CVS Health to Split Into Two Companies as Profit Beats Forecasts and Guidance Rises

CVS Health said on Wednesday that it will split into two publicly traded companies, separating its retail pharmacy chain from its health insurance and pharmacy benefit businesses. The move reverses the strategy that built one of the largest US health care groups. It came with third quarter results that beat analyst forecasts and a higher full year outlook.

Two companies, two chief executives

One company will keep the CVS Health name and will hold Aetna, the insurer CVS bought for $78 billion, along with the Caremark pharmacy benefit manager, the CVS Specialty drug business, Oak Street Health primary care clinics and Signify Health. Chairman and chief executive David Joyner will lead that company. The second company, to be called CVS Pharmacy, will hold about 9,000 retail pharmacies, the mail order pharmacy, MinuteClinic walk-in clinics and the Health100 technology services business. Prem Shah, a group president at CVS Health, will become its chief executive.

Current shareholders will own shares in both companies, and CVS intends the separation to be tax free for the company and its US shareholders. It targets completion in the first half of 2028, subject to final board approval, an effective registration statement filed with the Securities and Exchange Commission, and confirmation of the intended tax treatment.

"We believe based off of where we are and how we are performing, the businesses are best served by splitting," Joyner said, according to the Wall Street Journal, which first reported the plan on Tuesday. "We are basically taking what I believe is one great company and making it two."

Profit and revenue beat forecasts

For the three months ended September 30, total revenue rose 5.4 percent to $108.4 billion, ahead of analyst expectations near $104.7 billion. Adjusted earnings came in at $2.09 a share, up from $1.60 a share a year earlier and well above the $1.65 analysts had expected. On a reported basis, CVS earned $1.68 a share, against a loss of $3.13 a share a year earlier, when results carried a $5.7 billion goodwill impairment charge. Net income attributable to CVS Health was $2.17 billion, against a loss of $3.98 billion a year earlier.

The Health Care Benefits segment, which includes Aetna, lifted revenue 2.4 percent to $36.9 billion, and its adjusted operating income rose to $912 million from $314 million as its medical benefit ratio improved to 91.3 percent from 92.8 percent. Adjusted operating income for the whole group rose 21.2 percent to $4.19 billion. Cash flow from operations reached $15.3 billion in the first nine months, up from $7.2 billion a year earlier.

Guidance raised, with a cautious note

CVS raised its full year 2026 guidance. It now expects adjusted earnings of at least $8.20 a share, up from a range of $7.90 to $8.10, reported earnings of at least $6.98 a share, cash flow from operations of at least $15.5 billion, up from at least $11.5 billion, and total revenue of at least $420 billion. The company kept a cautious view for the rest of the year, citing elevated medical costs. Shares fell about 3 percent in premarket trading despite the beat, RTTNews reported.

The split unwinds two decades of expansion. CVS bought Caremark nearly 20 years ago, paid $78 billion for Aetna nearly a decade ago, then added clinic and home health businesses in smaller deals. Reuters reported in 2024 that the company was already exploring options that could include a breakup.