CVS Health Corp. has announced a new CEO amid ongoing restructuring efforts that involve layoffs resulting from store closures.
CVS has appointed David Joyner as the new president and CEO after former CEO Karen Lynch resigned. Joyner’s return comes during a restructuring phase that will see 271 stores close by 2025 and will cost $1.2 billion to downsize the company. CVS plans to update investors during its third-quarter 2024 earnings call on November 6, following its standard quarterly closing processes.
CVS Pharmacy is currently facing pressure on multiple fronts, including declining product revenue, rising healthcare costs, and shifting consumer behavior. According to CVS’s most recent quarterly report, product revenue declined by 7.1%, from $60.5 billion for April through June 2023 to $56.2 billion for the same period in 2024.
Healthcare costs have increased by 31.8%, from $42.2 billion in the first six months of 2023 to $55.6 billion for the same period in 2024. There has also been a significant shift in consumer behavior regarding how prescriptions are filled and how consumers engage with pharmacy services after COVID-19. An EY Global study shows that digital healthcare services have rapidly grown since the pandemic; approximately 43% of Medicare primary care visits were conducted through telemedicine in April 2020, compared to less than 1% in February 2020.
Many customers now prefer the convenience of online services, posing a threat to CVS’s brick-and-mortar retail locations. To adapt to changing consumer behavior and expand digital healthcare services, CVS has implemented several strategies. These include expanding its telehealth offerings through MinuteClinic with virtual care options, as well as keeping clinics open seven days a week.
“CVS Health is responsible for improving health for millions of people across the U.S., and our integrated businesses work together to deliver on our purpose and mission every day. To build on our position of strength, we believe David’s deep understanding of our integrated business can help us more directly address the challenges our industry faces, rapidly advance the operational improvements our company requires, and fully realize the unique value we can create,” said Roger Farah, chair of the board at CVS Health.