CVS to split pharmacies from insurance arm by 2028
CVS Health plans to split into two publicly traded companies by the first half of 2028, the company announced Wednesday. The move would rank among the largest corporate splits in history.
It would reverse CVS’s $78 billion acquisition of insurer Aetna and dismantle the vertically integrated healthcare conglomerate the company built in 2018. The plan would separate CVS’s roughly 9,000 retail pharmacies from its insurance business and its pharmacy benefit manager, Caremark, one of the nation’s three largest PBMs.
The decision follows a “comprehensive strategic review” by the company’s board, according to a news release. The company described the move as a reversal for a business that spent two decades building itself into a one-stop health destination. It also comes as CVS’s turnaround plan under CEO David Joyner shows substantial progress, with $2 billion in cost cuts, store closures, leadership shakeups and efforts to rein in Medicare Advantage costs.
“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. Shares have jumped roughly 70% since Joyner took the helm in October 2024, bringing the company’s market value to $117 billion.
The insurance and PBM company will keep the CVS Health name and be run by Joyner. The other company will be called CVS Pharmacy and be led by Prem Shah, currently group president of CVS Health. Additional leadership positions and board members will be announced later, CVS said. Existing shareholders will own shares in both companies after the split.
The Financial Times first reported the breakup plans on Tuesday.
The pharmacy business recorded $37.66 billion in 2025 sales, while the insurance unit booked $36.29 billion in revenue and the healthcare services segment generated $51.24 billion. CVS also said Wednesday it will group its insurer and PBM with its primary care business Oak Street Health, home-visit provider Signify Health and its specialty drug business. The split, CVS said, will let the two companies pursue a “focused strategic agenda” and give them greater ability to “innovate, adopt technology, increase efficiency.”
CVS has weighed a split before. In October 2024, it engaged advisors for a strategic review and considered breaking up its retail pharmacy and insurance units. Even so, Leerink Partners analyst Michael Cherny said in a Tuesday note that the split “feels like a complete shock.” He said the retail pharmacy business has been performing well, winning market share from competitors and seeing stabilizing gross margins thanks to CostVantage, a pharmacy reimbursement model CVS introduced last year.
“In this context, perhaps the outlook for a standalone retail pharmacy (still with meaningful scale and leverage on its own) is stronger now than before,” Cherny wrote. He added that “the rationale could also be to avoid what has been relentless state legislative scrutiny over the company’s level of vertical integration.”
The potential breakup also comes as PBMs face mounting bipartisan scrutiny in Washington and across states. PBMs negotiate drug prices and manage prescription drug benefits for insurers and employers, and have been criticized for opaque pricing practices, growing market power and potential conflicts of interest when owned by companies that also operate insurers and pharmacies. Congress enacted PBM reforms in February, including provisions to change how PBMs are compensated under Medicare Part D. States have increasingly moved to restrict PBMs’ ownership of pharmacies.
