CVS to break up $117 billion business, separating pharmacies from insurance; shares fall

Key Points:

• CVS Health forecasted 2027 adjusted earnings of at least $8.65 per share, beating analyst estimates but trailing rivals focused on government-backed plans following Democrats' control of Congress.
• The company announced a surprise plan to split into two entities by early 2028, separating its pharmacy chain from health insurance and services, which investors viewed as a defensive move against regulatory pressures.
• CVS shares dropped 12.5%, wiping out nearly $15 billion in market value amid concerns over the breakup's lack of financial detail and challenges in its pharmacy benefit business from government drug pricing programs.
• CEO David Joyner highlighted improvements in CVS’s pharmacy and insurance businesses over the past two years, enabling the split, while analysts noted ongoing scrutiny of vertical integration in the healthcare industry.
• The split will create two companies: CVS Pharmacy led by Prem Shah, and CVS Health led by Joyner, with shareholders receiving shares in both, as the company aims to simplify operations and address rising healthcare costs.