Why a CVS breakup may be hard to execute: 3 notes

CVS Health is contemplating a breakup of its diversified operations after a tumultuous financial period marked by repeated forecast cuts and a significant drop in stock value, The Wall Street Journal reported Oct. 1. 

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  1. The company has invested more than $88 billion in acquisitions over the last six years, with the aim to transform from a traditional retail pharmacy into a comprehensive retail provider. However, analysts told the news outlet that separating the integrated units could bring certain challenges. 
  2. CVS’ board is conducting a strategic review, exploring options that include a split. However, the decision is not expected in the near term, and analysts said dismantling the organization could leave certain units struggling independently, which could jeopardize customer retention and revenue streams. 
  3. While a breakup could allow for a renewed focus on core operations, it also raises concerns about a disruption of synergies between CVS pharmacy services and its pharmacy benefit manager, CVS Caremark, according to the Journal. 

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