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CVS Health announced plans on Wednesday to split into two separate public companies by the first half of 2028 in what would rank among the largest corporate breakups in history. The move reverses the company’s massive 78 billion dollar acquisition of insurer Aetna and dismantles the vertically integrated healthcare conglomerate created in 2018.
Details of the Corporate Split
The proposed plan separates CVS’ roughly 9,000 retail pharmacies from its major insurance business and pharmacy benefit manager, Caremark, which stands as one of the nation’s three largest PBMs. The decision follows a comprehensive strategic review by the board of directors, as reported in a company news release. Following the announcement, shares of CVS closed more than 12% lower on Wednesday.
The insurance and PBM company will retain the CVS Health name and be led by CEO David Joyner. This entity will include the primary care business Oak Street Health, home visit provider Signify Health, and the company’s specialty drug business. Meanwhile, the second company will be named CVS Pharmacy and will be run by Prem Shah, currently group president of CVS Health. Additional leadership and board members will be announced later, and existing CVS shareholders will own stock in both newly formed publicly traded companies.
The Financial Times initially reported the breakup plans on Tuesday. Financial results show the pharmacy business generated 37.66 billion dollars in 2025 sales, while the insurance unit recorded 36.29 billion dollars in revenue and the healthcare services segment brought in 51.24 billion dollars.
Financial Performance and Turnaround
Alongside the breakup announcement, CVS reported third-quarter earnings and revenue that exceeded Wall Street projections, with total sales rising to 108.40 billion dollars from 102.87 billion dollars during the same period last year. Growth in the healthcare benefits and health services segments drove the sales increase, whereas revenue in the pharmacy services business decreased compared to the previous year.
The restructuring arrives as CVS advances an aggressive turnaround strategy under Joyner, pursuing 2 billion dollars in cost reductions, store closures, leadership changes, and efforts to manage Medicare Advantage expenses. CVS shares have climbed approximately 70% since Joyner assumed leadership in October 2024, raising the company’s market value to 117 billion dollars. Speaking on CNBC’s “Squawk on the Street,” Joyner stated that the division is happening from a position of strength, highlighting the recovery in Aetna’s Medicare operations and steady retail pharmacy results.
CVS previously explored splitting the company in October 2024 by engaging advisors during a strategic review. However, Joyner explained to CNBC that the company was undergoing a turnaround at that time and lacked the necessary flexibility, cash reserves, and business performance to carry out a division.
Market Reactions and Industry Scrutiny
In an interview with CNBC, Leerink Partners analyst Michael Cherny noted that the separation demonstrates the stability of the pharmacy sector, which has gained market share and stabilized gross margins through CostVantage, a transparent pharmacy reimbursement model launched by CVS last year. Cherny also suggested that the motivation for the split could relate to ongoing state-level legislative scrutiny regarding the company’s vertical integration.
Investors have raised concerns about whether the retail pharmacy might forfeit its competitive edge by separating from a PBM that negotiates drug costs and manages prescription benefits for insurers and employers. However, Joyner assured analysts that commercial agreements between the two organizations will preserve operational synergies without requiring structural integration.
The prospective breakup occurs as pharmacy benefit managers encounter increasing bipartisan oversight in Washington, D.C., and state governments. Lawmakers in Tennessee and Arkansas have enacted legislation to prohibit co-ownership of PBMs and pharmacies, which CVS and other firms have challenged in court. Critics have targeted PBMs over opaque pricing, expanding market influence, and potential conflicts of interest arising from joint ownership with insurers and pharmacies.
The company stated that the separation will grant both entities a focused strategic agenda along with an enhanced capacity to innovate, adopt technology, and boost efficiency.
