CVS is shaking things up.
The pharmacy and retail corporation has decided to change its entire business model. CVS has struggled in recent years, closing hundreds of locations since 2022. The chain has decided to split its pharmacies from its insurance business
This year, CVS will divide itself into two companies, one that controls the insurance Aetna carrier and one in charge of Caremark, which manages prescription drug benefits.
The health care chain felt that it was financially strong enough to separate into two companies and that this would allow Aetna and Caremark to concentrate on their own operations.
CVS acquired Aetna for $78 billion in 2018, combining the businesses. This new plan will break them back up.
“It basically gives you confidence and strength about how each of the businesses are going to perform,” President and CEO of CVS Health David Joyner told The Wall Street Journal.
The change is anticipated to go into effect in the first half of 2028, making it one of the largest corporate separations to date.
“We believe based off of where we are and how we’re performing, the businesses are best served by splitting,” Joyner told the WSJ.
The CEO spoke to CNBC’s Squawk on the Street about the business decision, reaffirming that it is being done “out of a position of strength.”
“So it’s all about the strength of the business that affords us the opportunity to make what we think are the right strategic decisions for the future of this company,” he said.
Current shareholders will own stakes in both companies.
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