CVS Health announced plans on Wednesday to split its $117 billion healthcare conglomerate into two separate publicly traded companies by the first half of 2028, reversing its massive $78 billion acquisition of insurer Aetna and dismantling the vertically integrated empire built in 2018.
CVS Health Breaks Up Empire
Meanwhile, the insurer Aetna, the pharmacy benefit manager Caremark, and provider assets like Oak Street Health and Signify Health will remain with the parent company. It retains the CVS Health name under Chief Executive Officer and Chair David Joyner.
Joyner told CNBC’s Squawk on the Street
that the decision to split comes out of a position of strength,
pointing to a recovery in Aetna’s Medicare business and solid retail pharmacy performance.
Since Joyner took over in October 2024, CVS stock has climbed about 70%, lifting the enterprise valuation to $117 billion.
The Financial Times first reported the planned breakup on Tuesday, which follows a comprehensive strategic review by the company’s board of directors. The planned split would end a nearly decade-long chapter. CVS Health reached into nearly every corner of the healthcare system following its 2018 merger with Aetna.
That trend also saw rivals UnitedHealth Group and Cigna bring insurers, pharmacy benefits, and mail-order operations under single corporate umbrellas.
Why Is CVS Health ($CVS) Stock Down -11.17% Today? CVS shares fell 11.17% to $81.20, down from the prior session's close of $91.41. The primary catalyst was the company's announcement that it will split into two independent, publicly traded companies by the first half of 2028.…
Under the strategy, the two newly formed entities will both operate as publicly traded corporations. The split will separate the roughly 9,000 retail pharmacies from its major insurance business and Caremark, which stands as one of the nation’s three largest PBMs.
Company leadership explained that the drugstore unit has operated relatively detached from the enterprise.
The reorganization is designed to speed up its expansion as changing consumer trends and sector-wide pressures force other prominent drug store chains like Rite Aid out of business.
Lawmakers Criticize Healthcare Conglomerate Restructuring Plans
The restructuring follows mounting scrutiny from lawmakers and regulators over dominant healthcare conglomerates. Political pressure also played a part.
Critics argued their massive reach and vertical consolidation allow companies to turn expenses—such as dispensing medications or delivering care—into revenue for other parts of their business.
CVS Health generated over $400 billion in revenue last year, ranking seventh among U.S. public companies according to FactSet data, but faced growing legislative pushback.
Arkansas state representative Jeremiah Moore, a Republican who sponsored his state’s bill, told Politico that conglomerates are bending rules to benefit their own bottom line, stating that average citizens are tired of being pushed around.
At the federal level, a bill introduced by Missouri Republican Senator Josh Hawley and Massachusetts Senator Elizabeth Warren proposes an antitrust crackdown.
CVS HEALTH $CVS — THE BREAKUP IS BIG, BUT THE EARNINGS RECOVERY MAY MATTER MORE I've gone through CVS Health's Q3 earnings call, and what interests me most isn't simply the decision to split the company. It's the improving financial position behind that decision. WHAT STOOD OUT… https://t.co/ze85Hr9ott
Characterizing the measure as a vital stride toward bringing back clarity and lowering medical costs for every U.S. citizen, Hawley endorsed the proposal.
Executives Announce Projected Earnings for 2027
During the Wednesday morning conference call with analysts, executives announced that adjusted earnings in 2027 will be at least $8.65 a share.
Although CVS previously considered breaking up its retail pharmacy and insurance units during a strategic review in October 2024, Joyner noted the company was in a turnaround phase at that time without the flexibility, cash position, or business performance required to execute the separation.
Joyner will remain atop CVS Health as the company targets completion of the separation by the first half of 2028.
CVS is getting a divorce and the stock is paying the legal fees! CVS Health $CVS plans to split its 9,000 drugstores from Aetna, its insurer, and Caremark, its drug price middleman, by 2028, and the stock fell 14%. @petenajarian @jonnajarian split the difference because… pic.twitter.com/uPa1x3NQzw
Earlier coverage: CVS Health May Split into Two Companies, Reports Say