CVS Health plans to split pharmacy and insurance businesses into two companies

CVS Health is planning to separate its retail pharmacy operations from its health insurance and pharmacy benefit management businesses, potentially ending a decade-long strategy of combining healthcare services under one corporate structure.

The proposed restructuring would divide the US healthcare group, valued at approximately $117 billion, into two publicly traded companies. One would retain the CVS Health name and house insurer Aetna, pharmacy benefit manager Caremark and selected healthcare services. The second, to be called CVS Pharmacy, would operate the group’s retail and mail-order pharmacies and MinuteClinic network.

The Wall Street Journal reported on 3 November, citing the company, that the businesses would be separated. A separate Reuters report said the company was still evaluating the potential breakup and that no final decision had been made.

According to the Journal’s report, CVS is targeting an early 2028 separation. Existing shareholders are expected to receive ownership interests in both businesses, although detailed transaction terms have not been disclosed.

Chief Executive David Joyner told the Journal that the businesses would be better positioned to operate independently, allowing each organisation to concentrate on its respective activities.

CVS Health separation: How the two companies will be structured

Under the reported arrangement, the existing CVS Health business would retain its insurance and pharmacy benefit management operations alongside several healthcare service businesses.

The proposed structure includes:

CVS Health

• Aetna health insurance operations.
• Caremark pharmacy benefit management business.
• Oak Street Health primary care clinics.
• Signify Health home healthcare services.
• Specialty pharmaceutical operations.

David Joyner is expected to lead this business, according to the Wall Street Journal.

CVS Pharmacy

• Approximately 9,000 retail pharmacy locations across the US.
• Mail-order pharmacy operations.
• MinuteClinic healthcare services.
• Related retail pharmacy operations.

The separation would establish two distinct businesses with different revenue models and operating priorities.

The insurance and healthcare services company would retain the relationship between Aetna and Caremark, while the standalone pharmacy business would focus on retail prescription dispensing, consumer healthcare and pharmacy services.

The companies are also expected to maintain certain commercial agreements to preserve selected shared services following the separation.

CVS breakup reverses its $78bn Aetna acquisition strategy

The proposed restructuring represents a significant change from CVS’s previous expansion strategy.

The company acquired Caremark nearly two decades ago, establishing a major presence in pharmacy benefit management. In 2018, it completed its approximately $78 billion acquisition of health insurer Aetna, creating a vertically integrated healthcare business.

The combination was based on the expectation that bringing insurance, prescription management and pharmacy services under one organisation would improve coordination, create operational efficiencies and help reduce healthcare costs.

CVS subsequently expanded into healthcare delivery through acquisitions including Oak Street Health and Signify Health.

However, the integrated business model has faced operational and financial challenges. Aetna has experienced pressure from higher medical costs, while the pharmacy benefit management industry has come under increasing scrutiny over prescription drug pricing and the role of intermediaries in the pharmaceutical supply chain.

CVS previously explored strategic options, including a potential separation, in 2024. The company was dealing with weaker financial performance in parts of its insurance business at the time. Joyner replaced former chief executive Karen Lynch in October 2024.

The proposed split would therefore reverse an important element of the company’s acquisition-led expansion strategy.

Regulatory scrutiny puts pharmacy benefit managers under pressure

The proposed CVS separation comes amid growing regulatory attention on the relationship between pharmacy benefit managers, insurers and retail pharmacies.

Pharmacy benefit managers, commonly known as PBMs, administer prescription drug benefits for employers, health insurers and government programmes. Their responsibilities include negotiating with pharmaceutical manufacturers, managing pharmacy networks and processing prescription claims.

CVS Caremark is one of the largest PBMs in the US. Its ownership by the same group that operates Aetna and thousands of retail pharmacies has attracted scrutiny over potential conflicts of interest arising from vertical integration.

US lawmakers and regulators have been examining how PBMs determine reimbursement rates, negotiate drug prices and interact with pharmacies.

The Federal Trade Commission reached a settlement with CVS earlier in 2026 that restricts certain aspects of how Caremark conducts business with other pharmacies.

The Trump administration is also planning rules requiring CVS and competing companies to provide greater transparency regarding pricing and the financial relationships between their healthcare businesses.

Some US states have pursued restrictions on common ownership of pharmacy benefit managers and retail pharmacies.

Joyner told the Wall Street Journal that regulatory developments were not driving CVS’s decision to separate the businesses. Nevertheless, the proposed restructuring comes against a backdrop of increased scrutiny of integrated healthcare companies.

Standalone pharmacy business faces a different competitive environment

Separating the retail pharmacy operations would expose CVS Pharmacy to the commercial challenges facing the wider US drugstore industry.

Traditional pharmacy chains are dealing with competition from online retailers and prescription delivery services, including Amazon. Changes in shopping behaviour and increased use of mail-order prescriptions have also affected store traffic.

A standalone pharmacy business would need to operate without the same corporate integration with Aetna and Caremark, although commercial arrangements between the two companies are expected to continue.

The separation could provide greater operational focus and allow management to concentrate on retail pharmacy performance, store operations and consumer healthcare services.

However, analysts have also identified potential disadvantages, including the loss of certain operational synergies and the additional costs of establishing separate corporate structures.

For the insurance and PBM business, retaining Aetna and Caremark together would preserve their existing relationship in managing health and prescription benefits.

The inclusion of Oak Street Health and Signify Health would also maintain CVS’s exposure to primary care and home healthcare services.

Investors assess potential value from CVS’s restructuring

The proposed separation could change how investors assess CVS’s different businesses.

Mizuho analyst Ann Hynes told Reuters that investors might assign higher valuations to the two businesses independently than to the combined group.

CVS shares were trading at approximately 10.8 times the analyst’s projected 2027 adjusted earnings, compared with a 10-year sector average of 15.7 times, according to the Reuters report.

A separation could provide greater visibility into the financial performance of the retail pharmacy and insurance businesses individually. It could also allow investors to evaluate their growth prospects and operating risks separately.

However, the potential financial benefits will depend on the final transaction structure, the allocation of debt and corporate costs, and the commercial agreements between the two companies.

CVS is scheduled to report its third-quarter 2026 financial results on 4 November. The earnings announcement and investor conference call are expected to provide an opportunity for further clarification on the company’s restructuring plans.

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