CVS to split 9,000 pharmacies from insurance unit in $117bn overhaul

CVS Health, a $117 billion corporation, announced on Wednesday it will separate its retail pharmacy operations from its insurance and benefits divisions. The split creates two distinct entities: CVS Pharmacy, which will manage 9,000 stores, in-store clinics, and mail-order prescriptions, and a remaining CVS Health company. The latter will retain the Aetna insurance brand, the Caremark pharmacy benefits manager, and services for older adults including home visits and primary care.

The decision follows a decade of aggressive expansion that transformed CVS into a healthcare conglomerate. In 2018, the company merged with Aetna in a $70 billion deal, mirroring strategies used by rivals UnitedHealth and Cigna. These three companies now control approximately 80% of the market. CVS generated more than $400 billion in revenue last year, though the stock price fell to $44 in late 2024 before recovering.

Regulatory pressure has mounted in response to this consolidation. Lawmakers in Arkansas and Tennessee recently passed laws preventing these giants from managing prescription benefits while also running retail or mail-order pharmacies. Other states have introduced similar restrictions. At the federal level, Missouri Senator Josh Hawley and Massachusetts Senator Elizabeth Warren introduced a bill proposing an antitrust crackdown.

Arkansas Representative Jeremiah Moore, a Republican who sponsored the state bill, argued that the industry structure favors corporate interests over patients. He told Politico that the average American is tired of being bullied by monopolistic companies. Moore described the current system as crony capitalism, claiming the companies bend rules to benefit their bottom lines at the expense of sick people.

Hawley characterized his proposed legislation as a major step toward restoring transparency and lowering costs for Americans. The split marks a sharp reversal for CVS, which previously opposed such legislative efforts. A company spokesman had warned that breaking up the giant would allow private equity firms to strip the U.S. healthcare system for parts.

David Joyner, CVS’s chief executive and chair, will lead the new healthcare solutions business. In a statement, Joyner said the company is proactively evolving to deliver more affordability and greater access. He noted that the current environment requires a simpler experience for patients. This strategy aims to address investor concerns about growth and market dominance.

The restructuring is scheduled for completion in early 2028. The timeline allows the two new companies to establish independent operations, separate financial reporting, and distinct management teams. The division will separate the physical retail footprint from the administrative and insurance functions that previously operated under one corporate umbrella.