CVS Health plans to split into two separate public companies by the first half of 2028, the company announced Wednesday. The plan would separate its roughly 9,000 retail pharmacies from its insurance business and its pharmacy benefit manager, Caremark.
CVS said the decision follows a "comprehensive strategic review" by its board of directors. Shares fell roughly 11% on Wednesday, according to the report.
The insurance and PBM company will keep the CVS Health name and be run by CEO David Joyner. The retail company will be called CVS Pharmacy and led by Prem Shah, currently group president of CVS Health. CVS said additional leadership and board members will be named later.
Existing shareholders will own shares in both companies after the split.
Joyner told CNBC the decision comes "out of a position of strength," pointing to recovery in Aetna's Medicare business and solid retail pharmacy performance. CVS shares have risen roughly 70% since Joyner became CEO in October 2024, the report said.
CVS also reported third-quarter earnings and revenue that topped Wall Street expectations. Total sales rose to $108.40 billion from $102.87 billion a year earlier.
Joyner said the two businesses' synergies "are going to be preserved in commercial agreements between the two organizations." Leerink Partners analyst Michael Cherny said the split reflects the stability of the pharmacy business. The report noted that pharmacy benefit managers face bipartisan scrutiny in Washington and several states, and that Tennessee and Arkansas have passed laws banning co-ownership of PBMs and pharmacies. CVS and other companies have challenged those laws in court.