CVS Health is splitting up.
The healthcare giant announced Wednesday morning that it would divide its business units into two companies. The first houses its retail pharmacies and Health 100 technology businesses, and will operate as CVS Pharmacy. The second includes Aetna, Caremark, Oak Street Health and Signify Health and will be referred to as CVS Health on an interim basis.
CVS said in the announcement that it expects the separation to be completed in the first half of 2028, subject to closing conditions, and until then, it will continue to operate jointly.
Current CVS CEO David Joyner will become chief executive of the new CVS Health, while Prem Shah, group president of CVS Health, will become the CEO of the new CVS Pharmacy unit.
The company said that the decision “follows a comprehensive strategic review” by its board of directors.
Joyner said in the announcement that the team has made significant progress in its turnaround efforts over the past two years, and that it’s from that positioning that it now approaches the breakup.
“From a position of strength, and a focus on the long term, we plan to create two focused companies to improve consumer engagement, affordability, and care coordination,” he said. “Both companies will continue to advance innovative technology solutions to improve the healthcare experience as we deliver on our purpose to simplify healthcare, one person, one family and one community at a time.”
CVS’ strategy is built on four key principles: delivering on best-in-class execution, rethinking the consumer experience, becoming a go-to partner and harnessing capabilities across the company.
Following the split, both companies will continue to lean on these concepts, CVS said. Each individual entity will also benefit from a more focused strategy and the ability to adapt more nimbly to its own unique goals and strategic needs.
The future CVS Pharmacy will continue to identify ways to expand the reach of its pharmacists and identify further partnerships across the healthcare spectrum, while CVS Health will be able to adapt in new ways to serve its clients, the company said.
Shares in the company were up by 3% premarket as of about 7:30 a.m. ET. CVS also reported its Q3 earnings on Wednesday, where it posted $2.2 billion in profit and $108.4 billion in revenue for the quarter.
This is a developing story and will be updated.