CVS Health Corporation Announces Pricing of Maximum Tender Offer

Rhea-AI Summary

CVS Health has announced the pricing details of its Maximum Tender Offer for multiple series of Senior Notes, with a maximum purchase price of $1,774,423,242.62. The tender offer includes various series of notes with maturities ranging from 2030 to 2050. Notes tendered by the Early Tender Date of December 13, 2024, will receive the Total Consideration, which includes the Early Tender Payment of $30 per $1,000 principal amount.

The settlement date for notes validly tendered by the Early Tender Date is expected to be December 18, 2024. Due to oversubscription at the Early Tender Date, no notes tendered after this date are expected to be accepted for purchase. The 2.700% Senior Notes due 2040, 3.875% Senior Notes due 2047, and 4.250% Senior Notes due 2050 will be accepted at 100% proration, while the 4.125% Senior Notes due 2040 will be accepted at 57.5% proration.

Positive

• Clear pricing structure with fixed spreads and reference yields for each note series
• Full acceptance (100% proration) for three series of notes
• Early tender payment of $30 per $1,000 principal amount offered

Negative

• acceptance (57.5% proration) for 4.125% Senior Notes due 2040
• No acceptance for six series of notes due to oversubscription
• No Final Settlement Date due to early oversubscription

Insights

Financial Analyst

CVS Health's tender offer of up to $1.77 billion for its outstanding notes represents a significant debt management initiative. The company is targeting multiple series of senior notes with maturities ranging from 2030 to 2050, offering premiums through total consideration prices that reflect current market conditions. The proration factors indicate strong demand, with full acceptance for notes in priority levels 1-4 and 57.5% acceptance for the 2040 notes. This debt restructuring could help optimize CVS's capital structure and potentially reduce future interest expenses, though the premiums paid will result in some near-term costs. The strategic focus on longer-dated maturities suggests a proactive approach to managing future debt obligations.

Market Research Analyst

The pricing announcement reveals strong investor participation in CVS's tender offer, with early tender results exceeding the maximum amount, eliminating the need for a final settlement date. The reference yields, ranging from 4.611% to 4.676% and the total consideration prices reflect current market conditions and CVS's credit quality. This transaction demonstrates CVS's ability to access capital markets effectively and manage its debt profile. The company's methodical approach to debt management, prioritizing certain notes through the acceptance priority levels, shows strategic financial planning that could positively impact its long-term debt service costs.

WOONSOCKET, R.I., Dec. 16, 2024 /PRNewswire/ -- CVS Health Corporation ("CVS Health" or the "Company," NYSE: CVS) announced today the applicable Reference Yields and Total Consideration (each as summarized in the tables below) to be paid in connection with the previously announced cash tender offer (the "Maximum Tender Offer" ) for the maximum principal amount of the following series of Maximum Tender Offer Notes (as defined below) for which the aggregate purchase price, not including Accrued Interest (as defined below), payable in respect of such Maximum Tender Offer Notes, does not exceed $1,774,423,242.62  (such maximum purchase price, the "Maximum Tender Offer Amount"): its 2.700% Senior Notes due 2040, the 3.875% Senior Notes due 2047 issued by its wholly-owned subsidiary Aetna Inc. ("Aetna"), its 4.250% Senior Notes due 2050, the 4.125% Senior Notes due 2042 issued by Aetna, its 4.125% Senior Notes due 2040, its 2.125% Senior Notes due 2031, its 1.875% Senior Notes due 2031, its 5.050% Senior Notes due 2048, the 4.500% Senior Notes due 2042 issued by Aetna and its 1.750% Senior Notes due 2030 (together, the "Maximum Tender Offer Notes").

The applicable Reference Yield for the Maximum Tender Offer Notes and the Total Consideration for the Maximum Tender Offer Notes are summarized in the table below:

Maximum Tender Offer Notes:

Title of Notes

CUSIP Number

Original Issuer

Principal Amount Outstanding

Maturity Date

Acceptance Priority Level(1)

UST Reference Security

Bloomberg Reference Page

Fixed Spread (bps)

Early Tender Payment(2)

Reference Yield(3)

Total Consideration(2)(3)

Approximate Proration Factor(4)

2.700% Senior Notes due 2040

126650DP2

CVS Health Corporation

$1,250,000,000

8/21/2040

1

4.625% due 11/15/2044

FIT1

+110 bps

$30

4.676 %

$685.54

100 %

3.875% Senior Notes due 2047

00817YAZ1

Aetna Inc.

$1,000,000,000

8/15/2047

2

4.625% due 11/15/2044

FIT1

+121 bps

$30

4.676 %

$750.06

100 %

4.250% Senior Notes due 2050

126650DL1

CVS Health Corporation

$750,000,000

4/1/2050

3

4.250% due 8/15/2054

FIT1

+136 bps

$30

4.611 %

$776.80

100 %

4.125% Senior Notes due 2042

00817YAM0

Aetna Inc.

