CVS Health The company announced Wednesday that it plans to split into two public companies by the first half of 2028, in the largest corporate split in history.
The move would reverse the company’s blockbuster $78 billion acquisition of insurance company Aetna and break up the vertically integrated healthcare conglomerate it founded in 2018. Among other things, the plan would separate CVS’ approximately 9,000 retail pharmacies from its major insurance business and pharmacy benefit management company Caremark, one of the country’s three largest PBMs.
The decision followed a “comprehensive strategic review” by the company’s board of directors, according to a news release. CVS stock closed down more than 12% on Wednesday.
This is a stunning reversal for a medical powerhouse that has strived to provide one-stop medical services for the past two decades. The move also comes as CVS’s aggressive turnaround plan under CEO David Joyner shows significant progress, with the company pursuing $2 billion in cost cuts, store closures, a leadership shakeup and initiatives to contain Medicare Advantage costs.
But Joyner said Wednesday on CNBC’s “Squawk on the Streets” that the decision to split was a “loss of strength,” pointing to the recovery in Aetna’s Medicare business and strong performance in retail pharmacy.
“So it all depends on the strength of the business, which gives us the opportunity to make the right strategic decisions for the future of this company,” he later added.
On August 15, 2024, a person enters a CVS Pharmacy near George Washington University in Washington, United States.
Kayley Greenlee Beer | Kayley Greenlee Beer Reuters
Since Joyner took over in October 2024, CVS stock has risen about 70%, giving the company a market value of $117 billion.
Both new companies will be listed on the stock market.
The insurance and PBM company will retain the CVS Health name and be run by Joyner, while the other company will be called CVS Pharmacy and will be led by Prem Shah, currently group president of CVS Health. Additional leadership positions and board members will be announced at a later date, CVS said.
Existing CVS shareholders will own shares in both companies after the split. The Financial Times on Tuesday first reported the breakup plan.
The company’s pharmacy business generated revenue of $37.66 billion in 2025, the insurance segment generated $36.29 billion, and the healthcare services segment generated revenue of $51.24 billion.
CVS announced Wednesday that third-quarter profit and sales also exceeded Wall Street expectations. Total sales increased to $108.4 billion from $102.87 billion in the same period last year.
Sales increased due to year-over-year growth in the company’s healthcare benefits and health services division. On the other hand, revenue from the pharmacy services business decreased from the previous year.
How CVS splitting works
CVS announced Wednesday that it is combining its insurance companies and PBMs with Oak Street Health, a primary care business, Signify Health, a home visiting service, and its specialty pharmaceutical business.
CVS also said the separation will allow both companies to experience “focused strategic challenges” and enhanced capabilities, including “innovation, technology adoption and increased efficiency.”
This isn’t the first time CVS has considered a company split. In October 2024, CVS hired an advisor to conduct a strategic review of its business and consider separating its retail pharmacy and insurance divisions.
But Joyner told CNBC that at the time, the company was “in a rebuilding phase” without the flexibility, cash flow or performance to carry out the split.
Michael Charney, an analyst at Leerink Partners, said in an interview that the split signals “stability for the pharmacy,” which has gained market share from competitors and whose gross margins are stabilizing thanks to CostVantage, a new pharmacy reimbursement model that CVS introduced last year and claims to be more transparent.
“This business is very different from the business that was being considered three years ago, five years ago, 10 years ago, when there were headwinds that pharmacies couldn’t overcome,” he told CNBC on Wednesday.
One potential concern for investors is that retail pharmacies that are tied directly to PBMs, which negotiate drug prices and manage prescription drug benefits on behalf of insurers and employers, may lose their competitive advantage.
But Joyner told analysts on Wednesday that the synergies between the two businesses “will be maintained in the commercial agreement between the two organizations,” adding that “no consolidation of operations is required.”
Charney said the rationale for the split could also extend to state legislative oversight of the company’s level of vertical integration.
The potential for division also comes as pharmacy benefit managers face increased bipartisan scrutiny in Washington, D.C., and across the state. Republicans in Tennessee and Arkansas passed laws banning joint ownership of PBMs and pharmacies. These are being challenged in court by CVS and other companies.
PBMs have been criticized for opaque pricing practices, increased market power and potential conflicts of interest when owned by companies that also operate insurance companies and pharmacies.
