSet predict earnings of $1.69 per share.
CVS Health will report third-quarter results on November 6, the day after Election Day.
Joyner, who will also join the company's board, most recently served as executive vice president of CVS Health, and president of its pharmacy benefit management, or PBM, arm. The company said he has 37 years of health care and pharmacy benefit management experience.
CVS Health also announced on Friday that Chairman Roger Farah will now be executive chairman. Farah said in a statement that the board believed it was “the right time to make a change,” and they were confident in Joyner's leadership.
Lynch became CEO in early 2021, replacing the company’s long-time leader Larry Merlo. She came to CVS Health when the company acquired its Aetna division several years ago.
Her tenure started with the company’s drugstores riding a wave of revenue from COVID-19 vaccines. She then led an aggressive push into care delivery.
Lynch told analysts in 2021 that “we are closer to the consumer than anyone else,” and providing more care can help the company influence the overall cost of care.
CVS Health spent $8 billion buying home health care provider Signify Health and then another $10.6 billion early last year on Oak Street Health, which runs clinics that specialize in treating Medicare Advantage patients.
CVS Health's stock fell 8%, or $5.10, to $58.56 Friday while broader indexes were mixed.
FILE - A sign marks a CVS branch on Tuesday, May 16, 2023, in Pasadena, Calif. (AP Photo/Marcio Jose Sanchez, File)
FILE - CVS Health President and Chief Executive Officer Karen Lynch speaks during a gathering at the Boston College's Chief Executives Club, Wednesday, Oct. 12, 2022, in Boston. (AP Photo/Charles Krupa)
FILE - David Joyner, then-executive vice president and president of pharmacy services at CVS Health, testifies during the Senate Health, Education, Labor, and Pensions Committee hearing on Capitol Hill in Washington, Wednesday, May 10, 2023. (AP Photo/Carolyn Kaster, File)
Lebanon’s Hezbollah militant group said Friday it is entering a new phase in its fight against invading Israeli troops, as the region reckons with the killing of top Hamas leader Yahya Sinwar in a battle with Israeli forces in Gaza on Wednesday.
Hamas acknowledged Sinwar's death and described him as a martyr. Sinwar was a chief architect of the attack on southern Israel that precipitated the latest escalating conflicts in the Middle East.
Many, from the governments of Israeli allies to exhausted residents of Gaza, expressed hope that Sinwar's death would pave the way for an end to the war, but Israeli Prime Minister Benjamin Netanyahu said in a speech announcing the killing that “Our war is not yet ended.”
On Oct. 7, 2023, Hamas-led militants blew holes in Israel’s security fence and stormed in, killing some 1,200 people, mostly civilians, and abducting another 250. Israel’s offensive in Gaza has killed over 42,000 Palestinians, according to local health authorities, who do not distinguish combatants from civilians. The war has destroyed large areas of Gaza and displaced about 90% of its population of 2.3 million people.
Here's the latest:
BERLIN — The White House on Friday said they did not have any early insight on who might succeed Yahya Sinwar or whether the new Hamas leader might be more willing to revive a cease-fire and hostage deal.
White House national security spokesman John Kirby called Sinwar the main obstacle that had prevented the negotiations from moving forward. But he said it remained to be seen if the killing of the Hamas leader could reinvigorate negotiations.
He added it’s “too soon” to assess who Hamas “might anoint as Sinwar’s successor and what that individual may be willing to pursue.”
Netanyahu said Thursday Israel’s military would keep fighting until the hostages are released and will remain in Gaza to prevent a severely weakened Hamas from rearming after a year of devastating war.
Khalil al-Hayya, who was Sinwar’s Qatar-based deputy, said Hamas will not return any of the hostages “before the end of the aggression on Gaza and the withdrawal from Gaza.”
TEHRAN, Iran — Iranian President Masoud Pezeshkian condemned the killing of Hamas leader Yahya Sinwar by Israel and said his death will not create a disturbance in Islamic resistance, the state-run IRNA news agency reported Friday.
IRNA quoted Pezeshkian as saying, “Martyrdom will not create a disturbance in the Islamic Ummah’s resistance against force and occupation.”
Pezeshkian also expressed condolences to the oppressed people of Gaza and all the freedom-seekers of the world.
JERUSALEM — Israel’s military released new footage Friday of what it said was the killing of Hamas leader Yahya Sinwar, showing a tank firing at a home where Sinwar took refuge after a firefight with Israeli soldiers.
The Israeli military said that Sinwar was killed in the southern Gaza Strip when the tank shell hit the building where he fled following the gunfight.
Israeli soldiers killed Sinwar after encountering three militants fleeing between buildings Wednesday, Israeli military spokesperson LTC Col. Nadav Shoshani told reporters Friday. Under Israeli fire, two militants whose faces were covered by cloth fled into one building while another — Sinwar — entered a second.
