CVS Health announced plans to split into two publicly traded companies by the first half of 2028, separating its pharmacy business—comprising roughly 9,000 retail locations—from its major insurance business (Aetna) and pharmacy benefit manager (Caremark) [1]. This strategic decision marks a significant reversal from 2024, when CVS considered a breakup but ultimately abandoned the idea, as analysts questioned whether the retail pharmacy business could survive independently [1].
The company's improved financial performance over the past two years has made the separation feasible. CVS has posted eight consecutive quarters of beating Wall Street earnings estimates and raised guidance multiple times, driven by improvements across its PBM, pharmacy, and insurer divisions [1]. CEO David Joyner stated that in 2024, the company was "in a turnaround" without sufficient flexibility, cash, or business performance to execute a split, but conditions have now changed [1]. The retail pharmacy business has become "more consistently profitable," while Aetna has improved its performance despite persistently high medical costs in Medicare Advantage plans [1].
Since taking the helm in 2024, Joyner has implemented an aggressive turnaround plan involving $2 billion in cost cuts, store closures, leadership shakeups, and efforts to rein in Medicare Advantage costs [1]. The company now expects to generate at least $15.5 billion in operating cash flow in 2026—a roughly 70% increase from $9.1 billion in 2024—and has reached its leverage target ahead of schedule [1]. Analysts view the breakup positively, with Brian Tanquilut of Jefferies noting that "back then, the idea of retail standing alone was unthinkable," while Michael Cherny of Leerink Partners emphasized that "this business is a much different business from the one that's been considered three years ago, five years ago, 10 years ago" [1].
CONCLUSION
CVS Health's planned 2028 breakup represents a major strategic pivot enabled by two years of operational improvements and financial stabilization under CEO David Joyner. The separation of its profitable retail pharmacy business from its insurance and PBM operations is now viewed as strategically sound by analysts, contrasting sharply with skepticism when the company considered the move in 2024, signaling confidence in both entities' standalone viability.