The structure being taken apart is only eight years old. CVS bought the insurer Aetna in 2018 for $78 billion to build one company that could insure a patient, administer that patient's drug benefit and fill the prescription at its own counter.
On Wednesday CVS said it intends to break that chain into two separately listed businesses by early 2028, CNBC reported. Both halves would trade publicly, current holders would end up owning stock in each, and one of them keeps the CVS Health name under chief executive David Joyner. The Financial Times carried the plan on Tuesday, before the company's own announcement, and MarketWatch described the decision as a surprise to analysts.
Key numbers
- $78 billion paid for Aetna in 2018, the acquisition this split would reverse
- 9,000 retail pharmacies, roughly, that would sit in the standalone drugstore company
- $51.24 billion health care services revenue in 2025, ahead of pharmacy at $37.66 billion and insurance at $36.29 billion
- $117 billion market value, after a rise of about 70% in the shares since Joyner took over in October 2024
Which pieces go where
One company gets the stores. The other gets everything built around the insurance business: Aetna itself, the pharmacy benefit manager Caremark, the primary care chain Oak Street Health, the home-visit provider Signify Health and the specialty drug operation, grouped together in a statement CVS made on Tuesday, per CNBC.
Caremark ranks among the three biggest pharmacy benefit managers in the United States. That is the piece the whole 2018 logic rested on, and the piece that now ends up on the opposite side of the line from the counters where prescriptions are handed over.
In plain words: a pharmacy benefit manager sits between drugmakers, insurers and employers, bargaining over prices and deciding which medicines a plan pays for. Owning one alongside an insurer and a pharmacy chain is what people mean by vertical integration: the same parent collects money at several points along one prescription. A split ends that arrangement by putting the links in different hands.
Washington and the states have been pressing on PBMs
Congress passed PBM reforms in February, including changes to the way these firms are paid under Medicare Part D, CNBC reported. States have separately been moving to limit PBMs from owning pharmacies. Leerink Partners analyst Michael Cherny, in a Tuesday note cited by CNBC, called the split "a complete shock" and wrote that part of the reasoning could be to escape persistent state legislative attention on how tightly the company is integrated.
The announcement lands in the middle of a turnaround that is about two years old. CVS has been working through $2 billion of cost reductions, closing stores, changing management and trying to contain Medicare Advantage costs. It is also not the first time the idea has come up: the company brought in advisers for a strategic review in October 2024 and looked then at separating retail pharmacy from insurance.
I went through the reports on this, and none of them gives a regulatory step, a shareholder vote date or a date for the separation itself. Early 2028 is the company's own timeline, not a scheduled event on anyone else's calendar.
What to watch
- Early 2028 the window CVS gave for completing the separation into two publicly traded companies