CVS to Split into Two Companies in 2028

CVS announced plans to split its business into two separate entities by the first half of 2028, marking its return to a standalone pharmacy chain for the first time since 2006. The move comes amid challenges in its pharmacy benefit and health insurance divisions.

The company’s shares closed down 12.5% at $79.96, slashing nearly $15 billion in market value. Analysts suggested the split was perceived as a defensive move against regulation rather than an offensive strategy.

CVS Health CEO David Joyner stated that recent improvements in its pharmacy and health insurance operations made the split feasible. He noted that the company has beaten Wall Street earnings expectations for the past eight quarters.

The split will result in two separate entities: CVS Pharmacy, led by Prem Shah, and CVS Health, led by Joyner. The latter will include Aetna, Caremark, and other healthcare services companies.

Analysts have raised concerns about the lack of financial details surrounding the breakup. Barclays analyst Andrew Mok pointed to the absence of specifics as a key investor worry, while UBS analyst Kevin Caliendo suggested the split was perceived as a reaction to regulatory threats.

Industry consolidation has intensified pressure on CVS and similar companies, with critics arguing that vertical integration has led to conflicts of interest and rising healthcare costs. Morningstar analyst Julie Utterback noted that CVS has the most exposure to vertical integration in the industry.