Before night fell on Wednesday, soldiers killed the two militants in one building and fired a tank shell at the other. It wasn’t until the following day, Thursday, that soldiers inspecting the rubble noticed the body of a man who looked like Sinwar. His identity was confirmed by forensic tests inside Israel.
Shoshani said the military has intelligence troops killed Sinwar during a rare moment when the Hamas leader was outside rather than in Gaza’s extensive tunnel network.
At one point, Shoshani said, Sinwar spent time in the same tunnel complex where six hostages — who the military says were killed by their Hamas captors as Israeli soldiers drew near — were held.
BEIRUT — The militant group Hezbollah expressed its condolences to the Palestinian people and Hamas for the assassination of Yahya Sinwar, head of Hamas’ political bureau, in a statement issued by the group’s leadership. The statement referred to Sinwar as a “martyr” and praised his role in leading Hamas on “the path of resistance.”
Hezbollah described him as the leader “who stood in the face of the American project and the Zionist occupation, and sacrificed his blood for that.”
“We in the leadership of Hezbollah, who are facing with our resistant and steadfast Lebanese people the repercussions of the criminal Zionist aggression, confirm our standing with our Palestinian people,” Hezbollah said.
BERLIN — U.S. President Joe Biden is reiterating his call for Israel to use the death of Hamas leader Yahya Sinwar as an opportunity to move toward peace.
Biden said as he met German Chancellor Olaf Scholz in Berlin Friday that Sinwar’s killing “represents a moment of justice.” He added that Sinwar “had the blood of Americans and Israelis, Palestinians and Germans and so many others on his hands.”
Biden said: “I told the prime minister of Israel yesterday, let’s also make this moment an opportunity to seek a path to peace, a better future in Gaza without Hamas.”
Scholz, also a staunch ally of Israel, said Sinwar’s death hopefully opens “the concrete prospect of a cease-fire in Gaza, of an agreement to release the hostages held by Hamas.”
On Thursday night, Biden said “now’s the time to move on. ... Move toward a cease-fire in Gaza, make sure that we move in a direction that we’re able to make things better for the whole world.”
BEIRUT — Ina statement, Hamas heralded Sinwar as a hero who “ascended as a heroic martyr, advancing and not retreating, brandishing his weapon, engaging and confronting the occupation army at the forefront of the ranks.”
The statement appeared to refer to a video circulating of Sinwar’s last moments, in which he sits on a chair in a badly damaged building, severely wounded and covered in dust. He then suddenly raises his hand and flings a stick at an approaching Israeli miniature drone in an apparent final act of defiance.
GENEVA — Forces in the U.N. peacekeeping mission in southern Lebanon are maintaining their positions despite “demands” to move from the Israeli Defense Forces, a spokesperson said Friday.
Andrea Tenenti of UNIFIL, the interim force in Lebanon, says a “unanimous” decision was taken by its 50 troop-contributing countries and the U.N. Security Council to hold its positions and continue efforts to monitor the conflict and ensure aid gets to civilians.
“The IDF has repeatedly targeted our positions, endangering the safety of our troops, in addition to Hezbollah launching rockets toward Israel from near our positions, which also puts our peacekeepers in danger,” he told a U.N. news briefing in Geneva by video.
Tenenti said deteriorating security in recent weeks in the fighting between Hezbollah and Israeli forces had forced UNIFIL — which has some 10,000 personnel — to suspend most, but not all, of its patrols near the “blue line” boundary along the Lebanon-Israel border.
“We are seeing at the moment hundreds of trajectories, and sometimes more, crossing the blue line each day, forcing our peacekeepers to spend extended hours in shelters to ensure their safety, which remains our top priority,” he said from Beirut.
Tenenti said UNIFIL was maintaining its positions “despite IDF demands to move from positions close to the blue line.”
JERUSALEM — Israel’s military said that two soldiers were injured in a gunfight with militants from Jordan who crossed into Israel Friday.
At least two militants crossed into Israeli territory south of the Dead Sea Friday morning, before being shot dead by Israeli troops. The two soldiers were injured during the exchanges of fire, the military said. It added that troops were searching the area for another militant who may have infiltrated.
The identities of those who crossed the border remained unclear.
Hamas praised the incursion but did not claim responsibility, calling it an “important development” in the war in Gaza and a “natural response” to the “brutal crimes of the occupation against our Palestinian people.”
The statement was one of the first public comments by Hamas since Israel killed its leader, Yahya Sinwar, Thursday in Gaza.
BEIRUT — A statement issued by one of Hamas’ political leaders abroad Friday tacitly — but not directly — confirmed the death of the group’s leader, Yahya Sinwar, in Gaza, and said that Israel is mistaken if it “believes that killing our leaders means the end of our movement and the struggle of the Palestinian people.”
