CVS Health has announced a plan to split into two separate publicly traded companies by the first half of 2028, marking one of the largest corporate breakups in history. The decision reverses the company's $78 billion acquisition of insurer Aetna and dismantles the vertically integrated healthcare conglomerate established in 2018. According to a release following a comprehensive strategic review by the board, the move will separate CVS's approximately 9,000 retail pharmacies from its major insurance business and pharmacy benefit manager, Caremark, which ranks as one of the nation's three largest PBMs.
The restructuring comes after significant progress under CEO David Joyner, who took the helm in October 2024. Since his appointment, shares have risen roughly 70%, bringing the company's market value to $117 billion. Joyner stated that from a position of strength, the split aims to create two focused entities to improve consumer engagement, affordability, and care coordination. The insurance and PBM unit will retain the CVS Health name and remain under Joyner's leadership, while the retail division will be named CVS Pharmacy and led by Prem Shah, currently the group president of CVS Health.
Financial data from 2025 shows the pharmacy business generated $37.66 billion in sales, while the insurance unit booked $36.29 billion in revenue, and the healthcare services segment produced $51.24 billion. Under the new structure, the insurance and PBM company will also incorporate Oak Street Health, Signify Health, and the specialty drug business. Existing shareholders will own shares in both new companies following the separation.
Analysts have noted that while the split is a shock, the retail pharmacy business has been performing well, gaining market share and stabilizing gross margins through the CostVantage reimbursement model introduced last year. Michael Cherny of Leerink Partners suggested the rationale may also involve avoiding relentless state legislative scrutiny regarding vertical integration. This move aligns with a broader environment where PBMs face mounting bipartisan scrutiny in Washington and across states over opaque pricing practices and conflicts of interest, following federal reforms enacted in February and increasing state restrictions on PBM ownership of pharmacies.
Sources: CNBC Markets.