CVS Health stock fell more than 11% Wednesday morning after the company announced plans to break up into two separate companies in 2028.

The news eclipsed a third-quarter earnings report that beat Wall Street's expectations. At the same time, executives on the earnings call addressed a decline next year in a key segment being watched by investors, saying the health services business is expected to experience "trough earnings" in 2027 before returning to growth.

CVS shares fell to $80.73 Wednesday after closing up 3.3% at $91.41 during the Tuesday session. The stock was on pace for its largest percent decrease since Jan. 27, 2026, when it fell 14.15%, according to Dow Jones Market Data.

The healthcare giant said it would split its insurance provider Aetna and pharmacy-benefit manager Caremark into one company, with the other firm taking on its 9,000 retail pharmacies.

Both companies -- to be called CVS Health in the interim and CVS Pharmacy, respectively -- will be publicly traded, and current shareholders will own shares in both.

CEO David Joyner said the split would allow each entity to sharpen its focus and tailor capital allocation, and that he felt "really good" about the timing and the decision.

"We are not doing anything out of a distressed decision," Joyner said on the earnings call. "We have healthy balance sheets, with appropriate capital allocation opportunities, and momentum in each one of the businesses that we're operating," he added.

CVS also raised its guidance for fiscal 2026, saying it now expects adjusted earnings of at least $8.20 a share, up from a prior range of $7.90 and $8.10 a share. Wall Street anticipates $8.05 a share.

The company now expects revenue of at least $420 billion for fiscal 2026, up from a previous forecast of at least $414 billion. Analysts polled by FactSet expect revenue of $417.7 billion.

For CVS's third quarter, the company posted adjusted earnings of $2.09 a share, surpassing Wall Street's estimates of $1.65 and up from $1.60 in the same quarter a year ago, according to FactSet.

Revenue grew 5.4% to $108.4 billion, above analysts' consensus calls for $104.72 billion and up from $102.87 billion a year prior. Management attributed the strong performance to growth in its health services and healthcare benefits segments.

Within CVS's insurance business, the medical cost ratio was 91.3%, lower than the expected ratio of 92.2% and down from the same quarter last year, when it was 92.8%. The ratio is a measure of how much an insurer spends on medical claims as a share of premium revenue, and investors generally want to see a lower ratio. CVS said the lower figure was primarily driven by improved performance in its government business.

But investors were also looking for an update on a federal program that created something of a cliffhanger on the last quarterly call.

On that August call, CVS officials noted that the company serves health systems under a federal program known as 340B. The program allows safety-net hospitals and certain clinics to purchase discounted prescription drugs from pharmaceutical companies.

A financial headwind from that business could extend into next year, executives said at the time. The company doesn't break out 340B revenue in financial disclosures, but those August comments were enough to put a damper on an earnings report that otherwise exceeded expectations. CVS shares fell 5% that day, to $99.12, and have fallen further since. Overall, shares are up 15.2% for the year versus 10.6% for the broader market.

Chief Financial Officer Brian Newman said Wednesday that the 340B business should "largely stabilize by the end of next year."

He said the health services segment is now expected to generate at least $7 billion in adjusted operating income in 2027, encompassing a year-over-year decline in the 340B business. "We are confident 2027 will reflect trough earnings for the segment, and we expect to return to growth from there," Newman said.

Altogether, Newman said, the company expects to deliver at least $8.65 in adjusted earnings per share in 2027, up from a previous floor of $8.44.

There's lots of money at stake in 340B -- which saw $100 billion in purchase volume last year -- and the parameters of the program are a long-running source of tension between drug companies and hospitals. The two sides have sparred this year over new claims data collection requirements imposed by some drug manufacturers.

For its part, CVS earns fees from dispensing 340B drugs at its pharmacies and by providing third-party administrative services to hospitals in the program.

On the call in August, CVS said drug manufacturer "restrictions" had affected its 340B business in the second quarter, without elaborating on specific revenue streams or services affected. A spokesperson later told Barron's that the company would "provide additional color" on the third quarter call.

Once the idea of a 340B headwind was introduced, investors were left with questions about the possible effect on earnings moving forward.