A significant development is unfolding in the healthcare sector as CVS Health announced plans to split into two separate public companies by the first half of 2028. This move would reverse the company's massive $78 billion acquisition of Aetna in 2018, dismantling the vertically integrated healthcare conglomerate created during that time.

According to a release from CVS, the decision follows a comprehensive strategic review by the company's board of directors. The plan aims to create two focused companies, improving consumer engagement, affordability, and care coordination. The insurance and PBM company will retain the CVS Health name and be led by CEO David Joyner, while the other company, called CVS Pharmacy, will be led by Prem Shah, currently group president of CVS Health. Existing shareholders will own shares in both companies after the split.

This development marks a stunning reversal for the healthcare powerhouse, which spent the last two decades working to turn itself into a one-stop health destination. Under Joyner's leadership, CVS has pursued aggressive turnaround efforts, including $2 billion in cost cuts, store closures, leadership shakeups, and attempts to rein in Medicare Advantage costs. Shares have jumped roughly 70% since Joyner took the helm in October 2024, bringing the company's market value to $117 billion.

The pharmacy business raked in $37.66 billion in 2025 sales, while its insurance unit booked $36.29 billion in revenue and healthcare services segment generated $51.24 billion. On Tuesday, CVS also said it will combine its insurer and PBM with primary care business Oak Street Health, home-visit provider Signify Health, and specialty drug business.

In October 2024, CVS engaged advisors in a strategic review of its business, considering breaking up its retail pharmacy and insurance units. However, this announcement came as a shock, even to analysts like Michael Cherny from Leerink Partners. He stated that the outlook for a standalone retail pharmacy may be stronger now than before, given its performance in winning market share and stabilizing gross margins through CostVantage, a new pharmacy reimbursement model introduced by CVS last year.

Frequently Asked Questions

What prompted CVS' decision to split off its drugstore business?

A: The decision follows a comprehensive strategic review by the company's board of directors, aiming to improve consumer engagement, affordability, and care coordination.

How might this restructuring impact customers and employees?

A: The separation of CVS's retail pharmacies from its major insurance business and PBM could lead to improved efficiency and innovation within each entity, potentially benefiting consumers and employees alike.

Will existing shareholders see any changes in their ownership or benefits?

A: Yes, existing shareholders will own shares in both companies after the split, providing them with continued involvement in the respective businesses.

What are some potential consequences of this breakup on the healthcare industry?

A: This move may influence the landscape of pharmacy benefit managers (PBMs), potentially leading to increased scrutiny and regulation due to concerns over opaque pricing practices and conflicts of interest.