CVS plans a retail split that keeps specialty pharmacy with Aetna
The proposed companies divide the pharmacy business as well as the healthcare group. Existing shareholders would own both, with completion targeted for the first half of 2028.
CVS Health plans to separate its retail pharmacies into a new public company while keeping insurer Aetna, drug-benefits manager CVS Caremark and CVS Specialty together.
The company expects to complete the separation in the first half of 2028. Existing shareholders would own shares in both businesses.
What goes with the stores?
The new CVS Pharmacy would include approximately 9,000 retail pharmacies, mail pharmacy, MinuteClinic and its virtual-care services, and the Health100 technology business.
The remaining healthcare solutions company, provisionally called CVS Health, would contain Aetna, CVS Caremark, CVS Specialty, Oak Street Health and Signify Health. That keeps insurance, pharmacy benefit management, specialty drugs and much of the care-delivery business together.
David Joyner, CVS Health's current chairman and chief executive, would lead the healthcare solutions company. Prem Shah, currently group president, would become chief executive of CVS Pharmacy.
CVS estimates 2026 revenue of about $320 billion for the businesses assigned to the healthcare solutions company and $145 billion for those assigned to CVS Pharmacy.
The announcement and investor presentation do not set out how debt will be divided. CVS expects both businesses to have investment-grade credit ratings and pay dividends, with the final structures still to come.
The split follows an earnings recovery
CVS announced the plan alongside stronger quarterly results. Third-quarter adjusted operating income rose to $4.2 billion from $3.5 billion a year earlier. Adjusted profit in its insurance business rose sharply as government-plan performance improved.
In the retail pharmacy segment, adjusted operating income increased even as revenue fell. CVS attributed that improvement to its core pharmacy operations and acquired Rite Aid prescription business, partly offset by investment and consumer pressures.
The company raised its annual adjusted earnings forecast to at least $8.20 a share, above August's $7.90 to $8.10 range. It also raised its operating-cash-flow floor to $15.5 billion from $11.5 billion. Cash timing as well as better insurance performance contributed to the increase in cash generated so far this year.
The CVS Health company profile tracks those results and the proposed separation. Today's reporting segments cross the planned company boundaries, so their current sales and profit figures are not ready-made accounts for the two future businesses.
Completion requires final board approval, an effective registration statement and confirmation of the intended tax-free treatment.