CVS Split by 2028 Could Give Beauty More Shelf Clout

By Grace Kim

CVS Health will split into two independent, publicly traded companies by the first half of 2028, and the separation could hand beauty and wellness more room at the drugstore giant's roughly 9,000 retail pharmacies.

The company disclosed the plan this week. CVS Pharmacy will hold the 9,000 stores, mail pharmacy, MinuteClinic and the Health100 technology service business. Prem Shah, currently group president of CVS Health, will become CEO of CVS Pharmacy upon separation.

Aetna, CVS Caremark, CVS Specialty, Oak Street Health and Signify Health will form the health care solutions company, which keeps the CVS Health name in the interim. The split requires customary conditions and approvals.

Why does the split reverse two decades of strategy?

The move unwinds CVS's twenty-year push to fuse retail pharmacy with health care into one integrated business. David Joyner, chairman and CEO of CVS Health, framed the breakup as a choice made from strength, not distress.

"Each company will have greater flexibility to adopt the technologies that best fit its needs, improve efficiency and more effectively adapt to the regulatory and other dynamics," Joyner said on the third-quarter earnings call. "Retail, for the most part, has been operated behind the firewall. The timing of this decision is saying now is the time because we are not doing anything out of a distressed decision. We are doing it because we have healthy balance sheets with momentum in each one of the businesses we're operating."

Note what he did not say. Joyner offered no committed capital, no store-format plan and no merchandising targets for beauty.

What could change for beauty at the front of store?

Analysts see upside. Wendy Liebmann, CEO of WSL Strategic Retail, said the separation could strengthen front-end sales. "They can finally focus on retail, and health and beauty are core category pillars," Liebmann said.

Rohit Banota, founder of Jump Accelerator, argued beauty and wellness align naturally with CVS's health care mission. "Splitting the company allows for better targeting and positioning to increase margins and loyalty," Banota said. "A brand-driven, high-margin business like beauty needs true shopper intimacy for premium growth against consolidation, which is merely an operational strategy focused on efficiency and cost savings."

Banota recommends CVS elevate the front-of-store experience through discovery, exclusivity, hyper-personalized technology and curation. That prescription is a hypothesis. No CVS executive has committed to it on the record.

Will beauty become a growth engine or a margin backstop?

Industry expert Jeffrey Ten raised the sharper question. He said the split will not immediately alter store shelves, but a stand-alone retail business will depend more on front-of-store margin drivers.

"What I'm watching is whether beauty gets treated as a growth engine that earns capital or as a margin backstop for a pharmacy business under pressure," Ten said. "I'd expect more pressure on productivity per square foot, assortment rationalization and private label. That could be good for brands that deliver turns and traffic, and harder on those that don't."

What is CVS already doing in beauty?

Michelle LeBlanc, vice president of merchandising for beauty, personal care and the Hispanic Strategy Team, has been reshaping the category. Changes include:

• Moving skin care to the forefront of stores
• Curating assortments to simplify shopping
• Localizing product selection
• Consolidating all men's brands in one section
• Investing in training for beauty advisers, now in about 700 stores

The men's consolidation delivered triple-digit growth for those brands, LeBlanc said. The retailer did not disclose absolute sales figures.

GLP-1 medications present another opening. CVS said consumers taking these drugs over-index in health and beauty purchases, which could connect shoppers with hydration and skin care products beyond the prescription.

The separation closes in 2028. Until CVS names its retail capital plans, the beauty industry can only watch whether the category earns investment or absorbs margin pressure.