CVS Health Corporation (NYSE:CVS), currently trading near its 52-week low with a market capitalization of $69.5 billion, has announced the issuance and sale of $3 billion in aggregate principal amount of junior subordinated notes, according to a recent SEC filing. According to InvestingPro data, the company's short-term obligations currently exceed its liquid assets, with a current ratio of 0.8.
The company, a leader in the retail drugstore industry, sold $2.25 billion of its 7.000% Fixed-to-Fixed Rate Series A Junior Subordinated Notes due 2055, alongside $750 million of its 6.750% Fixed-to-Fixed Rate Series B Junior Subordinated Notes due 2054, on Monday. This financial move was made under CVS Health's Registration Statement on Form S-3ASR, initially filed on May 25, 2023. The company's total debt stands at $82.7 billion as of the latest quarter.
The notes were issued pursuant to a Subordinated Indenture dated May 25, 2007, between CVS Health and The Bank of New York Mellon (NYSE:BK) Trust Company, N.A., as trustee. This agreement was further supplemented by two additional indentures specific to each series of notes, both dated Monday.
CVS Health retains the ability to issue more subordinated debt securities in the future under the same Base Indenture. The Base Indenture and the Supplemental Indentures have been filed with the SEC and are incorporated by reference into the Registration Statement.
In other recent news, CVS Health has secured $3 billion in junior subordinated notes due 2054 and 2055, with net proceeds estimated at approximately $2.96 billion. This move is part of CVS Health's ongoing efforts to manage its capital structure and financial obligations. Concurrently, the company has announced plans for a potential bond sale and a $3 billion debt buyback, signaling management's confidence in the company's liquidity and ability to refinance its obligations.
CVS Health's third-quarter earnings report revealed an adjusted earnings per share of $1.09, with total revenues exceeding $95 billion, marking a 6% increase year-over-year. The company also announced leadership changes and plans to close approximately 270 stores by 2025 as part of an optimization strategy.
Analysts from TD (TSX:TD) Cowen, Piper Sandler, Leerink Partners, and RBC (TSX:RY) Capital Markets have updated their price targets and ratings for CVS Health. TD Cowen has increased the share price target from $73.00 to $80.00 and maintained a Buy rating, projecting a 6% earnings per share growth for CVS Health in 2025. Piper Sandler reduced its price target to $64 but maintained an Overweight rating, while Leerink Partners and RBC Capital Markets revised their price targets downward, maintaining Market Perform and Outperform ratings respectively.
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