CVS Health Names Aetna Leader Karen Lynch as New CEO
CVS Health Corp. announced last week that its president and CEO, Larry Merlo, plans to step down in February, with Aetna president Karen Lynch lined up to replace him. Lynch has served as the executive vice president of CVS Health since CVS acquired the insurer in November 2018, and has remained as president of Aetna, a title she has held since 2015. Lynch, who will also join CVS Health's board of directors, will make the transition Feb. 1, becoming the leader of the largest company by revenue ($256 billion last year) to be run by a female CEO, per The Wall Street Journal.
Merlo is leaving after working at the Woonsocket, RI-based company for 40 years. He started as a community pharmacist and ultimately became CEO a decade ago. His tenure saw the industry-disrupting acquisition of Aetna in 2018, the elimination of all tobacco products from CVS Pharmacy stores, and transformed the regional retail pharmacy into a company with $250 billion in revenue. Merlo still plans to serve on CVS’s board of directors until May 2021, and will be a strategic advisor to assist in the transition until his retirement at the end of May.
Total Retail's Take: As mentioned above, Lynch's ascension is especially notable because she'll become the highest-ranking female CEO in the Fortune 500. She's well-suited for the job. For example, at CVS Health, Lynch had a critical leadership role in the company's integration of Aetna, launching its first suite of transformative products and services, including the Aetna Connected Plan, powered by CVS Health, and Aetna health plans with access to all covered MinuteClinic services at no cost.
Under her leadership Medicare Advantage membership grew more than three times the industry average, generating outstanding membership growth of over 30 percent in 2019. Lynch has also been instrumental in the design of the HealthHUB strategy, incorporating the HealthHUBs' differentiated suite of services into Aetna's offerings. Also, in the past five years, she's lifted the insurer's revenues from $60 billion to $75 billion and delivered on her promises for sales and earnings 20 quarters in a row.
Lynch will move up in the ranks at a critical time for CVS. The retail pharmacy chain has been on the front lines of the coronavirus pandemic, launching testing sites early in the pandemic, and adding rapid testing at sites across the nation in recent months. CVS has also said it will partner with the federal government to distribute a vaccine to long-term care facilities when one becomes available. However, CVS is facing stiff competition from Walmart, along with other big retailers, which are currently rolling out their own in-store health clinics, as well as from Amazon.com, which is now delivering prescription drugs.