CVS Health Corporation (CVS) shares fell sharply on Wednesday, plunging 12.28% to $80.19 even as the company reported stronger third-quarter earnings and raised its annual profit outlook. The selloff came as the healthcare giant unveiled plans to divide its operations into two publicly traded companies, a restructuring that would reverse years of business integration.

The stock lost $11.22 during the trading session as CVS simultaneously outlined its latest financial results and its corporate restructuring plans. The company reported stronger adjusted earnings and raised its full-year profit forecast following improvements across several business segments. However, the proposed separation introduced major changes to the company's operating structure and future business strategy.

Strong Third-Quarter Results and Higher 2026 Guidance

CVS Health reported third-quarter revenue of $108.4 billion, a 5.4% increase from $102.9 billion a year earlier. The company recorded adjusted earnings per share of $2.09, up from $1.60 in the prior-year period, with improved performance in its healthcare benefits business helping to support the stronger operating results.

Following the results, CVS increased its full-year 2026 adjusted earnings guidance to at least $8.20 per share. The company had previously expected adjusted earnings of between $7.90 and $8.10 per share before announcing the revised forecast. Management also raised its operating cash flow outlook to at least $15.5 billion, up from the earlier target of $11.5 billion. The revised per-share target sits above the top end of the previous range, and the new cash flow goal adds roughly $4 billion to the company's earlier figure.

CVS also reported GAAP earnings of $1.68 per share, reversing a loss of $3.13 in the comparable quarter a year earlier. The previous year's results included a substantial goodwill impairment charge that weighed on reported profitability. The swing from a GAAP loss to a GAAP profit reflects the absence of that impairment in the current quarter, alongside stronger operating income contributing to the improvement as the company continued executing its margin recovery strategy.

CVS Health Unveils Two-Company Separation Plan

Alongside the earnings report, CVS Health announced plans to create two independent companies, separating its healthcare services operations from its retail pharmacy business. Under the proposed structure, CVS Health will retain Aetna, CVS Caremark, CVS Specialty, Oak Street Health, and Signify Health, with those healthcare services operations continuing under the CVS Health name. A separate company, to be named CVS Pharmacy, will manage the group's retail pharmacy and community healthcare operations. Once complete, the arrangement would place insurance and healthcare delivery on one side of the split and storefront pharmacy and community-based care on the other, each trading as its own publicly listed business with its own leadership team and operating priorities.

The new CVS Pharmacy business will include approximately 9,000 retail locations alongside MinuteClinic facilities and related healthcare services. The arrangement will establish distinct operating structures for the company's insurance and retail businesses. Both companies will pursue their respective growth strategies while retaining opportunities for future commercial partnerships.

The separation represents a major reversal of CVS Health's longstanding strategy of combining pharmacy, insurance, and healthcare services under a single umbrella. The company previously expanded its healthcare operations through acquisitions and investments across several parts of the industry. Management now expects the proposed division to improve business focus and give each organization greater operational independence.

Separation Targeted for First Half of 2028

CVS Health expects to complete the proposed separation during the first half of 2028, subject to required approvals. The transaction would create two publicly traded businesses with separate leadership teams and independent operating priorities. Both companies would continue serving different segments of the broader American healthcare market. Between now and then, the required approvals and the establishment of the two independent operating structures are the milestones that will mark the separation's progress.

The restructuring follows years of expansion that transformed CVS from a pharmacy retailer into a diversified healthcare company. Its acquisition of Aetna strengthened its insurance operations, while other investments broadened its healthcare delivery services. The proposed separation would accordingly reorganize businesses that previously formed the foundation of the company's integrated healthcare strategy.

Despite the stronger quarterly figures, CVS shares declined sharply as the company announced its restructuring and revised financial outlook. The stock's 12.28% drop stood in contrast to revenue growth, improved adjusted profitability, and higher annual earnings expectations. The planned separation now represents a significant milestone in CVS Health's corporate strategy through the first half of 2028.