CVS shares plunge 10% after replacing CEO

Topline

Shares of CVS fell 10% on Friday morning, marking the company's worst loss in three years, after the company replaced its chief executive while cutting its profit forecasts well below analysts' expectations.

Important facts

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tangent

CVS Health is one of three pharmacy benefit managers that are the subject of a Federal Trade Commission lawsuit that accuses the companies of driving up insulin prices. The three companies — which, according to the FTC, manage about 80% of prescriptions in the U.S. — created a “perverse” drug discount system that “artificially inflated” the price of insulin, the FTC alleges. The FTC accuses the companies of excluding lower-priced insulin in favor of higher-priced options when negotiating the terms of access to prescription drugs. All three companies have rejected the agency's claims.

Important background

Lynch has served as CEO of CVS Health since 2021 after previously leading the company's pharmacy services business. The leadership change followed a call from Glenview Capital, one of CVS's major shareholders, which reportedly proposed unspecified changes to the company's business. Retail pharmacies have struggled in recent years with lost revenue from prescription drugs and staffing shortages. Walgreens and Elevance Health have also warned of challenges in the retail pharmacy market as pharmacies lose money on drugs like Ozempic and Mounjaro, two increasingly popular medications for treating diabetes and weight loss.

Further reading

ForbesFTC sues pharmacy middlemen over allegedly inflated insulin pricesFrom Ty RoushForbesWalgreens closes 1,200 stores as profits beat forecastsFrom Ty Roush