CVS Plans to Split Pharmacy Chain From Insurance and Benefits Operations by 2028
CVS Health plans to divide its $117 billion business into two publicly traded companies, separating about 9,000 pharmacies from its insurance and pharmacy-be...
CVS Health plans to divide its $117 billion business into two publicly traded companies, separating about 9,000 pharmacies from its insurance and pharmacy-benefit operations. The proposed split, announced Wednesday, is expected to be completed in the first half of 2028.
The plan would unwind a strategy built around combining multiple parts of healthcare under one corporate roof. One company, which will keep the CVS Health name, would house insurer Aetna, pharmacy benefit manager Caremark, CVS Specialty and businesses providing primary care and home visits to older adults. The other, CVS Pharmacy, would include retail stores, MinuteClinics, mail-order prescriptions and a technology business.
A reversal of the Aetna deal
CVS created its integrated model through acquisitions, including its roughly $78 billion purchase of Aetna in 2018. The planned separation would pull the retail pharmacy chain away from the insurance and benefits businesses that have since operated alongside it.
The move follows a review by the company’s board. CVS said separating the units would give each business more independence while preserving the ability to form partnerships across healthcare.
Regulatory pressure is also building around large, vertically integrated healthcare companies. Lawmakers and regulators have raised concerns that control of several stages of the healthcare supply chain could create conflicts of interest, weaken competition and push up costs. CVS, UnitedHealth Group and Cigna together control roughly 80% of the market, the source material says.
Two businesses, different challenges
The split would leave Caremark, one of the country’s three largest pharmacy benefit managers, with Aetna and CVS’s other healthcare services. That keeps the insurer and benefits manager together, while the retail chain and its roughly 9,000 locations move into a separate company.
For customers, the announcement sets out a new corporate structure but does not detail changes to pharmacy access or services. The businesses would remain able to pursue partnerships, according to CVS. The company has also not described specific effects on employees.
Investors reacted sharply: CVS shares fell more than 10% on Wednesday. The separation now faces a long path to its target completion in the first half of 2028, with the company’s operations divided between CVS Health and CVS Pharmacy.
