CVS Health to Split Into Two Companies by 2028, Separating Pharmacies From Aetna

CVS Health will split into two independent, publicly traded companies, separating its retail pharmacies from its insurance and pharmacy-benefit businesses in one of the biggest shake-ups in American healthcare in years.

The company announced the plan on Wednesday, 4 November, saying it expected to complete the separation in the first half of 2028. Existing shareholders will own shares in both companies, and the transaction is intended to be tax-free for the company and its shareholders for US federal income tax purposes, subject to final board approval and a registration filing with the Securities and Exchange Commission.

Shares fell sharply on the news. Reuters reported that CVS shares plunged 12.6% to $79.94 after the announcement, a reminder that even a plan framed as a move from strength can unsettle investors when it unwound a model built over many years.

Two companies, two leaders

One company will keep the CVS Health name and hold the healthcare solutions businesses: insurer Aetna, pharmacy benefit manager CVS Caremark, CVS Specialty, primary care provider Oak Street Health and in-home health business Signify Health. David Joyner, currently chairman and chief executive of CVS Health, will lead that company.

The second company, to be called CVS Pharmacy, will hold about 9,000 retail pharmacies, mail pharmacies, MinuteClinic — including virtual care — and Health100, a technology services business the company says will deliver artificial intelligence-native products and services. Prem Shah, currently group president of CVS Health, will become its chief executive.

“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 a company announcement.

CVS said customers, patients and clients will continue to receive their medicines, care, benefits and services without interruption during the separation. As a standalone company, CVS Pharmacy plans to expand the services offered by its nearly 30,000 pharmacists and pursue wider partnerships with payers, pharmacy benefit managers and manufacturers.

Why now: pressure on the integrated model

The split reverses much of the strategy behind CVS’s $78 billion acquisition of Aetna in 2018, which turned a drugstore chain into one of the largest vertically integrated healthcare companies in the United States. That model — owning the insurer, the pharmacy benefit manager and the pharmacy counter — was meant to control costs and coordinate care. It has since drawn sustained political and regulatory scrutiny.

Pharmacy benefit managers, which negotiate drug prices and process prescription claims, have faced bipartisan criticism over opaque pricing and potential conflicts of interest when they share ownership with insurers and pharmacies.

Leerink Partners analyst Michael Cherny said in a note that the retail pharmacy business had been gaining market share and seeing gross margins stabilise under CostVantage, the pharmacy reimbursement model CVS introduced last year. He added that the move may also be aimed at avoiding what he called “relentless state legislative scrutiny” over how vertically integrated the company has become.

Under Joyner, who took over as chief executive in October 2024, CVS has cut costs, closed stores and worked to control Medicare Advantage costs. Its shares had risen roughly 70% since he took the helm, bringing its market value to about $117 billion before Wednesday’s fall.

What it means for patients, members and shareholders

For patients, the most immediate message from CVS is continuity: prescriptions, clinics and benefits are supposed to keep working as before while the separation is prepared. The longer-term question is whether two focused companies can deliver lower costs and simpler experiences than one combined group — or whether splitting the businesses will make coordination harder.

For shareholders, owning shares in both companies means they will not be forced to choose between the pharmacy and the insurance and benefits businesses, but they will be exposed to two separate management teams and market stories.

The announcement coincided with third-quarter 2026 results, with revenue up to $108.40 billion from $102.87 billion a year earlier.

A long road to 2028

A separation planned for the first half of 2028 leaves plenty of time for details to change. Leadership below the two chief executives, board membership, debt allocation and the exact mechanics of the share distribution are still to be announced, and regulatory filings will provide the next concrete look at the structure. The broader market reaction will also be watched closely. Whether healthcare innovation improves under the split will only become clear once both companies have to prove themselves on their own.