CVS Health plans to split in two, in a major unraveling of one of the country’s largest health care conglomerates after decades of rampant expansion, the company announced on Wednesday.
Under the breakup, expected in the first half of 2028, a spinoff company, to be called CVS Pharmacy, will house the conglomerate’s approximately 9,000 retail pharmacies, in-store medical clinics and a warehouse-based operation that sends prescriptions through the mail to consumers.
A second company will retain the name CVS Health and include Aetna, the major insurer; Caremark, the giant pharmacy benefit manager; and other businesses that provide home visits and primary care to older people.
CVS Health and its peers, UnitedHealth Group and Cigna, have been under mounting scrutiny from both Democratic and Republican lawmakers, regulators and others because of the companies’ dominance over nearly every aspect of consumers’ health care services.
Critics say the three have long exploited internal conflicts within their web of businesses to increase profits, stifling competition and helping to drive up medical costs.
Within the past two years, Arkansas and Tennessee have each passed laws that aim to prevent the conglomerates from both managing prescription benefits and running retail and mail-order pharmacies.
Smaller pharmacies claimed the companies favored their own drugstores in determining which stores patients could use and how much the stores were reimbursed for the prescriptions they dispensed. In Washington and other states, lawmakers from both parties have proposed similar legislation, which the giant companies have fiercely opposed.
CVS Health, which mounted aggressive advertising and legal campaigns to try to block the state laws, warned repeatedly that splitting off pharmacies would force it to close drugstores and raise costs for consumers.
The company sometimes offers patients a financial incentive to use its pharmacies, rather than fill their prescriptions elsewhere. But in practice, consumers may not notice a difference from the breakup, because those kinds of arrangements could still exist.
In an interview on CNBC on Wednesday morning, David Joyner, chief executive of CVS Health, said that the political and regulatory pressure is “one of the external things that we assessed” in making the decision to split the company.
During a call with analysts, he said that having two separate public companies will allow the distinct businesses to “innovate and move faster.” He added, “We are doing this from a position of strength.”
Mr. Joyner will run the business that includes the remaining insurance and pharmacy benefits divisions. Another longtime CVS executive, Prem Shah, will head the pharmacy spinoff.
CVS Health generated over $400 billion in revenue last year. That ranked seventh among U.S. public companies, according to FactSet, a financial data provider.
The Financial Times on Tuesday reported the company’s plans to split itself up.
The planned breakup would end an era of enormous growth, which began nearly 20 years ago when CVS, the drugstore chain, coupled with Caremark, the pharmacy benefit manager hired by employers and government programs.
In 2018, CVS merged with Aetna, one of the nation’s largest health insurers. That same year, Cigna bought Express Scripts, the pharmacy benefit manager.
Since then, CVS, UnitedHealth and Cigna have become an increasing presence in how Americans receive health care. Each company now encompasses a major insurer, a giant pharmacy benefit manager and a mail-order pharmacy, along with a vast array of other businesses.
The mergers were originally justified as a way of better managing patient care less expensively, and the company was allowed to proceed with the combination. That hasn’t happened as hoped.
“The split is a belated acknowledgment that the synergies between CVS pharmacy and Caremark were oversold from the start,” said Adam Fein, a consultant who writes a popular industry blog. “Owning a pharmacy chain has done little to strengthen Caremark’s market position or make it a more competitive P.B.M.”
Arielle Trzcinski, an analyst for Forrester, a research and advisory firm, said in a statement: “Now, CVS Health is effectively acknowledging that bigger isn’t always better.”
For CVS, the merged businesses have struggled in recent years and have not met Wall Street’s demands for growth. At the end of 2024, the company’s market value fell to its lowest level in over a decade, though it has since rebounded.
On Wednesday, the company announced higher-than-expected financial results in the third quarter, swinging to a profit from a loss for the same period of 2025.
Many investors see CVS’s pharmacy benefit manager as the shining jewel of the portfolio. But prospects have dimmed for the retail pharmacy business, which has lower margins and is vulnerable to changing consumer habits and industrywide challenges that shuttered Rite Aid.
CVS Health will also retain its lucrative specialty pharmacy business, which provides patients with expensive medications, like cancer drugs, that are not available at a drugstore or through traditional mail-order pharmacies.
Existing shareholders will get shares of both companies in a tax-free transaction. CVS’s stock was down 12 percent by early Wednesday afternoon, even as the broader market rose after Democrats gained control of Congress.
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