CVS Health (NYSE:CVS) finds its shares are down more than 20% this year as it grapples with higher-than-expected medical costs in its insurance unit and pharmacy reimbursement pressure, among other issues.
As it seeks to claw back faith with Wall Street, the company is considering breaking itself up.
CVS has engaged advisors in a strategic review of its business, the company revealed this week. One option being weighed is splitting up its retail pharmacy and insurance units. It would be a stunning reversal for the company, which has spent tens of billions of dollars on acquisitions over the last two decades to turn itself into a one-stop health destination for patients.
Some analysts contend that a breakup of CVS would be challenging and unlikely.
CVS risks losing customers and revenue if it splits up its vertically integrated business segments, which includes health insurer Aetna and the major pharmacy benefits manager Caremark. That could translate to more lost profits for a healthcare giant that has slashed its full-year 2024 earnings guidance for three consecutive quarters.
“There really is no perfect option for a split,” said eMarketer senior analyst Rajiv Leventhal, who believes a breakup is still a possibility. “If that does happen, one side of the split becomes really successful and prosperous, and the other would significantly struggle.”
CVS shares opened Friday up $1.78, or 2.8%, to $64.71.