CVS Health Corporation Announces Expiration and Results of Any and All Tender Offer

Rhea-AI Summary

CVS Health announced the results of its cash tender offer for its 4.100% Senior Notes due 2025. As of December 6, 2024, $225,979,000 in principal amount was validly tendered, with an additional $5,000 tendered under guaranteed delivery procedures. The settlement date is expected to be December 11, 2024.

The company plans to fund the purchase using proceeds from its newly issued 7.000% Series A Junior Subordinated Notes due 2055 and 6.750% Series B Junior Subordinated Notes due 2054. CVS Health expects to accept all validly tendered notes for purchase.

This tender offer is part of a larger initiative that includes a Maximum Tender Offer with a maximum purchase price of $2,000,000,000, less the amount paid for the Any and All Notes.

Positive

• Successful debt refinancing initiative with strong tender participation
• Company maintains financial flexibility by replacing existing debt with new notes

Negative

• New notes carry higher interest rates (6.750-7.000%) compared to the tendered notes (4.100%)
• Increased interest expense will impact future financial results

Insights

Financial Analyst

CVS Health's tender offer for its 4.100% Senior Notes due 2025 represents a significant debt management initiative. The company received tenders for $225,979,000 in principal amount, with an additional $5,000 through guaranteed delivery procedures, out of the total outstanding $950,087,000. This represents approximately 23.8% of the outstanding notes.

The refinancing strategy, using proceeds from newly issued Junior Subordinated Notes (7.000% Series A due 2055 and 6.750% Series B due 2054), suggests a shift towards longer-term debt structures. While the new notes carry higher interest rates, the extended maturity profile provides greater financial flexibility. The $2 billion Maximum Tender Offer Amount indicates a substantial commitment to liability management, potentially improving the company's debt profile and financial stability.

Market Research Analyst

This debt restructuring move comes at a strategic time when interest rates are expected to decline in 2024. By replacing shorter-term notes with longer-duration subordinated debt, CVS is effectively locking in rates before potential market shifts. The relatively modest participation rate in the tender offer (23.8%) suggests that many noteholders may be waiting for better opportunities or prefer to hold until maturity in March 2025.

The issuance of junior subordinated notes, while carrying higher interest rates, demonstrates CVS's focus on optimizing its capital structure. This transaction could positively impact the company's credit metrics and financial flexibility, though it comes with increased interest costs. The market typically views proactive debt management positively, especially when it extends maturity profiles without significantly increasing leverage.

WOONSOCKET, R.I., Dec. 9, 2024 /PRNewswire/ -- CVS Health Corporation ("CVS Health", NYSE: CVS) announced today the results of the previously announced cash tender offer (the "Any and All Tender Offer") for any and all of its 4.100% Senior Notes due 2025 (the "Any and All Notes").

As of 5:00 p.m., New York City time, on December 6, 2024 (the "Any and All Expiration Date") as reported by D.F. King & Co., Inc., the Tender and Information Agent for the Any and All Tender Offer, the principal amount of the Any and All Notes listed in the table below has been validly tendered and not validly withdrawn, or tendered pursuant to the guaranteed delivery procedures (the "Guaranteed Delivery Procedures") described in the Offer to Purchase dated December 2, 2024 (as amended or supplemented from time to time, the "Offer to Purchase"). In order to be eligible to participate in the Any and All Tender Offer, holders (individually, a "Holder" and collectively, the "Holders") of Any and All Notes tendered pursuant to the Guaranteed Delivery Procedures at or prior to the Any and All Expiration Date must deliver such Any and All Notes to CVS Health at or prior to 5:00 p.m., New York City time, on December 10, 2024 (the "Any and All Guaranteed Delivery Expiration Date") (unless extended by CVS Health as described in the Offer to Purchase).

