WOONSOCKET (dpa-AFX) - CVS Health (CVS) said it plans to separate into two independent publicly traded companies, a move aimed at creating more focused businesses across healthcare services and retail pharmacy operations.
The planned breakup will divide the company into a healthcare solutions business and a retail pharmacy company, unwinding the structure that has combined insurance, pharmacy benefits, care delivery and retail pharmacy company, unwinding the structure that has combined insurance, pharmacy benefits, care delivery and retail pharmacy service under one corporate umbrella.
Under the proposal, the healthcare solutions company will include Aetna, CVS Caremark, CVS Specialty, Oak Street Health and Signify Health. The retail pharmacy company, which will operate as CVS Pharmacy, will include approximately 9,000 retail pharmacies, mail pharmacy operations, MinuteClinic locations and the Health100 technology services business.
CVS said the separation is intended to give each company greater strategic focus, financial flexibility and operational agility, while continuing efforts to improve healthcare affordability, access and patient experience.
Following the separation, current CVS Health Chief Executive Officer David Joyner is expected to lead the healthcare solutions company, while Prem Shah, currently Group President of CVS Health, is expected to become chief executive of CVS Pharmacy.
The company said it will continue to operate and serve customers as it dose today until the separation is completed.
CVS expects the transaction to be completed in the first half of 2028 through a separation that is intended to be tax-free to the company and its shareholders for U.S. federal income tax purposes. Upon completion, existing shareholders are expected to own shares in both companies.
The announcement follows a strategic review by the board and comes as CVS continues to expand its healthcare services platform while maintaining one of the largest retail pharmacy networks in the United States. Both companies are expected to maintain investment-grade balance sheets, generate strong cash flow and pay dividends following the separation.
CVS has traded between $69.51 and $110.68 over the past year. The stock closed Tuesday's trading at $91.41, up 3.28%. In pre-market trading the stock is at $89.41, down 2.25%.
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