As chief of corner drugstore and health insurance colossus CVS, Lynch headed the largest Fortune 500 enterprise, measured by sales, of any female CEO, and for years reigned as the most powerful woman in American business. In her first two years after being chosen for the top job in late 2020, Lynch seemed on the road to glory. By late 2022, she’d lifted CVS’s share price from $70 to roughly $110. Investors were buying her daring new strategy: making CVS a one-stop shop for pharmacy services and basic care, right in their own neighborhoods, augmented by hands-on, data-driven management from their in-house insurer that reminded folks to refill prescriptions and get their annual physical.

Lynch pledged to “revolutionize health care as we know it” by repurposing thousands of CVS’s more than 9,000 stores into either fully dedicated providers of such services as diabetic retinopathy treatment, cholesterol screening, and mental health counseling, or hybrid retail and primary care centers called HealthHUBs. CVS would then store tons of data on patients’ conditions at its Aetna insurance arm, whose costs would fall because seniors were getting preventive care that curbed heart disease and other chronic conditions that account for the bulk of our health care spending. Rival insurers would also reward CVS with part of the savings they achieved from the spread of primary care from faraway doctors’ offices requiring long waits, to the CVS just around the block, where you could also pick up your pills and buy shampoo and candy bars.

It was an intriguing vision that targeted our hugely expensive, largely consumer-unfriendly health care system. But Lynch couldn’t fully deliver on the paradigm that’s already starting to upend the current regime, and where CVS will continue playing a pivotal role going forward—one that will likely determine whether it rebounds from its current tailspin.

At press time, CVS hadn’t responded to a Fortune email requesting comment.

CVS underperforms on already low expectations

On Oct. 18, CVS disclosed that its heretofore weak financial performance was even worse than the low expectations that had already pushed big investors, including activist Glenview Capital, to demand changes in the C-suite. The board preannounced that earnings for Q3 would prove far lower than both the company’s forecast and Wall Street’s predictions. CVS posited earnings per share at $1.05 to $1.10, well below the FactSet consensus of $1.69. Accounting for most of the shortfall: extremely tight margins in the health benefits business at Aetna, and especially in its giant Medicare Advantage franchise. CVS disclosed that its medical cost ratio of premiums to expenses had soared from an estimated 91% to over 95%. “That represents some combination of providing benefits that are too rich and underpricing premiums,” says Michael Ha of Robert W. Baird.

The same press release stated that Lynch had “stepped down from her position in agreement with the company’s board of directors,” and would be replaced by David Joyner, a CVS veteran who’s been heading Caremark, the pharmacy benefits business.

Where Lynch’s transformation went awry

A trifecta of problems, some that started before she took the top job, ended a reign that appeared to start brilliantly, then unraveled fast. The first was CVS’s error in vastly overpaying for acquisitions, a practice that piled on amounts of capital so huge that only magical performance could provide shareholders with decent returns going forward. In the years following its successful acquisition of Caremark in 2007, CVS was thriving. By late 2017, its shares had jumped around threefold to $75. Then, it unveiled its acquisition of Aetna, where Lynch had risen to the position of heir apparent based on her skill in building the Medicare Advantage side.

CVS paid a gigantic $68 billion, or a 73% premium, for Aetna. The day of the announcement, the two companies boasted a combined market cap of $128 billion. Proof that CVS hasn’t come close to generating the extra profits needed to cover that Brobdingnagian price: Its valuation now stands at just $76 billion, only slightly higher than what it paid for Aetna. The Aetna lesson didn’t deter Lynch and the board. In 2023, CVS made another hugely expensive deal, purchasing Oak Street Health, owner of over 200 centers in 25 states providing care for the elderly, this time laying out $10.5 billion, 30% or $2 billion more than the target’s cap prior to clinching the purchase. CVS made still another big bet by acquiring Signify Health, a health care analytics provider, for $8 billion. The Oak Street and Signify buys signaled that CVS was making desperate moves, adding big pieces to bolster the complex construct that Lynch conceived, but that wasn’t performing.

CVS became a revolving door at the top, and the vision proved overly complex

Lynch also kept changing her group of lieutenants at an alarming rate. It isn’t clear if she kept choosing the wrong people for the wrong roles, or was unable to get the talent she recruited to do their best work. From the spring of 2023 through this month, no fewer than eight C-suite stalwarts, all of whom she’d hired after officially taking charge in February of 2021, departed. The exodus encompassed the head of Aetna, who left after less than a year; the CFO (whose statement cited health reasons); the chiefs of HR, communications, health care delivery, and the retail stores. Two other long-standing CVS execs exited as well: the general counsel and chief marketing officer.

The third and final rub: The lofty, intricate blueprint proved beyond Lynch’s capacity to implement. It was her predecessor, Larry Merlo, who launched the initial phase via the purchase of Aetna, the first time ever that a huge insurer combined with a pharmacy chain. Lynch extended the framework through her plan to bring primary care to America’s doorstep. Though the idea was a big one, CVS was getting a late start on the retail component, since Walgreens, Concentra, and sundry others, including Oak Street, were invading what promised to become a gigantic market. Besides, the culture formed from running drugstores clashed with the mindset required to manage a major insurer, making it difficult to mate Aetna’s data troves with the folks CVS attempted to lure to its stores for primary care. The sudden drop in profitability for Aetna’s Medicare Advantage arm further undermined the ambitious plan to meld the two businesses.

In the past couple of years, CVS has made scant mention of the original HealthHUB concept. The focus now appears to be on building out the well-established Oak Street network. And according to Ha of Baird, it’s an excellent strategy. “That initiative will drive their growth for the next decade,” he says. “Oak Street–style, value-based care is still the future for CVS.”

The pharmacy division, the health services division she set up, and the retail division are doing well. Aetna’s margins collapsed as the federal government reduced its payments to Medicare Advantage. UnitedHealthcare and Cigna are both suffering, too. That was unforeseen, but it happened just as Aetna increased its Medicare rolls by 300,000 seniors. That was either unlucky or an unforced error. This extremely personable, charismatic leader deserves great credit for developing and superbly articulating a vision. It may even turn out that Lynch just needed more time. But that was a luxury that was, at least for CVS, out of stock.