Dive Brief:
- CVS Health appointed Thomas Cowhey as its permanent finance chief effective Jan. 5. as part of a series of leadership changes, the health solutions company announced in a press release.
- In October the Woonsocket, Rhode Island-based company named Cowhey interim CFO after announcing finance chief Shawn Guertin would be taking a leave of absence for personal reasons. Guertin will be stepping down due to family health reasons, and will depart the company on May 31, according to the press release.
- As part of the leadership shifts, CVS also announced Mike Pykosz, the CEO of its Oak Street Health unit and interim lead of its Health Care Delivery unit, has been named as President of Health Care Delivery, also effective as of Jan. 5.
Dive Insight:
Interim leadership can often open up a path to a permanent role, with businesses increasingly tapping interim finance chiefs to fill the roles on a permanent basis. Last year, companies such as SelectQuote and Hertz both announced previously appointed interim CFOs had transitioned into their positions permanently.
In association with his appointment as permanent CFO, Cowhey will receive a base salary of $1 million, and will also be eligible for an annual cash incentive of 150% of eligible earnings, as well as target annual equity award of $5.5 million, according to a filing with the Securities and Exchange Commission.
Cowhey first joined CVS in 2022, serving as SVP, capital markets before being appointed as SVP of corporate finance for the company in September 2023, according to his LinkedIn profile. He took on the role of interim CFO in October when CVS first announced Guertin would be taking leave.
Guertin’s departure, meanwhile, came only months after he had been named as president of the company’s health services segment — which includes its Oak Street and Signify Health brands — in August as part of a larger corporate restructuring undertaken in the face of slumping profits, Industry Dive sister publication Healthcare Dive previously reported.
Profits for the health services provider’s second quarter of fiscal 2023 fell by 37% year-over-year to $1.9 billion, with CVS also lowering its 2024 earnings per share target to be flat with its 2023 guidance range in the face of cost pressures. During its second quarter earnings call in August the company also warned that increasing medical and business integration costs could impact its 2024 earnings.
As part of its corporate restructuring, the company also laid off approximately 5,000 employees in a bid to cut down on its expenses, Industry Dive sister publication Healthcare Dive reported in August.
CVS surpassed Wall Street’s expectations for its third quarter earnings released in November, reporting net income of $2.2 billion for the quarter ending Sept. 30 and total revenues of $89.7 billion.
It also generated operating income of $3.7 billion for its third quarter, compared to a $3.9 billion operating loss in the prior year period, a change the company attributed to the “absence of a $5.2 billion opioid litigation charge and a $2.5 billion loss on assets held for sale related to the write-down of the Company’s Omnicare long-term care business,” the company said, both of which were recorded the prior year.
The company reached a settlement in November 2022 that aimed to resolve several lawsuits brought against CVS and others in the pharmaceutical space, including competitor Walgreens, regarding their part in the opioid crisis. CVS agreed to pay approximately $5 billion over the course of 10 years, including $4.9 billion to states and political subdivisions and about $130 million to tribes, according to a company statement. Walgreens, meanwhile, agreed to pay a similar total of $4.95 billion in remediation payments to be paid out over a 15-year period, the company said in a statement.
The company’s third quarter also closed mere days after CVS pharmacists in several cities ended a walkout aimed at improving working conditions employees claimed threatened patient safety, according to a report by USA Today. CVS committed to workplace improvements including additional staffing and paid overtime, USA Today reported.
CVS declined to comment beyond the details included in the press release.
