CVS Split to Form Two Public Companies by 2028
CVS split follows strong Q3 results and raised 2026 guidance, setting up a valuation and capital-allocation rerate ahead of H1 2028 separation.
KEY TAKEAWAYS
- Planned separation will create two independent public companies targeted for completion in the first half of 2028.
- Third-quarter revenue reached $108.4 billion and adjusted EPS was $2.09.
- Company raised full-year 2026 guidance to at least $6.98 GAAP EPS and $8.20 adjusted EPS.
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CVS Health on November 4, 2026, announced plans to separate into two publicly traded companies by the first half of 2028. The split will create a healthcare-solutions firm and a retail-pharmacy company, following stronger third-quarter results and an increase in full-year 2026 guidance.
Separation Plan and Business Structure
The company intends to complete the separation by mid-2028, subject to final board approval, the effectiveness of a Form 10 registration statement, and customary tax confirmation. Management said the healthcare-solutions company will include Aetna, CVS Caremark and other pharmacy services, CVS Specialty, Oak Street Health, and Signify Health. The retail-pharmacy company will comprise about 9,000 retail pharmacies, the mail-order pharmacy, MinuteClinic (including virtual care), and Health100 technology services.
Existing CVS Health shareholders are expected to hold shares in both companies. Management said, "We expect the separation transaction to be tax free for U.S. Federal income tax purposes." David Joyner is expected to remain chairman and chief executive of the healthcare-solutions company, while Prem Shah is expected to become chief executive of CVS Pharmacy.
Third-Quarter Results and Updated Guidance
For the three months ended September 30, 2026, CVS reported total revenue of $108.4 billion, up 5.4% year over year. GAAP diluted earnings per share (EPS) was $1.68, and adjusted EPS was $2.09. Management said adjusted operating income reached $4.2 billion in the quarter.
The company raised its full-year 2026 guidance to at least $6.98 GAAP diluted EPS and at least $8.20 adjusted EPS. Secondary reports indicated an increase in operating-cash-flow guidance to at least $15.5 billion from at least $11.5 billion.
The split follows these stronger results and upgraded guidance, framing a near-term narrative for investors around capital allocation and valuation as the two businesses prepare to operate independently in public markets.
