What CVS announced
CVS Health, described by The Guardian as the largest US healthcare conglomerate with a value of $117bn, said on Wednesday that it will divide itself into two separate companies. The move would end an era in which healthcare firms grew into sprawling businesses spanning several parts of the system.
One company, to be called CVS Pharmacy, will hold the roughly 9,000 pharmacies, the in-store clinics and the mail-order prescription business. The second will keep the CVS Health name and house the insurer Aetna and the large pharmacy benefits manager Caremark. It will also include businesses that provide home visits and primary care to older people.
David Joyner, CVS's chief executive and chair, will run the healthcare solutions business. In a statement, he said the company's history is "defined by proactively evolving to stay ahead of what's next in healthcare," adding that today this means "delivering more affordability, greater access and a simpler experience." The breakup is planned for early 2028, according to The Guardian.
Mounting pressure on the industry
The announcement follows growing scrutiny from lawmakers and regulators, who have argued that large healthcare companies such as CVS Health, UnitedHealth Group and Cigna have become too dominant, contributing to higher medical costs. The Guardian reported that the three companies control roughly 80% of the market, and that CVS Health alone generated more than $400bn in revenue last year.
Some states have acted. Arkansas and Tennessee have passed laws aimed at stopping such companies from both managing prescription benefits and operating retail and mail-order pharmacies. Other states have proposed similar restrictions.
Jeremiah Moore, the Republican Arkansas state representative who sponsored that state's bill, told Politico last week that "the average American citizen is really tired of being pushed around and bullied, whether it be from the government or a monopolistic company." He also said he considers the companies' conduct to be "crony capitalism."
Federal proposals and a change of stance
At the federal level, Republican Senator Josh Hawley of Missouri and Democratic Senator Elizabeth Warren of Massachusetts have introduced a bill proposing an antitrust crackdown. Hawley has described the legislation as "a major step toward restoring transparency and making healthcare more affordable for every American."
The Guardian noted that the CVS plan marks a sharp reversal. The company previously opposed legislative efforts to break up the healthcare giants, with a spokesman saying such measures would "open the door to private equity stripping the entire U.S. healthcare system for parts."
How CVS got here
CVS expanded into nearly every corner of the healthcare system through a series of acquisitions. The process began in 2018, when CVS and Aetna merged in a $70bn deal. UnitedHealth and Cigna also embraced the model of combining an insurer, pharmacy benefits services and a mail-order business under one operation.
According to The Guardian, CVS Health has not met investors' growth expectations. Its share price fell to $44 in late 2024, though it has since rebounded.