$500,000,000

11/15/2042

4

4.625% due 11/15/2044

FIT1

+122 bps

$30

4.676 %

$805.69

100 %

4.125% Senior Notes due 2040

126650DK3

CVS Health Corporation

$1,000,000,000

4/1/2040

5

4.625% due 11/15/2044

FIT1

+119 bps

$30

4.676 %

$825.77

57.5 %

2.125% Senior Notes due 2031

126650DR8

CVS Health Corporation

$1,000,000,000

9/15/2031

6

4.250% due 11/15/2034

FIT1

+92 bps

$30

N/A

N/A

0 %

1.875% Senior Notes due 2031

126650DQ0

CVS Health Corporation

$1,250,000,000

2/28/2031

7

4.250% due 11/15/2034

FIT1

+87 bps

$30

N/A

N/A

0 %

5.050% Senior Notes due 2048

126650CZ1

CVS Health Corporation

$8,000,000,000

3/25/2048

8

4.250% due 8/15/2054

FIT1

+156 bps

$30

N/A

N/A

0 %

4.500% Senior Notes due 2042

00817YAJ7

Aetna Inc.

$500,000,000

5/15/2042

9

4.625% due 11/15/2044

FIT1

+130 bps

$30

N/A

N/A

0 %

1.750% Senior Notes due 2030

126650DN7

CVS Health Corporation

$1,250,000,000

8/21/2030

10

4.125% due 11/30/2029

FIT1

+106 bps

$30

N/A

N/A

0 %

(1)	Subject to each of the Maximum Tender Offer Amount and proration, the principal amount of each series of Maximum Tender Offer Notes that is purchased in the Maximum Tender Offer will be determined in accordance with the applicable acceptance priority level (in numerical priority order) specified in this column.
(2)	Per $1,000 principal amount of Maximum Tender Offer Notes validly tendered at or prior to the Early Tender Date (as defined below) and accepted for purchase.
(3)	Pricing information has only been provided for the Maximum Tender Offer Notes that are expected to be fully or partially accepted for tender.
(4)	The proration factor has been rounded to the nearest tenth of a percentage point for presentation purposes.

The Maximum Tender Offer is being made upon the terms and subject to the conditions set forth in the Offer to Purchase dated December 2, 2024 (as it may be amended or supplemented from time to time, the "Offer to Purchase"), which sets forth a more detailed description of the Maximum Tender Offer. Copies of the Offer to Purchase are available at www.dfking.com/cvs. The Maximum Tender Offer is open to all registered holders (individually, a "Holder" and collectively, the "Holders") of the Maximum Tender Offer Notes.

The Total Consideration payable by CVS Health for the Maximum Tender Offer Notes is a price per $1,000 principal amount calculated as described in the Offer to Purchase in a manner intended to result in a yield to maturity or first par call date, as the case may be, equal to the sum of the yield to maturity of the applicable U.S. Treasury reference security specified in the table above as determined at 10:00 a.m., New York City time, on December 16, 2024 and the applicable fixed spread shown in the table above.

Maximum Tender Offer Notes that were tendered and not validly withdrawn at or prior to 5:00 p.m., New York City time, on December 13, 2024 (the "Early Tender Date") and that are accepted for purchase will receive the applicable Total Consideration, which includes the Early Tender Payment (as defined in the Offer to Purchase). Maximum Tender Offer Notes that are tendered after the Early Tender Date but at or prior to 5:00 p.m., New York City time, on December 31, 2024 (the "Maximum Tender Offer Expiration Date") (unless earlier terminated by CVS Health as described in the Offer to Purchase) and that are not validly withdrawn and that are accepted for purchase will receive only the applicable Tender Offer Consideration (as defined in the Offer to Purchase), which is the applicable Total Consideration minus the Early Tender Payment.

The Maximum Tender Offer Withdrawal Deadline of 5:00 p.m., New York City time, on December 13, 2024 has passed and, accordingly, Maximum Tender Offer Notes validly tendered in the Maximum Tender Offer may no longer be withdrawn.  The settlement date for the Maximum Tender Offer Notes validly tendered at or prior to the Early Tender Date and accepted for purchase is expected to be December 18, 2024, the third business day after the Early Tender Date (the "Early Settlement Date"). Although the Maximum Tender Offers is scheduled to expire at 5:00 p.m., New York City time, on December 31, 2024, unless extended or terminated, because the aggregate purchase price of Notes validly tendered (and not validly withdrawn) prior to the Early Tender Date exceeded the Maximum Tender Offer Amount, there is not expected to be a Final Settlement Date (as defined in the Offer to Purchase), and no Notes tendered after the Early Tender Date are expected to be accepted for purchase.  

In addition to the Total Consideration for the Maximum Tender Offer Notes, Holders of the Maximum Tender Offer Notes accepted for purchase on the Early Settlement Date will receive accrued and unpaid interest ("Accrued Interest") on those Maximum Tender Offer Notes from the last interest payment date with respect to those Maximum Tender Offer Notes to, but not including, the Early Settlement Date.

CVS Health expressly reserves the right, in its sole discretion, subject to applicable law, to amend, extend or terminate the Maximum Tender Offer with respect to any or all series of Maximum Tender Offer Notes at any time if any condition to the Maximum Tender Offer is not satisfied. The Maximum Tender Offer is not conditioned on any minimum principal amount of Maximum Tender Offer Notes being tendered but the Maximum Tender Offer is subject to certain other general conditions as described in the Offer to Purchase.

