CVS Health Corp. plans to spin off its retail pharmacy business in one of the biggest-ever breakups in the healthcare industry.

The drugstore business will be separated into a new company called CVS Pharmacy in the first half of 2028, split from the Aetna insurance unit and Caremark prescription benefits division. The company holding those assets will still be called CVS Health. Both companies will be publicly traded, CVS said in a statement.

The move marks the end of an era for a company that grew from a single store in Lowell, Massachusetts, in 1963 into a healthcare powerhouse with a market value of $117 billion as of Tuesday. Although CVS has closed hundreds of stores in recent years, it still operates almost 9,000 retail pharmacies. Rivals like Walgreens and Rite Aid have struggled to compete.

CVS shares plunged as much as 14% in New York on Wednesday, erasing much of their gain for the year.

The plan runs counter to the long-term trend of consolidation among major healthcare companies. Insurers combined with drug benefit managers, care providers and pharmacies to assemble vertically integrated enterprises with vast reach. Politicians decried that consolidation, with both Republicans and Democrats criticizing the sheer size of CVS and its major rivals when CEOs testified in Congress earlier this year.

How the pharmacy chain will be positioned in the long term as a standalone entity in “an already-challenged retail pharmacy environment will also warrant scrutiny,” RBC Capital Markets analyst Ben Hendrix wrote in a note to clients.

CVS also reported earnings on Wednesday, raising its profit outlook for the year to at least $8.20 a share, up from $7.90 to $8.10 a share. Third-quarter profit surpassed Wall Street’s expectations, the latest sign of strength among large health companies.

Adjusted earnings in 2027 will be at least $8.65 a share, executives said on a call with analysts on Wednesday morning.

Chief Executive Officer David Joyner, who took over two years ago, will remain atop CVS Health. Prem Shah, who is currently group president of CVS Health, will run CVS Pharmacy.

Joyner said recent improvements in the retail business’s performance, including changing reimbursement for dispensing drugs to better align with their costs, set the stage for the breakup. He said the split would accelerate growth of the drugstore business.

“Retail has run somewhat independent of the enterprise,” Joyner said in an interview Wednesday. “We think by uncoupling the retail business in terms of how we run and operate and invest in our business, we’ll allow them to actually grow faster than they would grow as part of this enterprise.”

“If you look at retail, it probably has not historically gotten the same capital investments that the other parts of our business” have, he said.

The company reviewed strategic options including a breakup in 2024, Bloomberg reported at the time.

Healthcare conglomerates have faced growing political pressure over their reach into different businesses, with some state and federal lawmakers proposing to break them up. The consolidation has allowed companies to turn some of their expenses — to dispense medications or deliver care — into revenue for other parts of their business.

At the same time, brick-and-mortar drugstores face long-term challenges from online retailers. CVS is the only one of its major healthcare competitors to have a large pharmacy chain footprint. The pharmacy and consumer wellness segment generated over $139 billion in revenue last year, about a third of CVS’ total, though the company reports significant overlap in sales between its businesses.

The company’s specialty pharmacy and care provider assets Oak Street Health and Signify Health would stay in the same company with Aetna and Caremark, the company said, while Minute Clinics and the mail-order pharmacy would stay with the retail entity.

Media reports about a potential breakup surfaced Tuesday afternoon, surprising some analysts.

Michael Cherny, an analyst at Leerink Partners, said reports of a breakup came as “a complete shock” because the pharmacy and consumer wellness business has been performing well recently.

“In this context, perhaps the outlook for a standalone retail pharmacy (still with meaningful scale and leverage on its own) is stronger now than before,” Cherny wrote in a research note Tuesday evening.

CVS didn’t detail how debt would be allocated between the two entities, but Joyner told analysts both companies will have “solid investment grade balance sheets.” The major bond graders have rated CVS one or two notches above high yield status.

The plan to spin off the “low-growth, low-margin retail business raises uncertainty around the group’s future capital structure,” but reducing leverage should let the new company keep an investment-grade rating, Bloomberg Intelligence Senior Credit Analyst Jean-Yves Coupin wrote.

Joyner said the retail pharmacy has operated “behind a firewall” and negotiates at arms-length with other parts of CVS’s business. The companies would be more nimble on their own and simplify experiences for consumers, executives said.

The approach contradicts the strategy CVS laid out at an investor day last year, when executives said that common ownership allows the company to simplify experiences for consumers with technology across its portfolio.

“The reality is, we can’t be a technology solution just in the PBM, or just at Aetna, or just in CVS retail, or in our clinics. You have to do this in totality,” Joyner said in December. The common experience “is the distinctive and differentiating factor in the organization,” he said.

—With assistance from Dan Wilchins.

(Updates with additional information from conference call, analyst reaction throughout.)

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