CVS Health Corp.

The stable outlook on CVS Health Corp. incorporates our expectation that consolidated performance trends at both CVS and Aetna businesses remain positive. We expect the company will repay about $5 billion or more of debt annually with cash flows while investing in business initiatives including strengthening its in-store capabilities. As a result, we forecast leverage declining to the low 4x at the end of 2019 and below 4x by the end of 2020. We could lower the ratings if there are delays in reducing leverage (such as if debt to EBITDA does not fall to the low 4x area one year after the transaction closes) with prospects for further deleveraging in future years. This could occur if cash flow generation

...Robust cash flows and financial policy support debt reduction and growth initiatives.We expect adjusted debt to EBITDA in the low 4x area by year-end 2019 and further deleveraging in 2020 to less than 4x as the company uses its ample cash flows--largely generated from profit conversion--to partly reduce debt while reinvesting in its business for growth initiatives. CVS Health Corp. is a vertically integrated health care services operator with good market positions.The Aetna acquisition creates opportunities for the combined company to address the evolving industry landscape. CVS' large store footprint is close to 70% of the U.S. population. We believe repurposing the stores to bring health care services closer to patient homes enhances the attractiveness of the company's business prospects by potentially reducing health care costs to patients and improving the contract economics for health care payers....

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