CVS CEO Shakeup, Netflix Jumps on Q3 Beat, Amex and P&G: Earnings and the Consumer 10/18/24

Jim Cramer (0:00)

It's Jim Cramer here. You're listening to the opening bell of CNBC's Squawk on the Street. Don't miss a minute of the action.

Carl Quintanilla (0:07)

Good Friday morning. Welcome to Squawk on the Street. I'm Carl Quintanilla with Jim Cramer at Post 9 of the New York Stock Exchange. David Faber has the morning off. Free markets mixed as is the reaction to some corporate results. Netflix, Procter, Amex, CVS. Ten-year yield is backing off a touch after almost reaching its highs for the month. Our roadmap begins with that shake up at CVS, the struggling pharmacy retailer replacing its CEO and cutting its guidance. Netflix shares are jumping. Strong subs adds to some easing growth worries. And we'll get a read on the consumer. P&G takes a China hit. Amex is raising its earnings guidance. Let's begin, though, with the shake up at CVS. The drugstore chain naming longtime executive David Joyner as its new CEO, effective last night, replacing Karen Lynch. Company's board says it's the right time to make a change. CVS also cutting guidance for Q3. They cite the continuing increase in medical costs. And Joyner does come from Caremark, Jim.

Jim Cramer (1:02)

Yeah, Joyner's 37 years. He's really good, knows the PBM side, knows the pharmacy side, knows the health plan side, knows the healthcare delivery side. I just want to say for a second, I had Karen Lynch on a couple of times. It was a very tough hand. So, I mean, those who, I know Roger Farrow, who's a really good chairman and very independent, it took a hard look at things. But I think that it was an impossible job. And I thought you did your best. You closed all the underperforming stores. But the focus was, let's get the stores right. And it turns out that the real problem is the medical loss ratio. And we see, by the way, everyone has these problems, but this company is taking action. I also want to know how much these acquisitions that they made, that involved staffing, going to your home or trying to get things that I know Walmart couldn't do and I know Walgreen couldn't do, which has involved just a lot of people trying to help people as opposed to just the traditional stores. She came from that. I just feel badly for her. I think it was a very tough loss.

Carl Quintanilla (2:05)

How many times can companies in this space reshuffle leadership amid these broader structural industry problems?

Jim Cramer (2:13)

Boy, I'll tell you, that's a great question. This is a very... This industry is so challenged and you can't make the money to make it up with stores because Amazon's doing same day for everything that they sell. And if you talk to anybody who sells stuff in these stores, it's a bad channel now. I mean, it's a bad channel, it's like the most pristine channel. And it's so hard to price this stuff.

When you start seeing it, medicaid's involved, medicaid doesn't give you the money to later. I just want to present the conundrum of the American health care system is squarely on CVS. It's on Umana, it's on United Health, which even didn't have a good number. And I just don't think that even though Karen Lynch came from the health insurance side, Carl, it's just, I don't know. I mean, I think that Joyner's, if someone's gonna do a good job, Joyner can't. But I knew Tim Wentworth, Ed Walker, he's really, really good. So you have tremendous firepower at the top and it's not enough. It's very unusual.

Carl Quintanilla (3:12)

I was just thinking about the different set of challenges that Larry Merlot had back in the day.

Jim Cramer (3:17)

Oh my God, and Larry saw Amazon coming, which is brilliant. So they went and did Aetna and they decided to go all in on health care, which made a lot of sense.

Wentworth wanted to go all in on health care, but the clock is ticking for all these guys. I don't know. I think it's great that Karen closed all the bad stores, every store that's losing money. But David is going to have a lot of things that just aren't in control. These are the companies that I think are least in control of their destiny of any companies in the S&P. And I don't know. I certainly don't. I think David will do a good job. But the hand, the hand is a bad one. And you have to dismantle a lot of things that were done like Weller's. He's dismantling everything. And then he's got to hope that if you close the 1,200 bad stores or whatever, that everybody else is profitable. In the meantime, you've got this operation at Amazon. And all they're doing is saying, okay, listen, if a store closes in that area, we're going to own that area. You're going against Amazon. You're not going against United Health. Your core money making place that you're supposed to go to that is the focal point for all the services is not getting the traffic. And these companies have to start recognizing that they're up against Amazon. They're not necessarily up against Umana.