CVS to split off drugstore business in major breakup of healthcare giant; shares fall 10%

Summary

• CVS Health plans to split into two separate public companies by the first half of 2028.
• The split reverses the $78 billion acquisition of Aetna made in 2018.
• The company will separate its roughly 9,000 retail pharmacies from its insurance business & pharmacy benefit manager Caremark.
• CVS shares closed more than 12% lower on Wednesday following the announcement.
• CEO David Joyner stated the decision is made from a position of strength following a 70% rise in share value since October 2024.
• The insurance & PBM company will retain the CVS Health name & be led by Joyner.
• The new retail pharmacy company will be called CVS Pharmacy & be led by Prem Shah.
• Existing shareholders will own stock in both new companies.
• The insurance & PBM entity will include Oak Street Health, Signify Health, & the specialty drug business.
• CVS Pharmacy business generated $37.66 billion in sales in 2025.
• The insurance unit generated $36.29 billion in revenue in 2025.
• The healthcare services segment generated $51.24 billion in revenue in 2025.
• CVS posted third-quarter total sales of $108.40 billion, up from $102.87 billion in the prior-year period.
• Healthcare benefits & health services segments saw year-over-year sales growth.
• Pharmacy services business revenue slid from the previous year.
• CVS engaged advisors in October 2024 to review a potential split but lacked the flexibility to execute it at that time.
• Analyst Michael Cherny noted the pharmacy business has won market share & stabilized gross margins.
• Joyner stated synergy between the two businesses will be preserved through commercial agreements.
• State laws in Tennessee & Arkansas ban co-ownership of PBMs & pharmacies.
• PBMs face bipartisan scrutiny regarding opaque pricing practices & conflicts of interest.