CVS to Split Into Two Public Companies by Mid-2028

CVS Health will split into two separate public companies by the first half of 2028, the company announced Wednesday, unwinding its $78 billion acquisition of insurer Aetna and dismantling the vertically integrated healthcare conglomerate it built in 2018. The plan would rank among the largest corporate splits in history.

The separation carves CVS's roughly 9,000 retail pharmacies away from its insurance business and Caremark, one of the nation's three largest pharmacy benefit managers. Both companies will trade publicly. The board reached the decision after what the company called a "comprehensive strategic review."

The move is a striking reversal for a company that spent two decades building a one-stop healthcare destination. It also arrives mid-turnaround: CEO David Joyner has been pursuing $2 billion in cost cuts, store closures, leadership shakeups and efforts to rein in Medicare Advantage costs.

What did the CEO say?

"From a position of strength, and a focus on the long term, we plan to create two focused companies to improve consumer engagement, affordability, and care coordination," Joyner said in the release. The claim of strength has some market backing: shares have jumped roughly 70% since Joyner took the helm in October 2024, lifting CVS's market value to $117 billion. What the statement lacks is any quantified forecast of what the split will cost to execute.

Leadership is settled at the top only. Joyner will run the insurance and PBM company, which keeps the CVS Health name. Prem Shah, currently group president of CVS Health, will lead the pharmacy company, to be called CVS Pharmacy. Additional leadership roles and board members will come later, CVS said. Existing shareholders will own shares in both companies. The Financial Times first reported the breakup plans on Tuesday.

How do the businesses stack up?

The 2025 numbers show how evenly matched the halves are:

• Pharmacy business: $37.66 billion in sales
• Insurance unit: $36.29 billion in revenue
• Healthcare services segment: $51.24 billion

On Tuesday, CVS said it will place its insurer and PBM alongside its primary care business Oak Street Health, home-visit provider Signify Health, and its specialty drug business. CVS said the split gives both companies a "focused strategic agenda" and greater ability to "innovate, adopt technology, increase efficiency." Those are promises, not results — and the company offered no timetable beyond the split date for delivering them.

Why now?

This is not CVS's first look at a breakup. In October 2024, the company engaged advisors to review its business and considered separating retail pharmacy from insurance. That review ended without a split — until now.

Leerink Partners analyst Michael Cherny said the announcement "feels like a complete shock" in a Tuesday note. He noted the retail pharmacy business has been performing well, winning market share and stabilizing gross margins thanks to CostVantage, the reimbursement model CVS introduced last year.

"In this context, perhaps the outlook for a standalone retail pharmacy (still with meaningful scale and leverage on its own) is stronger now than before," Cherny wrote.

He added that "the rationale could also be to avoid what has been relentless state legislative scrutiny over the company's level of vertical integration."

That scrutiny is real and mounting. PBMs, which negotiate drug prices and manage prescription benefits for insurers and employers, face bipartisan criticism in Washington and in state capitals over opaque pricing, growing market power, and conflicts of interest when their owners also run insurers and pharmacies. Congress enacted PBM reforms in February, including changes to how PBMs are compensated under Medicare Part D. States have increasingly moved to restrict PBM ownership of pharmacies.

The split, in short, may be as much a defensive move as a strategic one. Whether two companies can outrun regulatory pressure that one conglomerate could not is the question investors will watch through 2028.