\n CVS Health said Wednesday it is splitting into two companies, marking one of the largest shakeups in the healthcare industry. It\u2019s a major reversal of the mergers that brought together the nation\u2019s largest drugstore retailer along with health insurance giant Aetna and pharmacy benefit manager Caremark.\n <\/p>\n
\n One company, which would house CVS\u2019s 9,000 retail pharmacies, mail order pharmacy, specialty drug business and MinuteClinic, will be named CVS Pharmacy.\n <\/p>\n
\n The other, comprising of Aetna, Caremark and two companies that CVS acquired that provide primary care and in-home health evaluations to senior citizens, will be called CVS Health in the interim.\n <\/p>\n
\n The separation is expected to close in early 2028.\n <\/p>\n
\n The breakup unwinds a strategy that began in 2007, when CVS merged with Caremark, which handles prescription benefits available to people with health insurance. In 2018, CVS acquired Aetna for $69 billion.\n <\/p>\n
\n \u201cWe\u2019re basically taking what I believe is one great company and making it two,\u201d said CVS CEO David Joyner in a statement Wednesday.\n <\/p>\n
\n The company split will have little impact on the way people shop at CVS \u2013 the company didn\u2019t announce any closures as part of the news \u2013 nor will affect what patients pay for prescriptions.\n <\/p>\n
\n Pharmacy benefit management businesses work on the backend, negotiating directly with drugmakers on the cost of prescription drugs. But CVS\u2019s drugstores and Caremark insurance operate separately. Splitting into two companies won\u2019t change how they function.\n <\/p>\n
\n The split does, however, mark a major step back from the widespread trend to integrate various parts of the healthcare industry \u2013 including insurers, pharmacy benefit managers and providers \u2013 into massive conglomerates. That consolidation has come under attack from consumer advocates and state and federal lawmakers for wielding too much control of the sector, leading to higher costs for patients. Some members of Congress have called for breaking up the companies.\n <\/p>\n
\n Also, health insurers have come under cost pressure because Americans are using more healthcare services. Meanwhile, lawmakers and regulators are seeking to reform the pharmacy benefit manager industry just as it contends with new players looking to chip away at the dominance of Caremark and other major PBMs.\n <\/p>\n
\n Meanwhile, CVS\u2019 retail business has been hampered by consumers shifting to online channels, where the company still lags leaders like Amazon, Michael Cherny, an analyst with Leerink Partners, wrote in a client note on Tuesday evening after reports of the split surfaced.\n <\/p>\n
\n Cherny, who called the news \u201ca complete shock,\u201d wrote that CVS\u2019 pharmacy business has been performing well so \u201cperhaps the outlook for a standalone retail pharmacy (still with meaningful scale and leverage on its own) is stronger now than before.\u201d\n <\/p>\n