Apparently, the US election is not all that happened yesterday in big news: CVS announced it’s officially breaking up– and, this time, they mean it.

CVS will split retail pharmacies from PBM operations and insurance

CVS Health plans to break up its $117 billion business, separating its retail pharmacies from the Caremark pharmacy benefit management operations and the Aetna insurance company. The separation will create two separate publicly traded companies, and CVS Health shareholders will own shares in both companies.

One company – which will retain the name CVS Health for now – will house its insurance arm Aetna, the PBM Caremark, plus Oak Street Health, Signify Health, and its specialty pharmacy business. The retail company, to be known as CVS Pharmacy, would include roughly 9,000 retail pharmacies, MinuteClinic, and mail-order pharmacy operations, and the newly created Health100 engagement platform. Health100 aims to be the connective tissue that acts as the front door for care. The leadership team shared in today’s earnings call that they hope this separation enables Health100 to be more widely adopted across the industry and will look to position it to be a leading customer engagement platform.

Owning more of the healthcare journey does not necessarily make that journey better

The split unwinds a central piece of the premise behind CVS Health’s $78 billion acquisition of Aetna in 2018: Put a pharmacy, PBM, insurer, and care-delivery assets under one roof, and the resulting scale and coordination will make healthcare simpler and less expensive. Large megabrands in healthcare have faced scrutiny for limiting access to care and driving up prices for insurance, prescriptions, and care services.

In recent years, healthcare companies, especially insurers, have faced significantly elevated financial trends and headwinds, including challenging medical cost trends, sustained medical utilization and pharmacy spending, and margin pressure. Today, CVS Health reported third-quarter revenue of $108.4 billion, up 5.4% year over year, and raised its 2026 revenue guidance to at least $420 billion. As CEO and Chairman David Joyner shared in the earnings call today: “We are taking deliberate action and will continue to build on our momentum.” They aim to ensure each company remains a leader in its respective markets, to allow each to focus on their respective businesses, and to become more agile. As Joyner stated in the earnings call, “Same mission, sharper focus.” The move also allows each company to more effectively adapt to rapidly changing regulatory pressure and pursue additional partnerships in the future.

Regulatory, economic, and consumer pressures are reshaping healthcare megabrands

Concentration risk creates significant impacts for the industry and all stakeholders. Mounting pressure on healthcare megabrands shows no signs of slowing:

  • Regulatory pressure on vertically integrated entities or megabrands is growing. Rising regulation has changed the strategic calculus for these megabrands. Policymakers at both the federal and state levels continue to challenge the joint ownership of PBMs, pharmacies, insurers, and care delivery assets, and push for greater transparency. That scrutiny carries significant cost and complexity, as vertically integrated megabrands should keep proving the benefits to consumers, not just shareholders. With Democrats poised to control both the House and Senate, healthcare megabrands should prepare for even greater scrutiny in 2027. Vertical integration, PBM practices, healthcare consolidation, and affordability are likely to remain squarely in policymakers’ sights.
  • The economics of the megabrand are getting harder. CVS is making the move amid a strong financial position, in contrast to a weakened position when a split was first rumored in 2024. As CEO David Joyner shared in today’s earnings call, CVS can take this action today because of the progress it has made since 2024. He noted that the company has strengthened its balance sheet, reshaped the leadership team, expanded its technology capabilities, and revitalized the Aetna business amid headwinds on the Medicare Advantage business. Competitors are exploring partnerships, curated ecosystems, and AI-powered orchestration to create connected experiences without absorbing the cost and complexity of owning every part of the journey. Joyner acknowledged in the earnings call today that the split sets up CVS Pharmacy and CVS Health for expanded future partnerships.
  • Consumers aren’t waiting for the healthcare system to fix itself. Our latest research finds that AI is already enabling consumers to navigate healthcare without relying exclusively on insurers, providers, or pharmaceutical companies. That means the competitive advantage increasingly comes from empowering consumers to reach a better decision with more confidence, not just owning more assets. A growing population of intentionally uninsured going without coverage and paying for care out of pocket has created additional challenges for health insurers. Less than half of US online adults said health insurance was worth it in 2026. Breaking off Health100 from the insurance business aims to make it a solution that responds to competitive pressure and be an option for more health insurers that are scrambling to update their digital experiences to stay on par with big tech innovations gaining healthcare consumer market share, including OpenAI’s ChatGPT and Google’s Gemini.

The megabrand is not dead – but must shore up CX to attract and retain customers

The healthcare megabrand era is not over, but the remaining large conglomerates must prove that their scale makes care more affordable, accessible, connected, and trustworthy. Our 2026 Total Experience research shows that the health insurance industry is improving on customer experience and brand experience but still has significant room to strengthen the overall relationship with consumers. Yes, a breakup gives each new CVS company an opportunity to sharpen its value proposition – but corporate simplification cannot come at the expense of consumer simplicity. If the CVS split creates more handoffs or fragmented experiences, consumers will bear the cost of that complexity, and they have more choices than ever before to stay or find alternatives.

We will continue to watch as this strategic shift evolves. Forrester clients can:

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