CVS Health plans to break itself up — and this time, the bet looks a lot more viable.
The healthcare conglomerate on Wednesday announced plans to split into two publicly traded companies by the first half of 2028. CVS would separate its pharmacy business – including roughly 9,000 retail locations – from its major insurance business and pharmacy benefit manager, Caremark.
The move comes more than two years after CVS considered a breakup but ultimately walked away from the idea. At the time, analysts questioned whether the retail pharmacy business could survive on its own.
“Back then, the idea of retail standing alone was unthinkable,” Brian Tanquilut, senior equity research analyst at Jefferies, told CNBC.
But the economics of the businesses have changed: CVS's retail pharmacy business has become more consistently profitable, while its insurer, Aetna, has improved its performance despite persistently high medical costs in Medicare Advantage plans. That could make it easier for the company to separate the units — and for investors to recognize the value of each on its own, rather than valuing them together as one sprawling healthcare conglomerate.