CVS to split off drugstore business in major breakup of healthcare giant

CVS is splitting its vertically integrated healthcare company into two public companies. The move would reverse the structure created by its $78 billion Aetna acquisition and separate retail pharmacy operations from insurance and pharmacy-benefit management.

CVS Pharmacy will contain the company’s roughly 9,000 retail pharmacies. Prem Shah, currently group president of CVS Health, will lead it. The other company will keep the CVS Health name and be led by CEO David Joyner.

CVS Health will combine the Aetna insurance business with Caremark, its pharmacy benefit manager. It will also include Oak Street Health, Signify Health, and the specialty drug business. Existing shareholders will receive ownership in both companies. CVS says the split could improve focus, innovation, efficiency, affordability, and care coordination.

The split involves businesses with enormous operating scale. CVS’s retail pharmacy business includes roughly 9,000 pharmacies and generated $37.66 billion in 2025 sales. That gives the standalone CVS Pharmacy company a large customer and store network from day one.

The insurance unit booked $36.29 billion in revenue in 2025. CVS’s healthcare services segment generated another $51.24 billion. The article does not provide a separate Caremark revenue figure, so those numbers should not be treated as a complete accounting of every business moving into CVS Health.

The figures show why this would rank among the largest corporate splits in history, according to the article’s framing. Both companies would remain publicly traded. Their final financial boundaries, leadership positions, and additional board members will be announced later.

A pharmacy benefit manager is a company that helps insurers and employers manage prescription drug benefits. The article says PBMs negotiate drug prices and manage those benefits. Caremark performs that role for CVS and is one of the nation’s three largest PBMs.

In practice, Caremark can negotiate with drug manufacturers and pharmacies, help create covered-drug lists, and process or administer prescription claims. Insurers and employers use PBM services to organize pharmacy coverage. Pharmacies interact with the PBM over reimbursement and claims, while patients experience the resulting coverage, copays, and pharmacy rules.

The article does not provide Caremark’s specific contract terms or explain its exact patient pricing formulas. It does say CVS will keep Caremark with insurance and care businesses, rather than with retail pharmacies. That separation responds partly to concerns about conflicts of interest and opaque pricing.

CVS originally combined pharmacies, insurance, a PBM, and care providers to become a one-stop health destination. The strategy developed over roughly two decades. Its biggest step was the $78 billion acquisition of Aetna in 2018, which created the vertically integrated healthcare conglomerate now being dismantled.

The combined structure placed retail pharmacies alongside insurance and Caremark, the PBM. CVS later added or operated businesses including Oak Street Health, Signify Health, and specialty drugs. The article links this model with goals such as consumer engagement, affordability, care coordination, and a broader healthcare presence.

CVS now says separate companies can pursue more focused strategies and improve innovation, technology adoption, and efficiency. The reversal follows a board-led strategic review and a turnaround plan under David Joyner. It also comes amid regulatory scrutiny of vertical integration, suggesting the original model’s advantages no longer outweigh its pressures.

Congress and state governments are scrutinizing PBMs and vertically integrated healthcare companies because of concerns about how drug money and influence move through the system. The article identifies opaque pricing practices, growing market power, and possible conflicts of interest as major concerns.

Those conflicts can arise when one corporate group owns a PBM, an insurer, and pharmacies. The same group may negotiate drug benefits, set coverage terms, and operate dispensing locations. The article does not establish that CVS violated any rule. It explains why lawmakers and regulators are examining the structure more closely.

Congress enacted PBM reforms in February, including changes to Medicare Part D compensation. States have increasingly moved to restrict PBMs’ ownership of pharmacies. CVS’s proposed separation comes as this bipartisan scrutiny grows in Washington and across the states, and may reduce concerns about one company controlling multiple links in the chain.

Separate ownership could change how CVS makes decisions and how each business is judged. CVS says two focused companies would have clearer strategic agendas and greater ability to innovate, adopt technology, and increase efficiency. The companies could also present more distinct choices for customers and investors.

CVS Pharmacy would focus on its roughly 9,000 stores and retail customers. CVS Health would focus on insurance, Caremark, and care businesses such as Oak Street Health and Signify Health. The article says the pharmacy operation has been winning market share and stabilizing gross margins through CostVantage, a new reimbursement model.

Existing shareholders would own shares in both public companies. However, the article does not specify new prices, benefits, pharmacy contracts, staffing levels, or customer-service changes. Both businesses must still operate at scale, and CVS says additional leaders and board members will be announced later.

Drug manufacturers set initial prices for their medicines. Insurers and employers decide what prescription benefits they will offer, often using a PBM to administer the program. The PBM negotiates with manufacturers and pharmacies and helps determine which medicines receive preferred coverage.

A typical transaction works like this: a patient presents a prescription at a pharmacy, the pharmacy checks coverage through the PBM, and the insurer or employer plan pays according to its rules. The patient pays a copay, coinsurance, or deductible amount. The pharmacy receives reimbursement under its agreement, while negotiated discounts or rebates can affect the plan’s net cost.

The exact amounts vary by contract and drug. The article specifically says PBMs negotiate prices and manage benefits, and criticizes opaque pricing and potential conflicts. It does not provide a complete payment example. CVS’s split would separate its pharmacies from Caremark and insurance, changing ownership links but not automatically setting prices.