CVS Health, the largest US healthcare conglomerate valued at $117bn, has announced its plans split off its pharmacy chain from its health insurance and benefits businesses, ending an era in which healthcare companies grew into vast conglomerates.
In their announcement on Wednesday, CVS Health said they will split off its 9,000 pharmacies, in-store clinics and mail order prescription business into a business named CVS Pharmacy.
A second company will keep the name CVS Health and house the major insurer Aetna and the giant pharmacy benefits manager Caremark, along with other businesses that provide home visits and primary care to older people.
The company has come under pressure from lawmakers and regulators over concerns that the healthcare giants, including CVS Health, UnitedHealth Group and Cigna, have become too dominant, leading to higher medical costs. The three companies control roughly 80% of the market. CVS Health in particular generated over $400bn in revenue last year.
A political pushback against healthcare gigantism has led Arkansas and Tennessee to pass laws aimed at preventing the companies from managing prescription benefits and running retail and mail-order pharmacies.
The Arkansas state representative Jeremiah Moore, a Republican who sponsored the state’s bill, told Politico last week: “The average American citizen is really tired of being pushed around and bullied, whether it be from the government or a monopolistic company.”
He added: “For far too long, they’ve taken advantage of these sick people, and it’s what I consider to be crony capitalism. They’re bending the rules to benefit their own bottom line.” Other states have proposed similar restrictions.
At the federal level, a bill introduced by the Missouri Republican senator Josh Hawley and Massachusetts senator Elizabeth Warren proposes an antitrust crackdown.
Hawley has described the legislation as “a major step toward restoring transparency and making healthcare more affordable for every American.”
David Joyner, CVS’s chief executive and chair, will run the healthcare solutions business.
“Our history is defined by proactively evolving to stay ahead of what’s next in healthcare, and in today’s environment, that means delivering more affordability, greater access and a simpler experience,” said Joyner in a statement.
That marks a stark turnaround from CVS Health’s earlier opposition to legislative efforts to break up the healthcare giant, which a company spokesman said would “open the door to private equity stripping the entire U.S. healthcare system for parts”.
The announcement comes after a series of acquisitions that saw CVS Health expand into nearly every corner of the healthcare system. It began in 2018, when CVS and Aetna merged in a $70bn deal. Healthcare rivals, UnitedHealth and Cigna, also brought into the trend of harnessing an insurer, pharmacy benefits, and a mail-order business under one operation.
CVS Health, however, did not meet investors’ expectations for growth. In late 2024, its share price fell to $44, though it has since rebounded. The CVS Health breakup is planned for early 2028.