CVS Health has retained Barclays Capital Inc. and Mizuho Securities USA LLC to act as Dealer Managers for the Maximum Tender Offer. D.F. King & Co., Inc. has been retained to act as the Tender and Information Agent for the Maximum Tender Offer. The Offer to Purchase may be accessed at the following link: http://www.dfking.com/cvs. Requests for assistance relating to the procedures for tendering Maximum Tender Notes may be directed to the Tender and Information Agent either by email at cvs@dfking.com, or by phone (212) 269-5550 (for banks and brokers only) or (800) 487-4870 (for all others toll free). Requests for assistance relating to the terms and conditions of the Maximum Tender Offer may be directed to Barclays Capital Inc. at (800) 438-3242 (toll free) or (212) 528-7581 (collect) or Mizuho Securities USA LLC at (866) 271-7403 (toll-free) or (212) 205-7741. Beneficial owners may also contact their broker, dealer, commercial bank, trust company or other nominee for assistance.

This press release does not constitute an offer to sell or purchase, or a solicitation of an offer to sell or purchase, or the solicitation of tenders with respect to, any securities, including the Maximum Tender Offer Notes. No offer, solicitation, purchase or sale will be made in any jurisdiction in which such an offer, solicitation, or sale would be unlawful. The Maximum Tender Offer is being made solely pursuant to the Offer to Purchase made available to Holders of the Maximum Tender Offer Notes. None of CVS Health, the Dealer Managers, Tender and Information Agent or the trustees with respect to the Maximum Tender Offer Notes, or any of their respective affiliates, is making any recommendation as to whether or not Holders should tender or refrain from tendering all or any portion of their Maximum Tender Offer Notes in response to the Maximum Tender Offer. Holders are urged to evaluate carefully all information in the Offer to Purchase, consult their own investment and tax advisers and make their own decisions whether to tender Maximum Tender Offer Notes in the Maximum Tender Offer, and, if so, the principal amount of Maximum Tender Offer Notes to tender.

About CVS Health

CVS Health is a leading health solutions company building a world of health around every consumer it serves and connecting care so that it works for people wherever they are. As of September 30, 2024, the Company had more than 9,000 retail locations, more than 900 walk-in medical clinics, more than 225 primary care medical clinics, a leading pharmacy benefits manager with approximately 90 million plan members and expanding specialty pharmacy solutions, and a dedicated senior pharmacy care business serving more than 800,000 patients per year. The Company also serves an estimated more than 36 million people through traditional, voluntary and consumer-directed health insurance products and related services, including expanding Medicare Advantage offerings and a leading standalone Medicare Part D prescription drug plan. The Company is creating new sources of value through its integrated model allowing it to expand into personalized, technology driven care delivery and health services, increasing access to quality care, delivering better health outcomes and lowering overall health care costs.

Forward-Looking Statements

This press release contains forward-looking statements. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements made by or on behalf of CVS Health. By their nature, all forward-looking statements are not guarantees of future performance or results and are subject to risks and uncertainties that are difficult to predict and/or quantify. Actual results may differ materially from those contemplated by the forward-looking statements due to the risks and uncertainties described in our Securities and Exchange Commission filings, including those set forth in the Risk Factors section and under the heading "Cautionary Statement Concerning Forward-Looking Statements" in our most recently filed Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2024, June 30, 2024 and September 30, 2024 and our Current Reports on Form 8-K.

You are cautioned not to place undue reliance on CVS Health's forward-looking statements. CVS Health's forward-looking statements are and will be based upon management's then-current views and assumptions regarding future events and operating performance, and are applicable only as of the dates of such statements. CVS Health does not assume any duty to update or revise forward-looking statements, whether as a result of new information, future events, uncertainties or otherwise.

Investor	Larry McGrath	Media	Ethan Slavin
Contact:	Executive Vice President	Contact:	860-273-6095
	Chief Strategy Officer & Chief Strategic Advisor to the CEO investorinfo@cvshealth.com		Ethan.Slavin@CVSHealth.com

 

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SOURCE CVS Health

FAQ

What is the maximum purchase price for CVS Health's Maximum Tender Offer?

CVS Health's Maximum Tender Offer has a maximum purchase price of $1,774,423,242.62, excluding accrued interest.

When is the settlement date for CVS Health's Maximum Tender Offer?

The settlement date for notes validly tendered by the Early Tender Date is expected to be December 18, 2024.

Which CVS Health notes will be accepted at 100% proration in the tender offer?

The 2.700% Senior Notes due 2040, 3.875% Senior Notes due 2047, and 4.250% Senior Notes due 2050 will be accepted at 100% proration.

What is the Early Tender Payment in CVS Health's tender offer?

The Early Tender Payment is $30 per $1,000 principal amount of notes validly tendered by the Early Tender Date.

Why won't CVS Health accept notes tendered after the Early Tender Date?

Due to oversubscription at the Early Tender Date, where the aggregate purchase price of tendered notes exceeded the Maximum Tender Offer Amount, no notes tendered after this date will be accepted.