CVS plans a retail split that keeps specialty pharmacy with Aetna
CVS plans to separate its retail pharmacies while keeping Aetna, Caremark and CVS Specialty together. We trace the boundary and the financial questions ahead.
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CVS Health Corporation
CVS Health combines insurance, pharmacy benefits, pharmacies and care delivery. It plans to separate retail pharmacy and community care while keeping Aetna, Caremark and specialty pharmacy together.
- Ticker
- CVS
- Exchange
- XNYS
- SEC CIK
- 0000064803
CVS Health Corporation (NYSE: CVS) combines health insurance, pharmacy benefit management, pharmacies and care delivery. Aetna earns premiums and service fees for health plans. CVS Caremark manages prescription benefits, while CVS Specialty serves patients using specialty medicines. Retail pharmacies fill prescriptions and sell consumer products; Oak Street Health, Signify Health and MinuteClinic provide care in clinics, homes and virtual settings.
A recovery in insurance earnings
| Measure | 2026 | 2025 |
|---|---|---|
| Revenue | 108.399 | 102.871 |
| GAAP operating income (loss) | 3.566 | (3.207) |
| Adjusted operating income | 4.194 | 3.459 |
| GAAP diluted EPS | $1.68 | $(3.13) |
| Adjusted EPS | $2.09 | $1.60 |
The GAAP comparison benefits from the absence of a $5.725 billion goodwill impairment recorded a year earlier. Current adjusted operating income excludes intangible-asset amortization, realized investment gains and specified integration and Omnicare guarantee costs.
Health Care Benefits adjusted operating income rose to $912 million from $314 million. Its medical benefit ratio, the share of premium revenue spent on healthcare costs, fell to 91.3% from 92.8%. CVS attributed the improvement mainly to its government insurance business, while saying medical cost trends remained elevated.
Pharmacy & Consumer Wellness adjusted operating income increased to $1.635 billion from $1.478 billion, despite lower sales. Health Services adjusted operating income rose to $2.106 billion from $2.050 billion.
Targets and cash
August's annual adjusted EPS forecast was $7.90 to $8.10. November's forecast is at least $8.20. The operating-cash-flow floor increased from $11.5 billion to $15.5 billion.
Nine-month operating cash flow was $15.318 billion, compared with $7.249 billion. Purchases of property and equipment were $2.357 billion. CVS attributed the cash-flow increase to the timing of receipts and payments as well as improved insurance operations.
At September 30, cash and cash equivalents were $11.738 billion. Current debt was $3.457 billion and long-term debt was $57.223 billion. These are the combined company's balances, before the proposed separation.
The planned company boundary
On November 4, CVS announced plans to create two public companies in the first half of 2028. CVS Pharmacy would contain the retail pharmacies, mail pharmacy, MinuteClinic including virtual care, and Health100. Aetna, CVS Caremark, CVS Specialty, Oak Street Health and Signify Health would remain together in the healthcare solutions company.
The November 4 investor presentation estimates full-year 2026 revenue of approximately $320 billion for the healthcare solutions grouping and $145 billion for the pharmacy grouping. Existing segment accounts follow different boundaries.
Shareholders would receive an interest in both businesses. David Joyner would lead the healthcare solutions company and Prem Shah would lead CVS Pharmacy. The final dividend policies have not been announced.
Standalone earnings, cash flow and debt figures remain to be disclosed. Read our analysis of what the planned split includes.
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