WOONSOCKET, R.I. — CVS Health said on Wednesday it will split in two, separating its retail pharmacies from the Aetna insurance business and pharmacy-benefit operations in a major unwinding of the $117 billion healthcare conglomerate it spent years building.
The planned separation will create two independent, publicly traded companies. One, a healthcare solutions company referred to in the interim as CVS Health, will comprise Aetna, CVS Caremark, CVS Specialty, Oak Street Health and Signify Health. The other, to be named CVS Pharmacy, will comprise approximately 9,000 CVS pharmacies, mail pharmacy, MinuteClinic, including virtual care, and the Health100 technology services business.
Upon separation, David Joyner, currently chairman and CEO of CVS Health, will be chairman and CEO of the healthcare solutions company, and Prem Shah, currently group president, will be CEO of CVS Pharmacy. CVS Health shareholders will own shares in both companies, and the separation is intended to be structured as tax-free to the company and its shareholders for U.S. federal income tax purposes.
The decision follows a comprehensive strategic review by the CVS Health board of directors. Joyner said on the company's earnings call that in the past two years its chain of 9,000 pharmacies, Caremark pharmacy benefit manager and Aetna health insurance businesses had made marked improvements, making the new structure possible, and that the move was not a distressed decision.
The separation is expected to be completed in the first half of 2028, subject to customary conditions, including final approval by the board, effectiveness of a Form 10 registration statement filed with the U.S. Securities and Exchange Commission, and confirmation about the tax-free treatment of the separation. The split brings CVS back to being a standalone pharmacy chain for the first time since 2006, when it purchased the Caremark pharmacy benefit manager.
