CVS Health bought Aetna for $78 billion in 2018. Now it wants to give half of it back. No receipt required, apparently.
The plan: two public companies by the first half of 2028. One keeps Aetna, Caremark, Oak Street Health and Signify Health. The other, CVS Pharmacy, gets roughly 9,000 stores, the mail pharmacy and MinuteClinic.
CEO David Joyner says the turnaround made this possible. He took over two years ago, when the pharmacy business was projected to shrink 5%. Now it can stand on its own. Congratulations to the 9,000 stores. They are finally old enough to move out.
Leerink analyst Michael Cherny called the news "a complete shock." Then he said the standalone pharmacy might look stronger now. Shocked and bullish. Same analyst. Same note.
The stock fell 12.6% to $79.94. Investors heard "value-unlocking breakup" and responded by unlocking the exit.
Here is the part for the chart people. Shareholders will own both companies. You will hold two tickers where you once held one. You will lose money in two places. That is diversification.
RBC's Hendrix flagged a wrinkle. Retail pharmacists help engage Aetna members, which feeds Medicare Advantage quality ratings. Split them up and that relationship gets complicated. Nothing says synergy like a custody schedule.
Prem Shah, currently group president, becomes CEO of CVS Pharmacy. Promotions are easy when the building is getting smaller.
The split is due in 2028. The stock is a coin flip until then. The chart doesn't care about Aetna's 190% profit jump or Joyner's turnaround. It cares about the next candle.
Retail traders will spend the next two years debating which half is the buy. Both halves will be sold by someone who bought the old one at $90.
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