CVS Health plans to split its pharmacy operations from its insurance and benefits businesses, separating a company valued at $117 billion and marking a retreat from the healthcare conglomerate model it helped build.
Under the plan announced Wednesday, its 9,000 pharmacies, in-store clinics and mail-order prescription business will become a separate company called CVS Pharmacy. The other company will retain the CVS Health name and include insurer Aetna, pharmacy benefits manager Caremark, and businesses providing home visits and primary care for older people.
The planned separation comes amid scrutiny from lawmakers and regulators over the market power of large healthcare companies. CVS Health, UnitedHealth Group and Cigna together control roughly 80% of the market, according to the report. CVS Health generated more than $400 billion in revenue last year.
Arkansas and Tennessee have passed laws targeting companies that manage prescription benefits while also operating retail and mail-order pharmacies. Other states have proposed similar restrictions, while a bill introduced by Republican Senator Josh Hawley of Missouri and Democratic Senator Elizabeth Warren of Massachusetts proposes federal antitrust action.
CVS Health expanded across the healthcare sector through acquisitions, including its 2018 merger with Aetna in a deal worth $70 billion. The company had previously opposed legislative efforts to break it up. Its chief executive and chair, David Joyner, will lead the healthcare solutions business.
The separation is planned for early 2028. CVS Health shares fell to $44 in late 2024 before rebounding, after the company failed to meet investors’ growth expectations.
Sources: The Guardian Business.