The CVS Health split. How separate will the two companies really be?

Riding strong financial results and operating from what its CEO called a “position of strength,” healthcare giant CVS Health is dividing itself in two.

During the earnings call this morning and, in a statement, issued beforehand, the company said it will bifurcate into a “health solutions company,” which for the time being will retain the name CVS Health, and a second company, CVS Pharmacy. CVS Health, or whatever it comes to be called, will comprise Aetna, the health insurer; CVS Caremark, the company’s pharmacy benefit manager (PBM); CVS Specialty, the company’s specialty pharmacy business; Oak Street Health, a primary care clinic business; and Signify Health, a home health business. CVS Pharmacy will comprise the approximately 9,000 CVS brick-and-mortar retail pharmacies, the CVS mail-order pharmacy business, MinuteClinics and Health100, the company’s consumer-facing technology subsidiary.

Both of the new entities will operate as publicly traded companies. The separation is scheduled to occur in the early part of 2028. David Joyner, the current chairman and CEO of CVS Health, will be the chair and CEO of the provisionally named CVS Health. Prem Shah, the group president of CVS Health, is slated to become the CEO of CVS Pharmacy. Joyner said during the earnings call that the separation will be finalized during the first half of 2028.

The Financial Times was the first news outlet to report the split yesterday afternoon, and other outlets soon followed before CVS made the announcement public this morning.

The reaction to the news was mixed to negative, although criticism came the company’s business rivals. CVS Health stock fell by $10.91 to $80.49 during trading today.

One industry observer said that as more of a pure pharmacy business, CVS Pharmacy will be under more pressure to close stores with negative or low margins. The company may also move faster into digital services or perhaps explore the acquisition of online sellers such as Ro or Him/Hers, the observer said.

Joseph M. Shields, president of Transparency Rising, a trade group for smaller PBMs that position themselves as transparent competitors to CVS Caremark, said that the split was an acknowledgment that vertical integration that CVS Health touted as bringing efficiency to healthcare is “not working.” Shields also expressed skepticism that the company’s business practices that include advantaging its pharmacies would change.

“This is not an announcement that their practices are going to stop,” Shields said.

In a prepared statement, B. Douglas Hoey, CEO of the National Community Pharmacists Association, noted the news release about the division says current CVS Health shareholders will own shares in both companies. “That means the incentives for suppressing competition, patient steering and formulary manipulation don’t necessarily disappear,” he said in the statement that also described the split as “potentially encouraging news.”

Anthony J. Loiacono, founder and CEO of Judi Health, a midsize PBM that is challenging CVS Caremark and the other large PBMs for business, was sharply critical in written remarks. He said by keeping its specialty pharmacy business in the same company as its PBM and Aetna, “CVS still owns a dispensing business and still profits from drug spend. The PBM is still making clinical, formulary, and fulfillment-channel decisions that decide how much money it makes. That’s a conflict of interest.”

Joyner, who became president and CEO of CVS Health in October 2024, said several times during the earnings call that started at 8 a.m. this morning that the decision to divide the company came from a “position of strength. Brian Newman, the company’s chief financial officer, spoke about improvements in Aetna’s margins resulting from “deliberate actions we took in our Medicare Advantage business,” during the call.

Joyner, Newman and the required financial disclosure reported a slew of positive third-quarter financial results for CVS Health, including an upward adjustment of the full-year adjusted earnings per share to $8.20, from prior projections from $7.90 to $8.10, and an increase in the projections of cash flow from operations for the year to $15.5 billion from a previous estimate of $11.5 billion. Newman called out a $600 million increase in adjusted operating income from the healthcare benefits division of the company — which is Aetna — from $314 million during the third quarter of 2025 to $912 million this year. He also noted a medical-benefit ratio of 91.3% compared with a ratio of 92.8% for the third quarter of 2025.

During the call, Joyner listed focus, capital allocation, agility and simplicity as four benefits of the CVS Health-CVS Pharmacy split. “Same mission, sharper focus,” he said.

Joyner referred to the two future companies having “commercial agreements” that would preserve “the unique products that we built over the last 20 years.”

“That is in large part what we will be working on over the course of the next 15 to 18 months,” Joyner added.

The Health100 technology company will be the “connective tissue” between the two organizations, he said, and he described the future CVS Pharmacy as “the engagement engine” while Aetna and Caremark bring financial information to bear.

Joyner spoke about about the advantages of grouping Aetna, CVS Caremark and the company’s specialty pharmacy business into newly reconstituted CVS Health during the earnings call. CVS Health acquired Aetna eight years ago, and Joyner said that as result “Aetna is far more sophisticated and far more effective in managing their pharmacy benefit, in addition to the total cost of care, because of the assets that Caremark and our specialty business bring to the table.”