Home Economy Economic Activity CVS Health Corp. starts $5B bond sale

CVS Health Corp. starts $5B bond sale

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PBN Staff

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05/10/2024

CVS Pharmacy — CVS HEALTH CORP. started selling $5 billion in investment-grade corporate bond a week after the company missed first-quarter expectations and chopped its 2024 outlook. /ASSOCIATED PRESS FILE PHOTO / GENE J. PUSKAR

WOONSOCKET – CVS Health Corp. started selling $5 billion in investment-grade corporate bonds a week after the company missed first-quarter expectations and chopped its 2024 outlook. The Rhode Island-based drugstore chain is planning to use the proceeds for general corporate purposes such as working capital repay outstanding debt, which includes notes that will mature this

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WOONSOCKET – CVS Health Corp. started selling $5 billion in investment-grade corporate bonds a week after the company missed first-quarter expectations and chopped its 2024 outlook. The Rhode Island-based drugstore chain is planning to use the proceeds for general corporate purposes such as working capital repay outstanding debt, which includes notes that will mature this year, according to its U.S. Security Exchange Commission filing. The sale, which launched on May 7, is being underwritten by Bank of America Corp., Barclays PLC. Goldman Sachs and Wells Fargo. The notes are being offered in five parts ranging from 5.4% to 6.05%. CVS said on May 1 it expects adjusted earnings for 2024 to be at least $7, down its previous forecast of at least $8.30. Analysts had been forecasting earnings of $8.27 per share, according to FactSet. CVS scaled back expectations earlier this year as it worked to understand why costs keep rising from Medicare Advantage, the privately run version of Medicare, the government’s health program for people age 65 and older. Company leaders said on May 1 they aren’t seeing the same pressure from its commercial insurance business, which includes plans sold to employers and on individual insurance exchanges. The guidance reduction was much more significant than expected, according to Leerink analyst Michael Cherny. He said in a research note that it raises questions about the company’s path to reaching its previously stated goal of double-digit growth in earnings per share next year. In the first quarter, CVS’s net income plunged 48% to $1.11 billion. It booked adjusted earnings of $1.31 per share on total revenue of $88.4 billion. Analysts expected earnings of $1.69 per share on $89.33 billion in revenue for the first quarter. CVS runs one of the nation’s largest drugstore chains and a huge pharmacy benefit management business that operates prescription drug coverage for big clients like insurers and employers. It also covers more than 26 million people with health insurance through its Aetna arm. That includes the Medicare Advantage business.