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CVS Health said it plans to separate into two independent, publicly traded companies, following a comprehensive strategic review by its board of directors. The company says the split will give each business greater focus and create more value for stakeholders.
Shares closed 3.28% higher at $91.41 after the announcement, on dollar volume of about $1.8 billion.
The plan creates two separate companies. One — to be called CVS Health in the interim — takes the insurance and benefits operations: Aetna, CVS Caremark, CVS Specialty, Oak Street Health and Signify Health. The other, to be called CVS Pharmacy, gets approximately 9,000 retail stores, MinuteClinic locations, the mail pharmacy service and Health100, a technology services unit.
Leadership follows the same dividing line. David Joyner, currently chairman and chief executive, stays with the healthcare solutions company. Prem Shah, currently group president, will run CVS Pharmacy.
For anyone holding CVS shares today: when the split completes, they will own shares in both companies. CVS says the separation is intended to be tax-free under U.S. federal income tax rules, though the company notes it still requires customary confirmation of that treatment. Both companies are expected to carry investment-grade credit ratings and pay dividends, according to the release.
The separation is targeted for the first half of 2028. Final board approval, an SEC registration filing and that tax-free confirmation are all still required before it can close.