CVS Health announced on Wednesday that it intends to separate into two independent, publicly traded companies, in a transaction intended to be tax-free to the company and its shareholders and expected to be completed in the first half of 2028. Shareholders will own shares in both companies when the separation closes. The company does not call the transaction a spin-off in the release and gives no distribution ratio.
One company, referred to for now as CVS Health, will be a healthcare solutions company comprising Aetna, CVS Caremark, CVS Specialty, Oak Street Health and Signify Health. It combines health benefits, pharmacy services and care delivery: the Aetna insurance business, the Caremark pharmacy benefit manager and specialty pharmacy, and the value-based primary care and in-home care assets, with primary care clinics, home health capabilities and digital, virtual and in-person care. David Joyner, currently chairman and chief executive of CVS Health, will be chairman and chief executive of this company.
The second company will be named CVS Pharmacy. It takes the retail side: approximately 9,000 CVS pharmacies, mail pharmacy, MinuteClinic, including virtual care, and the Health100 technology services business, with nearly 30,000 pharmacists. It will provide specialty pharmacy services through an exclusive arrangement with CVS Specialty and will be coordinated with the other company through existing pharmacy benefit arrangements. Prem Shah, currently group president of CVS Health, will be its chief executive.
The decision follows a comprehensive strategic review by the board. Joyner said the company had spent two years strengthening its leadership, financials and operations, and concluded that “we plan to create two focused companies to improve consumer engagement, affordability, and care coordination.” Each company is to have a focused agenda under a dedicated leadership team, an independent capital structure backed by strong free cash flow, and a simpler structure. Both are expected to carry a solid investment grade rating and pay an attractive dividend, though the release gives no amounts, no separation costs and no capital figures for either company.
Completion is subject to customary closing conditions, including final approval by the CVS Health board, effectiveness of a Form 10 registration statement to be filed with the Securities and Exchange Commission, and receipt of a customary confirmation of the tax-free treatment. The company cautions there can be no assurance the separation will be completed, or as to its timing if it is. Further detail on structure, leadership and capital structure is to come in later communications.
The announcement landed with third quarter results that showed the group in improving health. Revenue rose 5.4 percent to 108.4 billion dollars, GAAP diluted earnings were 1.68 dollars a share against a loss a year earlier, and adjusted earnings were 2.09 dollars a share, up from 1.60 dollars. Net income attributable to CVS Health was 2.17 billion dollars, against a loss of 3.98 billion dollars in the same quarter of 2025, when results carried a 5.7 billion dollar goodwill impairment. The company raised full year 2026 guidance: GAAP diluted earnings to at least 6.98 dollars a share, adjusted earnings to at least 8.20 dollars, from 7.90 to 8.10 dollars previously, and cash flow from operations to at least 15.5 billion dollars, from at least 11.5 billion dollars.
As of September 30, the group operated approximately 9,000 retail pharmacy locations and more than 1,000 walk-in and primary care clinics, ran a pharmacy benefit manager with approximately 87 million plan members, and sold health insurance products serving an estimated 37 million people.