CVS Health to separate Pharmacy operations from insurance business

The planned separation will create a new entity, CVS Pharmacy, encompassing approximately 9,000 retail pharmacies, in-store clinics, and mail-order prescription services. The remaining CVS Health company will include Aetna, Caremark, and other businesses focused on services for older adults, such as home visits and primary care.

This decision comes amid increasing scrutiny from lawmakers and regulators concerned about the dominance of major healthcare players like CVS Health, UnitedHealth Group, and Cigna, which collectively control roughly 80% of the market. CVS Health reported over $400 billion in revenue last year.

Several states, including Arkansas and Tennessee, have already enacted legislation restricting these companies’ ability to manage prescription benefits and operate pharmacies. Arkansas State Representative Jeremiah Moore stated, “The average American citizen is really tired of being pushed around and bullied…They’ve taken advantage of these sick people, and it’s what I consider to be crony capitalism.”

At the federal level, a bipartisan bill introduced by Missouri Senator Josh Hawley and Massachusetts Senator Elizabeth Warren aims to strengthen antitrust regulations. Senator Hawley described the bill as a step towards greater healthcare affordability and transparency.

CVS’s current Chief Executive and Chair, David Joyner, will lead the healthcare solutions business. Joyner stated, “Our history is defined by proactively evolving to stay ahead of what’s next in healthcare, and in today’s environment, that means delivering more affordability, greater access and a simpler experience.”

This announcement represents a change in strategy for CVS Health, which previously opposed efforts to break up the company, arguing it could jeopardize the healthcare system. The restructuring follows a period of significant acquisitions, including the $70 billion merger with Aetna in 2018. Other healthcare companies like UnitedHealth and Cigna have also consolidated similar operations.

Despite expansion, CVS Health’s stock performance has been inconsistent, falling to $44 in late 2024 before recovering. The planned separation is expected to be completed in early 2028.