CVS Health Corp. plans to break itself in two, separating its drugstore chain from its insurance and pharmacy-benefit businesses and unwinding much of the integrated model it assembled with the $78 billion purchase of Aetna in 2018.
The Woonsocket, R.I., company said Wednesday that its board approved the plan in principle after a strategic review. The split is designed to be tax-free to CVS and its shareholders, who will own stock in both companies, and is expected to be completed in the first half of 2028. CVS shares closed down more than 12% on the day, trimming a market value that had stood near $117 billion.
Two companies
The larger piece, which will keep the CVS Health name, combines the Aetna health insurer, the CVS Caremark pharmacy-benefit manager, the specialty-pharmacy business and the Oak Street Health and Signify Health care-delivery units. Chairman and Chief Executive David Joyner will run it.
The second company, to be called CVS Pharmacy, will hold roughly 9,000 retail stores, the mail-order pharmacy, MinuteClinic and Health100, a technology services business. Prem Shah, currently group president, will be its chief executive. CVS said both companies are expected to carry solid investment-grade credit ratings and pay dividends, and that the commercial ties between the pharmacy and Caremark will be preserved through contracts rather than common ownership.
A reversal
For two decades CVS built itself into a one-stop health company, adding Caremark in 2007 and Aetna eleven years later. The breakup comes as pharmacy-benefit managers face scrutiny in Washington and in state capitals, where Tennessee and Arkansas have passed laws restricting common ownership of benefit managers and pharmacies. CVS has challenged those laws in court.
Management framed the move as a choice made from strength. Under Mr. Joyner, who took over in October 2024, the company has cut costs, closed stores and worked to contain Medicare Advantage expenses, and its stock had risen roughly 70% before Wednesday’s drop. CVS also reported third-quarter revenue of about $108.4 billion, up from $102.9 billion a year earlier, and raised its 2026 guidance.
Goldman Sachs is lead financial and strategic adviser, with Consello also advising. Wachtell, Lipton, Rosen & Katz is legal counsel. CVS said more leadership and board appointments will be announced later.