In addition to the Any and All Tender Offer, CVS Health previously announced its Maximum Tender Offer (as defined in the Offer to Purchase) for the Maximum Tender Offer Notes (as defined in the Offer to Purchase, and collectively with the Any and All Notes, the "Notes") concurrently with the Any and All Tender Offer. The maximum purchase price in the Maximum Tender Offer, not including Accrued Interest (as defined below) (such maximum purchase price, the "Maximum Tender Offer Amount"), is equal to $2,000,000,000 less the aggregate purchase price, not including Accrued Interest, paid or payable in respect of the Any and All Notes validly tendered and accepted for purchase. Because $5,000 aggregate principal amount of the Any and All Notes remain subject to the Guaranteed Delivery Procedures, the Maximum Tender Offer Amount is subject to change. Holders are urged to read the Offer to Purchase carefully before making any decision with respect to the Maximum Tender Offer.

Holders of all Any and All Notes validly tendered and not validly withdrawn at or prior to the Any and All Expiration Date and accepted for purchase were eligible to receive the applicable Total Consideration set forth in the table below, plus accrued and unpaid interest ("Accrued Interest") up to, but not including, the settlement date of the Any and All Tender Offer. For the avoidance of doubt, Accrued Interest payable with respect to Any and All Notes validly tendered pursuant to the Guaranteed Delivery Procedures and accepted for purchase shall cease to accrue on the Any and All Settlement Date (as defined below).

Any and All Notes:

Title of Notes	CUSIP Number	Original Issuer	Principal Amount Outstanding	Maturity Date	Principal Amount Tendered	Principal Amount Tendered Pursuant to Guaranteed Delivery Procedures
4.100% Senior Notes due 2025	126650CW8	CVS Health Corporation	$950,087,000	3/25/2025	$225,979,000	$5,000

The settlement date for the Any and All Notes validly tendered at or prior to the Any and All Expiration Date, or validly tendered pursuant to the Guaranteed Delivery Procedures, and accepted for purchase is expected to be December 11, 2024, the third business day following the Any and All Expiration Date (the "Any and All Settlement Date").

CVS Health expects that it will accept for purchase all of the Any and All Notes validly tendered at or prior to the Any and All Expiration Date, and all Any and All Notes delivered at or prior to the Any and All Guaranteed Delivery Expiration Date.  CVS Health will fund the purchase of the Any and All Notes with part of the proceeds from the issuance of CVS Health's 7.000% Series A Junior Subordinated Notes due 2055 and 6.750% Series B Junior Subordinated Notes due 2054 (the "New Notes").

CVS Health has retained Barclays Capital Inc. and Mizuho Securities USA LLC to act as Dealer Managers for the Tender Offers (as defined in the Offer to Purchase). D.F. King & Co., Inc. has been retained to act as the Tender and Information Agent for the Tender Offers. 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 Notes (as defined in the Offer to Purchase) 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 Tender Offers 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 Notes or the New 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 Tender Offers are being made solely pursuant to the Offer to Purchase made available to Holders of the Notes. None of CVS Health, the Board of Directors of CVS Health, the Dealer Managers, Tender and Information Agent or the trustees with respect to the 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 Notes in response to the Tender Offers. 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 Notes in the Tender Offers, and, if so, the principal amount of 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  Contact:

Larry McGrath Executive Vice President Chief Strategy Officer & Chief Strategic Advisor to the CEO investorinfo@cvshealth.com

Media Contact:

Ethan Slavin 860-273-6095 Ethan.Slavin@CVSHealth.com

View original content to download multimedia:https://www.prnewswire.com/news-releases/cvs-health-corporation-announces-expiration-and-results-of-any-and-all-tender-offer-302325595.html

SOURCE CVS Health

FAQ

What is the settlement date for CVS Health's tender offer announced in December 2024?

The settlement date for CVS Health's (CVS) tender offer is expected to be December 11, 2024.

How much of CVS Health's 4.100% Senior Notes due 2025 were tendered?

A total of $225,979,000 in principal amount was validly tendered, plus an additional $5,000 under guaranteed delivery procedures.

What are the interest rates on CVS Health's new junior subordinated notes?

CVS Health's new notes include 7.000% Series A Junior Subordinated Notes due 2055 and 6.750% Series B Junior Subordinated Notes due 2054.