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Fixed Income Information

CVS Health Corporation typically funds its operations through internally generated cash flow and commercial paper as well as through borrowings under various committed and uncommitted lines of credit. Our strong balance sheet has allowed us at times to enter the capital markets to fund acquisitions. This section provides details in regard to our financing.

Credit Ratings

MOODY’S
Debt Type Rating As of
Long-Term Debt Baa2 09.30.20
Short-Term Debt P-2 09.30.20
ALIC Financial Strength A2 09.30.20
Outlook Negative 09.30.20
STANDARD & POOR’S
Debt Type Rating As of
Long-Term Debt BBB 09.30.20
Short-Term Debt A-2 09.30.20
ALIC Financial Strength A- 09.30.20
Outlook Stable 09.30.20

Borrowing & Credit Agreements

* Includes unexchanged Omnicare notes

Sale-leaseback Transactions

The Company finances a portion of its store development program through sale-leaseback transactions. The properties are generally sold at net book value, which approximates fair value, and the resulting leases generally qualify and are accounted for as operating leases. The Company does not have any retained or contingent interests in the stores and does not provide any guarantees, other than a guarantee of lease payments, in connection with the sale-leaseback transactions.

Between 1995 and 1997, the Company sold or spun off a number of subsidiaries, including Bob’s Stores and Linens ‘n Things, each of which subsequently filed for bankruptcy, and Marshalls. In many cases, when a former subsidiary leased a store, the Company provided a guarantee of the former subsidiary’s lease obligations for the initial lease term and any extension thereof pursuant to a renewal option provided for in the lease prior to the time of the disposition. When the subsidiaries were disposed of and accounted for as discontinued operations, the Company’s guarantees remained in place, although each initial purchaser agreed to indemnify the Company for any lease obligations the Company was required to satisfy. If any of the purchasers or any of the former subsidiaries fail to make the required payments under a store lease, the Company could be required to satisfy those obligations, and any significant adverse impact of COVID-19 on such purchasers and/or former subsidiaries increases the risk that the Company will be required to satisfy those obligations.

As of September 30, 2020, the Company guaranteed 76 such store leases (excluding the lease guarantees related to Linens ‘n Things, which have been recorded as a liability on the unaudited condensed consolidated balance sheets), with the maximum remaining lease term extending through 2030.

Debt Maturity Schedule

q3-2020-data