Core Summary

  • Healthcare enterprise CVS Health has appointed former UPS executive Brian Newman as Chief Financial Officer, effective May 12, and granted him a base salary of $1 million, according to a securities filing.
  • As the finance chief, Newman will also be eligible for an annual target cash bonus opportunity equivalent to 150% of his base salary, as well as an annual equity award valued at $7 million—comprising 60% performance stock units, 20% restricted stock units, and 20% stock options for the 2025 calendar year.
  • Newman's appointment is the latest leadership change at the Woonsocket, Rhode Island-based healthcare company, as CVS Health seeks to execute its transformation strategy amid financial challenges and after reaching an agreement with an activist investor last year. In addition to appointing a new CFO, CVS Health also named Amy Compton-Phillips as Executive Vice President and Chief Medical Officer, effective May 19, according to a Tuesday press release.

In-Depth Analysis

Former UPS executive Newman will succeed outgoing CVS Health CFO Thomas Cowhey, who steps down from the role effective the same date, according to a filing with the U.S. Securities and Exchange Commission.

Cowhey, who held the top finance position for three years, will remain employed as a strategic advisor to CVS Health President and CEO David Joyner after stepping down and will assist with the CFO responsibilities transition until his departure from the company, the date of which has not yet been determined, the filing shows.

Newman previously served as CFO at UPS for five years, and the company announced last June that he was stepping down from the finance chief role due to personal health reasons, as CFO Dive previously reported. In July, the package delivery service named Brian Dykes, a 25-year company veteran, as CFO, according to a press release.

Before UPS, Newman spent 26 years at beverage giant PepsiCo, holding roles including EVP for Latin America, finance, operations, and IT, according to his LinkedIn profile.

Both the CFO and Chief Medical Officer appointments come after a turbulent 2024 for the company—largely driven by losses in Aetna's Medicare Advantage plans—which led CVS Health to make sweeping changes to its operations and executive leadership team following a battle with activist investor Glenview Capital.

Throughout 2024, CVS Health repeatedly cut its full-year forecasts as higher claims drove up costs in its insurance segment, weighing on overall profits, according to an August Associated Press report. As part of its transformation efforts, the company also announced in August plans to execute a multi-year program to cut $2 billion in costs, the AP reported. In October, the company laid off nearly 3,000 employees, primarily in corporate roles, as part of a cost-cutting initiative, according to USA Today.

However, its efforts failed to appease some investors, particularly Glenview Capital, which holds a 1% stake in CVS Health. Also in October, the activist investor issued a statement about the healthcare company, noting that despite its "tremendous assets," it operates "well below its potential, with shortcomings in investment and actuarial approaches in recent years, creating economic losses and volatility that strain employees, customers, and shareholders." While pushing for change, the investor denied advocating for a breakup of CVS Health and said it was in ongoing dialogue with the company.

Later that month, CVS Health ousted CEO Karen Lynch and appointed Joyner as CEO and President, the company said in a filing. A few weeks later, the company reached an agreement with Glenview Capital in November to appoint four new board members, including its CEO Larry Robbins, CNBC reported at the time.

"We believe the company's culture, governance, and leadership should be strengthened by individuals with appropriate industry experience and fresh perspectives, and that the company is best served by rapidly advancing board evolution. Karen Lynch and the board accepted and embraced her resignation decision, which we respect and support," Glenview Capital said in an October 18 statement regarding the CEO change.

The investor noted that it expected losses in the company's Medicare Advantage plans—projected at approximately $3.4 billion for full-year 2024—and that these losses "reflect poor decisions and risk management by a few. We believe these issues are quite fixable with strong leadership and appropriate board oversight and risk management."

In the fourth quarter ended December 31, despite CVS Health beating earnings expectations, its health benefits segment reported an adjusted operating loss of $439 million, compared with adjusted operating income of $676 million in the same period last year—weighed down by "elevated utilization, the adverse impact of the company's Medicare Advantage star ratings on the 2024 payment year, and the impact of high acuity following Medicaid redeterminations," the company said.

CVS Health is scheduled to report first-quarter 2025 earnings on May 1. The company declined to comment on the CFO appointment, referring only to Tuesday's press release.