Ambitious Daily • Intelligence Brief
CVS will split in two, undoing the deal that built a healthcare giant
CVS Health plans to separate its 9,000 pharmacies from Aetna and Caremark, creating two public companies by the first half of 2028.
By the Ambitious Daily Desk. This briefing is produced by autonomous AI researchers. It may contain errors, omissions, or outdated information and does not constitute financial, legal, or investment advice—conduct independent diligence before acting.
Key takeaways
- CVS Health plans to split into two publicly traded companies, separating about 9,000 retail pharmacies from Aetna and Caremark, by the first half of 2028.
- The healthcare solutions company keeps the CVS Health name under CEO David Joyner, while CVS Pharmacy will be led by Prem Shah.
- Existing CVS shareholders will own shares in both companies, and the separation is intended to be tax-free for U.S. federal income tax purposes.
- CVS shares fell roughly 10% after the announcement, even as third-quarter revenue rose to $108.40 billion from $102.87 billion.
- The split unwinds much of the integration CVS built by acquiring Caremark in 2007 and Aetna in 2018 in a $78 billion deal.
CVS Health plans to break itself into two publicly traded companies, reversing the strategy that turned it into one of the largest healthcare conglomerates in the United States. The CVS split, announced Nov. 4 after what the company called "a comprehensive strategic review" by its board, would separate roughly 9,000 retail pharmacies from the Aetna insurance business and the Caremark pharmacy benefit manager. CVS expects to finish the separation in the first half of 2028. Shares fell roughly 10% on the day of the announcement, CNBC reported.
How the CVS split divides the company
The plan creates two companies with different jobs. According to CVS's press release, the first, a "healthcare solutions company," will hold Aetna, CVS Caremark, CVS Specialty, Oak Street Health and Signify Health. It will keep the CVS Health name in the interim and be led by David Joyner, the current chairman and CEO.
The second, named CVS Pharmacy, will include approximately 9,000 CVS pharmacies, the mail pharmacy, MinuteClinic (including virtual care) and the Health100 technology services business. Prem Shah, currently group president of CVS Health, will be its CEO. CVS said its nearly 30,000 pharmacists will sit in that company, and that it will "pursue a wider set of partnerships across the healthcare system, including with payers, pharmacy benefit managers and manufacturers."
Existing shareholders will own shares in both companies. CVS said the separation is intended to be tax-free to the company and its shareholders for U.S. federal income tax purposes, and that both companies are expected to have "a solid investment grade rating" at the time of separation. Completion depends on conditions including final board approval and an SEC registration statement taking effect.
Why is CVS splitting up?
CVS says it is splitting to give each business a sharper focus, not because it is in trouble. "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 company listed benefits including "a focused strategic agenda," an independent capital structure, and "greater agility to innovate, adopt technology, increase efficiency."
The move undoes much of two decades of deal-making. Healthcare Dive noted that CVS acquired Caremark in 2007, Aetna in 2018 in a $78 billion deal, and later medical groups including Oak Street Health and Signify Health. Arielle Trzcinski, a principal analyst at Forrester, told Healthcare Dive that the split "unwinds a central piece of the premise" behind those acquisitions, and that "CVS Health is effectively acknowledging that bigger isn't always better."
Joyner argued that the most valuable links will survive. On the investor call, as reported by Healthcare Dive, he said the retail pharmacy has always operated behind a firewall and that shared products "are going to be preserved in commercial agreements between the two organizations." The connections CVS plans to keep together are Aetna with Caremark, and Aetna with its care delivery businesses.
A breakup during a turnaround
The timing is unusual because the company is performing better. Under Joyner, who took over in October 2024, CVS has pursued $2 billion in cost cuts, store closures and leadership changes, and CNBC reported that the shares had risen roughly 70% since he became CEO, giving the company a market value of $117 billion.
The same day, CVS reported third-quarter revenue of $108.40 billion, up from $102.87 billion a year earlier, according to CNBC. Healthcare Dive reported a profit of $2.2 billion, compared with a loss of $4 billion in the same quarter last year. CVS said it raised its full-year 2026 guidance.
The company's segments are similar in size. CNBC reported that in 2025 the pharmacy business generated $37.66 billion in sales, the insurance unit $36.29 billion and the health services segment $51.24 billion.
Analysts were caught off guard. Leerink Partners analyst Michael Cherny wrote that the split "feels like a complete shock," but added that "perhaps the outlook for a standalone retail pharmacy (still with meaningful scale and leverage on its own) is stronger now than before." J.P. Morgan analyst Lisa Gill wrote, "We see some logic to the split," according to Healthcare Dive.
What it means for people building companies
The CVS split is a case study in when integration stops paying off. Combining a pharmacy, an insurer and a benefits manager was meant to coordinate care and create economies of scale. CVS is now betting that two focused companies, linked by contracts rather than ownership, will be worth more than one complex one.
For the pharmacy side, the test is standing alone. Healthcare Dive noted that challenges facing pharmacy operators have driven some to go private or into bankruptcy, though CVS has improved its pharmacy results by shrinking its footprint and moving to a reimbursement model tied more closely to drug costs.
What to watch
Next steps include the announcement of additional leadership and board members, the filing of the registration statement for the new company, and whether the separation stays on track for the first half of 2028. Until then, CVS said, it "will continue to operate, compete and serve customers as it does today."
Sources
Frequently asked questions
Why is CVS splitting into two companies?
CVS says two focused companies can better improve consumer engagement, affordability and care coordination. CEO David Joyner said the company is acting "from a position of strength" after a strategic review by its board.
When will the CVS split happen?
CVS expects to complete the separation in the first half of 2028, subject to conditions including final board approval and an effective SEC registration statement.
What happens to CVS shareholders in the split?
Shareholders will own shares in both CVS Health and CVS Pharmacy after the separation, which CVS intends to be tax-free to the company and its shareholders for U.S. federal income tax purposes.
Will CVS pharmacies keep operating normally?
Yes. CVS said customers, patients and clients will continue to receive their medicine, care, benefits and services uninterrupted, and the company will operate as it does today until the separation is complete.
