Details on the decision

Under the breakup, which is planned for the first half of 2028, a new company called CVS Pharmacy will be in charge of the company's roughly 9,000 retail pharmacies, in-store clinics, and a warehouse-based mail-order prescriptions operation.

Meanwhile, a second company will keep the CVS Health name and be in charge of the insurer Aetna, the PBM Caremark, and other businesses involved with home visits and primary care for older adults.

According to the New York Times, CVS has been under growing scrutiny from lawmakers who say the company and others have grown too dominant in the healthcare industry. Last year, CVS generated over $400 billion in revenue, ranking seventh among U.S. public companies, according to the financial data provider FactSet.

"We believe based off of where we are and how we're performing, the businesses are best served by splitting," said CVS CEO David Joyner. "We're basically taking what I believe is one great company and making it two."

According to Joyner, the company's balance sheet is strong enough to support two separate companies, and a breakup would create more agile, focused firms. "It basically gives you confidence and strength about how each of the businesses are going to perform," he said in an interview with the Wall Street Journal.

CVS Health's board supported the decision, and the company said it wanted to get ahead of any future regulations shaping the healthcare market.

"The split is a belated acknowledgment that the synergies between CVS pharmacy and Caremark were oversold from the start," said Adam Fein, a consultant who writes an industry blog. "Owning a pharmacy chain has done little to strengthen Caremark's market position or make it a more competitive PBM."

Arielle Trzcinski, an analyst for Forester, said that with the move, CVS Health "is effectively acknowledging that bigger isn't always better."

Meanwhile, Mark Cuban, cofounder of Cost Plus Drugs, praised the move as "brilliant financial engineering."

"Their shareholders will benefit, at least in the short term. … As far as the impact on the cost of services and how the industry works, nothing will change except there will be more incentives for CVS Pharmacy to generate more profits," he said.

AJ Loiacono, founder and CEO of Judi Health, a new-generation PBM that claims to be more transparent than other PBMs, said that he believed CVS will still have a conflict of interest, even if it splits into two companies.

"Spinning off CVS/pharmacy from the PBM may seem like CVS wants the market to believe it has separated the businesses with inherent conflicts of interest, but it hasn't," he said. "By keeping specialty with its PBM and insurance arms, CVS still owns a dispensing business and still profits from drug spend. The PBM is still making clinical, formulary, and fulfillment-channel decisions that decide how much money it makes. That's a conflict of interest."