Hamas political bureau member Bassem Naim said that past leaders in the organization had also been killed and “Hamas each time became stronger and more popular, and these leaders became an icon for future generations to continue the journey towards a free Palestine.” He added that it is “painful and distressing to lose beloved people, especially extraordinary leaders” but that the Palestinian militant group is sure it will be “eventually victorious.”
When asked if the statement was a confirmation of Sinwar’s death, Naim said it was not.
JERUSALEM — Israel’s military said Friday that its forces killed two militants who crossed into south Israel from neighboring Jordan.
The militants entered Israeli territory south of the Dead Sea, the military said.
Such infiltrations into Israeli territory are relatively rare, especially as Israel has ramped up border security since the Oct. 7, 2023, Hamas attack on Israel, when militants from Gaza stormed southern Israel and killed around 1,200 people.
JERUSALEM — Israeli prosecutors are set to indict a Palestinian from East Jerusalem on Friday who police say planned to carry out an attack on a hostage protest in Tel Aviv.
In a statement Friday, the police and Israel’s Shin Bet security agency said the man was a supporter of Hamas and other militant groups, and planned to carry out multiple attacks against Israeli civilians and soldiers in retribution for Israel’s offensive in Gaza.
The man had not yet acquired a weapon or explosives to carry out any of the attacks, the police said, adding that he was planning to attack a protest calling for the return of the hostages held by Hamas in Gaza. Such protests occur weekly in Tel Aviv.
BEIRUT — Lebanon's Hezbollah militant group says it is entering a new phase in its fight against invading Israeli troops, adding that it has introduced new weapons over the past days.
A statement from the group’s operations room early Friday said that Hezbollah’s fighters have used new types of precision-guided missiles and explosive drones for the first time.
The statement appears to refer to a drone laden with explosives that evaded Israel’s multilayered air-defense system and slammed into a mess hall at a military training camp deep inside Israel, killing four soldiers and wounding dozens.
The group also announced earlier this week that it fired a new type of missile called Qader 2 toward the suburbs of Tel Aviv.
The statement also said that Hezbollah’s air defense units shot down this week two Israeli Hermes 450 drones.
Hezbollah said its fighters are working according to “plans prepared in advance” to battle invading Israeli troops in several parts of south Lebanon.
UNITED NATIONS — Iran’s Mission to the United Nations issued a statement honoring Yahya Sinwar, the leader of Hamas, after Israel said Thursday he had been killed in fighting:
“When U.S. forces dragged a disheveled Saddam Hussein out of an underground hole, he begged them not to kill him despite being armed. Those who regarded Saddam as their model of resistance eventually collapsed. However when Muslims look up to martyr Sinwar standing on the battlefield — in combat attire and out in the open, not in a hideout, facing the enemy — the spirit of resistance will be strengthened. He will become a model for the youth and children who will carry forth his path for the liberation of Palestine. As long as occupation and aggression exist, resistance will endure, for the martyr remains alive and a source of inspiration.”
Iran and Iraq fought a brutal war in the 1980s that began when Hussein launched an invasion of Iran. It killed more than 1 million people on both sides.
An Israeli security forces officer examines the damage to a home struck by a rocket fired from Lebanon in the town of Majd al-Krum, northern Israel, Wednesday, Oct. 16, 2024. (AP Photo/Ariel Schalit)
Smoke rises following Israeli bombardment in southern Lebanon as seen from northern Israel, Thursday, Oct. 17, 2024. (AP Photo/Leo Correa)
Israelis celebrate the news of the death of Hamas leader Yahya Sinwar, near Kibbutz Erez, southern Israel, on Thursday, Oct. 17, 2024, (AP Photo/Tsafrir Abayov)
FILE - Yahya Sinwar, head of Hamas in Gaza, delivers a speech during at a hall on the seaside of Gaza City, on April 30, 2022. (AP Photo/Adel Hana)
FILE - Yahya Sinwar speaks to foreign correspondents in his office in Gaza City on May 10, 2018. (AP Photo/Khalil Hamra, File)
A demonstrator holds a sign about the killing of Hamas leader Yahya Sinwar during a protest calling for a cease-fire deal and the immediate release of hostages held by Hamas on Thursday, Oct. 17, 2024, in Tel Aviv, Israel. (AP Photo/Ariel Schalit)
Displaced men fleeing the Israeli airstrikes in Beirut's Dahiyeh suburb, eat as sit at Beirut's seaside promenade, along the Mediterranean Sea while the sun sets over the capital Beirut, Lebanon, Thursday, Oct. 17, 2024. (AP Photo/Hassan Ammar)
