CVS Health to split into two companies, separating retail pharmacy from insurance operations

CVS Health said on Wednesday it will split into two companies, separating its retail pharmacy business from its insurance and pharmacy-benefit operations.

The companies will be named CVS Health and CVS Pharmacy. The company keeping the CVS Health name will include the insurer Aetna, the pharmacy benefit manager Caremark, and businesses that provide primary care and home visits to older people. The split unwinds a conglomerate that CVS built through acquisitions and deals.

What is reported

According to the Guardian, CVS Pharmacy will include the company's 9,000 pharmacies, in-store clinics and mail-order prescription business. The Guardian also reports that the breakup is planned for early 2028 and that David Joyner, CVS's chief executive and chair, will run the healthcare solutions business.

According to STAT, both companies will be publicly traded. STAT also reports that the specialty pharmacy will remain part of CVS Health, keeping its high-cost drugs tied to Caremark and Aetna.

The Guardian reports that CVS Health is valued at $117bn and generated more than $400bn in revenue last year. It says the company did not meet investors' growth expectations after its $70bn merger with Aetna in 2018. Its share price fell to $44 in late 2024 and has since rebounded.

The Guardian also reports that CVS Health has come under pressure from lawmakers and regulators. Arkansas and Tennessee have passed laws aimed at preventing companies from both managing prescription benefits and running retail and mail-order pharmacies. Other states have proposed similar restrictions. Senators Josh Hawley and Elizabeth Warren introduced a federal bill that the Guardian describes as proposing an antitrust crackdown.

What is disputed

The reports differ on CVS's size. The Guardian calls it the largest US healthcare conglomerate, while STAT and Reuters call it one of the largest. They also differ on how it was built. The Guardian dates the series of acquisitions to 2018, STAT refers to decades of deals, and Reuters to years of acquisitions and expansion.

What each side says

"Our history is defined by proactively evolving to stay ahead of what's next in healthcare, and in today's environment, that means delivering more affordability, greater access and a simpler experience," Joyner said in a statement, according to the Guardian.

The Guardian reports that a CVS Health spokesman earlier said legislative efforts to break up the company would "open the door to private equity stripping the entire U.S. healthcare system for parts".

Jeremiah Moore, the Arkansas state representative who sponsored that state's bill, told Politico last week, according to the Guardian: "They're bending the rules to benefit their own bottom line."

According to STAT, critics believe companies like CVS profit excessively from dispensing prescription drugs.

What is not known

The reports do not establish whether political or regulatory pressure caused the decision. They do not describe the transaction's structure, say who will lead CVS Pharmacy, or describe any effect on jobs, stores, patients or prices.

Analysis

The split would separate two businesses whose combination has drawn scrutiny from lawmakers and regulators, but the reports do not show that this pressure drove the decision. If the plan proceeds as reported, one open question is whether separation satisfies critics, given that the specialty pharmacy would stay tied to Caremark and Aetna. State laws and the federal bill could remain relevant in either case. Supporters may see a simpler structure, while skeptics may see limited change. The effects on costs, access and competition cannot be judged from the available reports.

Produced by the Vocemundi newsroom with AI assistance.