Karen Lynch will become CEO of CVS Health on Feb. 1, 2021
CVS Health Corp. named Karen Lynch as its next chief executive officer, putting a seasoned insurance executive in place to succeed longtime leader Larry Merlo. The shares jumped.
The change reflects how CVS has evolved under Merlo's direction from a pharmacy chain into a health conglomerate that sells insurance coverage, administers drug-benefit plans and offers care, including Covid-19 testing.
Lynch, 57, joined CVS in 2018 when it bought Aetna, where she was seen as a likely successor to its CEO, Mark Bertolini.
Lynch will be one of the highest-profile female executives in business, leading a company with a market value of more than $80 billion. On Friday, CVS boosted its full-year forecast as it prepared to play a role in vaccinating people for Covid-19.
"My focus is on building on the strong foundation and positive momentum we have across the company to continue to address the human aspects of health," Lynch said in a call with analysts Friday. Her appointment will be effective Feb. 1, and she will join the board upon assuming her new role, CVS said in a statement.
CVS gained 5.3% to $64.64 at 10:02 a.m. in New York trading Friday. Through the close on Thursday, the stock had declined 17% since the year began.
Lynch's background matches the company's ambitions, said Jefferies analyst Brian Tanquilut. "That's where they want to go as a company, and that's where her value will be," he said.
Merlo, 64, became CEO in 2011 and molded CVS into a health-industry bellwether. In his nine years at the helm, CVS has expanded its number of stores to 9,900, along the way acquiring Aetna in 2018 for $68 billion.
He will remain on the board until CVS's next annual meeting in May, and ill serve as a strategic adviser to assist with the transition until he retires on May 31, the company said.
"If we told you a year ago that to-date, 6 million people would have gone to their local CVS pharmacy for a diagnostic test related to some virus, it would probably get an eyeball roll," Merlo said during the conference call. "The reality is, that's happened."
