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CVS Health plans to split itself up. Here’s why a breakup could make sense now
CVS Health plans to split into two publicly traded companies by the first half of 2028, separating its roughly 9,000 retail pharmacies from Aetna, its insurer, and Caremark, its pharmacy benefit manager. The proposed breakup follows a turnaround that executives and analysts say has made the pharmacy business more consistently profitable and the separate units better placed to demonstrate their value.
CVS had considered separating its businesses in 2024 but abandoned the idea while it was short of the flexibility, cash and performance needed to proceed. Since then, it has reported eight consecutive quarters of earnings above analysts’ estimates, pursued $2 billion in cost cuts and says it expects at least $15.5 billion in operating cash flow in 2026, up from $9.1 billion in 2024. Despite that progress, its shares fell about 12% after the announcement.
In short
- CVS plans to split into two companies by early 2028.
- Its pharmacy business has become more consistently profitable.
- Shares fell about 12% after the announcement.
Steelman: both sides, in good faith
The strongest fair case each way — we don't pick a winner.
The case for
A split could make each business easier for investors to assess, potentially revealing value obscured by the complexity of the combined company and allowing each unit to focus on its own strategy. CVS’s stronger earnings, cost reductions and higher cash-flow expectations may give it more room to separate the businesses than it had in 2024.
The case against
Keeping the businesses together may preserve coordination between pharmacies, the insurer and the pharmacy benefit manager, as well as the scale and shared resources of a large group. Separating them could add costs and complexity, weaken those links, and leave each company more exposed to pressures in its own market; the share-price fall after the announcement also suggests investors may doubt the plan’s benefits or execution.