CVS Health, one of America’s biggest healthcare companies, plans to break itself in two, ending an experiment in “one-stop” healthcare that began with a landmark acquisition eight years ago. The company said on Wednesday that it will separate its retail pharmacy chain from its insurance and pharmacy-benefits operations, creating two independent, publicly traded companies by the first half of 2028.
What CVS announced
The plan will divide CVS into two. The first company will keep the name CVS Health and will include Aetna, the health insurer; CVS Caremark, one of the country’s three largest pharmacy benefit managers; the specialty pharmacy arm; and the care-delivery businesses Oak Street Health and Signify Health. David Joyner, the current chief executive, will lead it.
The second company, to be called CVS Pharmacy, will operate roughly 9,000 retail drugstores, along with mail-order pharmacy, MinuteClinic walk-in clinics, including virtual care, and a consumer health platform called Health100. Prem Shah, who currently oversees pharmacy and healthcare delivery, is set to become its chief executive.
CVS intends the separation to be tax-free for the company and its shareholders, subject to board approval, regulatory filings and other customary conditions. The announcement came alongside third-quarter results, with revenue rising to $108.40 billion from $102.87 billion a year earlier.
Reversing a landmark deal
The move unwinds much of the strategy CVS pursued over two decades. It bought Caremark in 2006, then acquired Aetna in 2018 for around $70 billion, or $78 billion including debt, arguing that combining a pharmacy chain, a benefits manager and an insurer would help coordinate care and lower costs. If completed, the split would leave CVS as a standalone pharmacy chain for the first time since 2006 and would rank among the largest corporate breakups on record.
Joyner told CNBC that the decision was made from a position of strength, pointing to a recovery in Aetna’s Medicare business and steadier performance at the pharmacies. He noted that when he took over two years ago, the company had expected its pharmacy business to shrink by about 5%. The company had hired advisers for a strategic review in October 2024 that considered exactly this kind of separation.
Why investors are not convinced
Shares fell sharply on the news, dropping by more than 10% at one point. Analysts offered a mixed reading. Some argue that the retail pharmacy business, valued at a lower multiple than insurance, has held back the group’s overall share price and masked the strength of Aetna and Caremark. Others say the retail operation has stabilised under a new reimbursement model and is gaining market share.
Still, the retail pharmacy sector remains under strain. Drugstore chains across the United States have struggled with falling prescription reimbursements, rising costs and store closures, and investors worry that a standalone CVS Pharmacy will have less financial cushion than the combined group.
What it means for customers and employers
For everyday shoppers, little will change in the near term. The separation is more than two years away, and stores are expected to keep operating as they do now. Patients who fill prescriptions at CVS but are insured by other companies will see no difference.
The picture is more complicated for Aetna members. Retail pharmacists have helped engage Aetna customers in managing their health, and a corporate separation could make that coordination harder. Employers who buy Aetna cover alongside Caremark benefits will still deal with one integrated company, so the split does not address the regulatory scrutiny of insurer-owned benefit managers. Policymakers have questioned how pharmacy benefit managers set prices and negotiate rebates, and that debate is likely to continue.
What to watch next
Key questions include how the two companies will divide debt and costs, how they will handle shared technology and contracts, and whether regulators or politicians take an interest in the arrangement. Investors will also look for early signs of how CVS Pharmacy plans to grow once it operates alone.
For now, the announcement marks a significant turn in American healthcare. A model that promised to bring insurance, medicines and primary care under one roof is being taken apart, and the market will be watching to see which half performs better. This article is for information only and is not investment advice.
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