CVS Splits Itself in Two, Betting the Drugstore Is Worth More on Its Own

CVS Health confirmed this week that it is splitting itself into two public companies. The current CVS Health, led by CEO David Joyner, will keep Aetna, pharmacy-benefit manager Caremark, Oak Street Health, Signify Health, and the specialty drug business. A new company called CVS Pharmacy will house the roughly 9,000 retail storefronts, mail-order pharmacy, and walk-in clinics, led by current group president Prem Shah. CVS expects the split to close in the first half of 2028.

Joyner insisted the move is not a response to regulatory pressure, calling it the next step in CVS's "evolution" and pointing to momentum from a turnaround that already included roughly $2 billion in cost cuts and store closures. That said, the timing is hard to ignore: CVS is actively fighting state laws in Arkansas and Tennessee that would bar pharmacies and pharmacy-benefit managers from sharing a parent company, and a bipartisan group in Congress has pushed similar legislation federally. Scrutiny is unlikely to ease now that Democrats have taken back the House and Senate.

The split lands almost exactly a decade after CVS paid $78 billion to buy Aetna in the first place, a reminder that in healthcare, vertical integration has a shelf life too. Analysts were split on the logic: Forrester's Arielle Trzcinski called it CVS "acknowledging that bigger isn't always better," while Leerink's Michael Cherny described the announcement as a "complete shock." CVS reported Q3 profit of $2.2 billion on revenue of $108.4 billion the same day, swinging from a $4 billion loss a year earlier, proof that strong performance didn't stop the company from deciding it would perform better split up.

Source: Healthcare Dive

Kyle Duford, Founder & Editor, BRNDWIRE. More from Kyle →