CVS Health plans to separate its US pharmacy chain from its insurance and pharmacy benefit businesses, creating two publicly traded companies in a major reorganisation of the healthcare group.
The Rhode Island-based company said it expects to complete the separation in the first half of 2028. The plan remains subject to conditions, including final approval by its board, and there is no guarantee that the transaction will take place on the proposed timetable.
The proposed pharmacy company, to be called CVS Pharmacy, would include approximately 9,000 retail pharmacies, the mail pharmacy business, MinuteClinic walk-in and virtual care services, and the Health100 technology services business.
The other company, referred to for now as CVS Health, would retain the Aetna health insurer and CVS Caremark, which manages prescription drug benefits. It would also include CVS Speciality, primary care provider Oak Street Health and home-based care business Signify Health.
The division would separate a vast network of retail pharmacies from some of the businesses that arrange and pay for healthcare. It would not, however, separate Aetna from Caremark, or remove the speciality pharmacy business from their group.
What happens next
Current CVS Health shareholders would own shares in both companies once the separation is completed. The group intends the transaction to be tax-free for the company and its shareholders for US federal income tax purposes.
As well as final board approval, the company said completion depends on a registration statement becoming effective with the US Securities and Exchange Commission and on customary confirmation of the intended tax treatment. The company cautioned that the separation might not happen, or might happen on different terms or at a different time.
David Joyner, CVS Health’s chair and chief executive, is expected to hold those roles at the healthcare company. Prem Shah, currently group president, is expected to become chief executive of CVS Pharmacy. Further leadership and board appointments are to be announced later.
CVS said it will continue to operate as it does now until any separation is completed. It said customers, patients and clients would continue to receive their medicines, care, benefits and services without interruption. That is the company’s stated expectation rather than proof of how arrangements will work after the split.
A change in strategy
CVS built its current structure through years of acquisitions, including its purchase of Aetna in 2018 and an earlier combination with Caremark. The group had previously considered a possible break-up during a strategic review in 2024.
Joyner said the latest decision followed a board review and came after improvements across the businesses. He has argued that separate companies will be able to pursue more focused strategies, and said the group intends to preserve useful joint products and services through commercial agreements between them.
Whether those future agreements provide the same benefits as common ownership remains an open question. Details of the arrangements have yet to be settled, and the company has not established that the split will reduce costs for patients or insurers.
The announcement came alongside third-quarter results showing revenue of $108.4 billion, up 5.4% from a year earlier. CVS also raised its full-year forecast for adjusted earnings per share to at least $8.20. Its shares closed 12.5% lower on Wednesday at $79.96; the results and the separation were both disclosed that day, so the share movement should not be treated as a measure of the market’s response to the split alone.
Pressure on the pharmacy business
Pharmacy benefit managers act as intermediaries in the US prescription drug system. They administer benefits for health plans and employers, negotiate with drugmakers and pharmacies, and can influence which medicines are covered and where patients obtain them.
In a 2024 interim report, staff at the Federal Trade Commission warned that large benefit managers’ ownership links with pharmacies could create conflicts of interest and that they might steer patients towards affiliated businesses. The report examined industry practices; it was not a finding that this planned separation would resolve those concerns.
Arkansas and Tennessee have passed laws aimed at restricting common ownership of benefit managers and pharmacies, and those measures have faced legal challenges. Joyner has said regulatory pressure was not the reason for the planned split.
The company said its benefit manager had approximately 87 million plan members as of 30 September 2026, while an estimated 37 million people were served through health insurance products and related services. Those groups can overlap and should not be added together as a count of individuals.
For patients and employees, the eventual effects remain uncertain. CVS has not set out the impact on individual prescription prices, insurance arrangements or jobs. The immediate announcement is a plan for a future corporate separation, not a completed change to those services.
Featured image: AI-generated illustration.
