CVS Health is splitting up.
The healthcare giant announced Wednesday morning that it would divide its business units into two companies. The first houses its retail pharmacies and Health 100 technology businesses, and will operate as CVS Pharmacy. The second includes Aetna, Caremark, Oak Street Health and Signify Health and will be referred to as CVS Health on an interim basis.
CVS said in the announcement that it expects the separation to be completed in the first half of 2028, subject to closing conditions, and until then, it will continue to operate jointly. The move will reverse CVS' historic acquisition of Aetna for $69 billion in 2018.
Current CVS CEO David Joyner will become chief executive of the new CVS Health, while Prem Shah, group president of CVS Health, will become the CEO of the new CVS Pharmacy unit.
The company said that the decision "follows a comprehensive strategic review" by its board of directors.
Joyner said during the company's earnings call Wednesday morning that the shift comes "from a position of strength" after multiple years of hard work at CVS to shift its strategic approach and drive improvement. That includes significant investments in technology across the enterprise, and an overhaul of its leadership team to drive needed change.
He said that the "environment around us is constantly changing" as the company pushes toward this new strategy.
"We can take this strategic action today because of our tremendous progress since 2024," Joyner said.
"We will be better positioned to address this changing environment as two strong independent healthcare leaders," he continued. "Following a thoughtful and deliberate strategic review by the board and senior management, we have a structure and plan that are built to win and represent the best path to create value over the long term."
During this process, the team has identified significant opportunities for greater integration between Aetna and Caremark and has leaned on those to support key strategic initiatives, like advancing value-based care, Joyner noted. However, the pharmacy business has generally "operated behind a firewall."
"It has always been an arm's length negotiation and structure, which again, just reinforces the fact that there are integration opportunities, but nothing that we cannot solve for with a commercial agreement," Joyner said.
While there are clear synergies that exist between the pharmacies and Caremark, those commercial deals can maintain what's working, he added.
"We don't need the integration in an operating structure," Joyner said. "We need to make sure that we're aligned around where we believe that there can be value creation and make sure that there's an appropriate commercial agreement in place to support that."
CVS' strategy over the past several years has been built on four key principles: delivering on best-in-class execution, rethinking the consumer experience, becoming a go-to partner and harnessing capabilities across the company.
Following the split, both companies will continue to lean on these concepts, CVS said. Each individual entity will also benefit from a more focused strategy and the ability to adapt more nimbly to its own unique goals and strategic needs.
The future CVS Pharmacy will continue to identify ways to expand the reach of its pharmacists and identify further partnerships across the healthcare spectrum, while CVS Health will adapt in new ways to serve its clients, the company said.
Joyner said the company will continue to be transparent about its progress during the separation process.
Shares in the company were up 3% pre-market as of about 7:30 a.m. ET. CVS also reported its Q3 earnings on Wednesday, posting $2.2 billion in profit and $108.4 billion in revenue for the quarter.
Joyner said on the earnings call that post-split, investors will own shares in both companies.