What CVS’s split means for retail pharmacy

It’s splitsville for CVS.

The healthcare giant announced on Nov. 4 it’s splitting into two separate public companies: CVS Pharmacy and CVS Health. Its insurer Aetna and pharmacy benefit manager (PBM) Caremark will fall under CVS Health while its roughly 9,000 retail pharmacies will go to CVS Pharmacy.

CVS shares closed at $79.96 on Nov. 4, down 12.5% from $91.41 the day before.

While it’s too early to tell how exactly the split may influence the broader retail pharmacy industry, B. Douglas Hoey, CEO of the trade group the National Community Pharmacists Association, a trade group representing independent pharmacies, said in a statement shared with Healthcare Brew that it’s “potentially encouraging news” for community pharmacies.

NCPA claims that PBMs’ pharmacy ownership is a conflict of interest that allows the PBMs to steer patients away from smaller, independent pharmacies, which already struggle to keep their doors open. Nearly a third of retail pharmacies closed between 2010 and 2021, according to a 2024 study published in Health Affairs.

However, separating Caremark from the retail pharmacies may not inherently remove all conflicts of interest, Hoey noted, as current shareholders will still own shares in both of the companies.

CVS did not respond to a request for comment on the NCPA’s claims. Ethan Slavin, a spokesperson for the company, said in a comment shared with Healthcare Brew that the split will have no effect on drug prices.

Under examination

The move comes as PBMs are facing increased scrutiny from legislators over alleged anti-competitive practices. Two states—Arkansas and Tennessee—have passed laws banning PBMs from owning pharmacies, arguing the vertical integration leads to higher drug prices and delays in care (though the Arkansas ban has been blocked by a federal judge and both are being challenged in court). In May, the Patients Before Monopolies Act, which has been endorsed by the NCPA, was reintroduced in Congress; it would institute a ban at the federal level, though it has yet to be put up to a vote.

CVS execs may have chosen to split the company in order to get ahead of potential regulatory changes regarding vertical integration or other issues such as price transparency, Arielle Trzcinski, a principal analyst at advisory firm Forrester, told Healthcare Brew. In addition to the challenges to vertical integration, the Department of Labor finalized a rule on Oct. 29 that requires more financial transparency from PBMs.

“I think part of this is saying, ‘We want to be in the driver’s seat. We don’t want to wait and have this be forced upon us,” she said.

Michael Cherny, senior research analyst at healthcare and life sciences investment bank Leerink Partners, wrote in an analyst note that the split may be to “avoid what has been relentless state legislative scrutiny over the company’s level of vertical integration.”

“It is possible that the regulatory environment and various state lawsuits made it too difficult for the retail pharmacy and PBM to continue together,” he said in the note. 

Slavin said in the comment that “the regulatory environment was only one of many factors” in the company’s decision to split, and that it was based on “what is the best strategic long-term option for our businesses.”

When asked by JPMorgan managing director Lisa Gill during the Q3 earnings call why now was the time for the split, CVS chairman and CEO David Joyner said it had to do with how well the company has performed in the two years since he took the reins. The company’s earnings have surpassed analyst expectations for several consecutive quarters, and its stock price has doubled from its low in December 2024.

A closer look

Following the split, CVS Health will also house primary care clinic chain Oak Street Health, which CVS purchased in 2023 for $10.6 billion. The company’s specialty pharmacy business and in-home care subsidiary Signify Health, which it bought the same year for $8 billion, will fall under CVS Health as well.

CVS Pharmacy will get the company’s mail-order pharmacy, MinuteClinic, and newly launched Health100, a new health tech subsidiary that houses an agentic AI platform meant to boost consumers’ healthcare engagement.

Joyner will stay on as CVS Health’s leader, while Prem Shah, current EVP and group president of CVS Health, will become CEO of CVS Pharmacy. CVS has yet to announce the remaining executives.

The split is planned to be done in the first half of 2028, Joyner said on the earnings call.