CVS Stock Rises After Hours On Alleged Pharmacy Spin-Off Ahead Of Q3 Earnings Report

• The structure and timing remain fluid and could change, the report said, adding that an announcement could come as early as this week’s third-quarter results.
• CVS is slated to report third-quarter earnings before the market opens on Wednesday.
• The potential split arrives amid growing scrutiny of companies that own both pharmacy benefit managers and pharmacies.

Shares of CVS Health (CVS) climbed 2% in after-hours trading on Tuesday following reports that the company is exploring a separation of its retail pharmacy business from its insurance and pharmacy benefit management operations.

The stock closed the regular session up roughly 3.3% and extended gains after hours.

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Break-Up Would Unwind CVS's Aetna Integration

The Financial Times, citing people familiar with the matter, said CVS is considering spinning off its retail pharmacy division as a separately listed company. The division has approximately 9,000 stores expected to generate about one-third of the company’s projected $417 billion in revenue this year.

Such a move would reverse the vertical integration created by CVS’s $78 billion acquisition of Aetna in 2018, the report noted. Under the plans being discussed, the remaining company would keep the Aetna insurer and Caremark pharmacy benefit manager together, along with other acquired care businesses such as Signify Health and Oak Street Health.

The structure and timing remain fluid and could change, the report said, adding that an announcement could come as early as this week’s third-quarter results. CVS is slated to report third-quarter earnings before the market opens on Wednesday. According to data from Fiscal AI, Wall Street on average expects the company to report revenue of $104.69 billion and earnings per share of $1.65.

Political Pressure On Combined Ownership

The potential split arrives amid growing scrutiny of companies that own both pharmacy benefit managers and pharmacies, FT noted. States including Tennessee and Arkansas have advanced measures restricting such combinations. Bipartisan federal legislation has also been reintroduced in the Senate to prohibit co-ownership of pharmacy benefit managers and pharmacies.

CVS Turnaround Under New Leadership

CVS Health has staged a notable recovery under chief executive David Joyner, who took the helm in October 2024 after activist investor Glenview Capital pushed for changes that resulted in the departure of former CEO Karen Lynch.

Shares, which sank to a 10-year low in December 2024, have recovered since, owing largely to a turnaround at the Aetna insurance unit. The company’s retail pharmacy business is the weaker part of the company’s portfolio, growing more slowly compared to its other businesses. The company currently has a market valuation of $117 billion.

How Did CVS Retail Traders React?

On Stocktwits, retail sentiment around CVS stock stayed in 'neutral' territory over the past 24 hours, while message volume stayed at 'normal' levels.

CVS stock has gained 15% year-to-date. 

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