Fitch Ratings has placed CVS Health Corporation’s (NYSE: CVS) and Aetna Inc.’s ‘BBB’ long-term issuer default ratings and associated debt ratings on Rating Watch Positive following CVS’s announcement that it intends to separate its retail pharmacy business into a new publicly traded company.
The agency also placed CVS Health’s ‘F2’ short-term issuer rating and commercial paper ratings on Rating Watch Evolving, indicating that the short-term ratings could be raised or lowered depending on the company’s financial position after the transaction.
- Fitch Ratings placed CVS Health and Aetna’s ‘BBB’ long-term issuer ratings on Rating Watch Positive following CVS’s proposed separation of its retail pharmacy operations.
- CVS reduced EBITDAR leverage from 4.1x at the end of 2025 to 3.6x in Q3 2026, supported by stronger operating earnings and approximately $4 bn in debt repayments.
- Fitch expects CVS Health’s post-separation long-term rating to remain at ‘BBB’ or improve to ‘BBB+’, depending primarily on leverage, capital structure and earnings composition.
Fitch expects CVS Health’s long-term credit rating to remain at ‘BBB’ or potentially increase to ‘BBB+’ following the separation.
However, the final assessment will depend on the group’s capital structure, leverage, earnings mix and progress in reducing debt before the transaction.
CVS Health’s pharmacy spin-off could support credit ratings
CVS announced plans to separate its retail pharmacy operations into an independent publicly traded company, CVS Pharmacy.The transaction would establish two distinct businesses.
The remaining CVS Health would focus on healthcare insurance and services, including Aetna, CVS Caremark, CVS Specialty, Oak Street Health and Signify Health.
CVS Pharmacy would operate approximately 9,000 retail pharmacies alongside mail-order pharmacy services, MinuteClinic and the Health100 technology business.
Fitch expects the separation to change CVS Health’s earnings composition sufficiently for the agency to assess the remaining company under its Insurance Rating Criteria.
The rating review assumes CVS will not incur additional debt as part of the restructuring. Fitch said the Rating Watch could remain in place for longer than six months while it evaluates the final transaction structure and financial implications.
CVS reduces leverage to 3.6x as operating performance improves
CVS’s improving financial performance has strengthened its credit profile ahead of the planned separation. Consolidated EBITDAR leverage declined from 4.1x at the end of 2025 to 3.6x at the end of September 2026.
The reduction was supported by stronger earnings in the Pharmacy & Consumer Wellness segment and the continued recovery of the Health Care Benefits business. CVS also repaid approximately $4 bn in maturing debt during the first nine months of 2026.
Fitch expects consolidated EBITDAR leverage to remain between 3.25x and 3.75x before the pharmacy business is separated. Leverage will be the primary factor determining whether CVS retains its existing ‘BBB’ rating or receives an upgrade to ‘BBB+’.
Fitch forecasts CVS revenue of $420 bn in 2026
Fitch expects consolidated CVS Health revenue to increase approximately 4% to $420 bn in 2026, supported primarily by growth in its Health Services segment.
Revenue growth is projected to moderate to low-single-digit rates annually from 2027. The agency forecasts EBITDAR of approximately $20.7 bn in 2026, remaining broadly stable in subsequent years.
Fitch’s key financial projections for CVS Health
| Financial metric | Fitch forecast |
|---|---|
| 2026 consolidated revenue | $420 bn |
| Revenue growth in 2026 | Approximately 4% |
| 2026 EBITDAR | $20.7 bn |
| 2026 adjusted operating cash flow | $12.7 bn |
| 2026 GAAP operating cash flow | Approximately $15.5 bn |
| 2026 adjusted free cash flow | $6 bn |
| Annual free cash flow after 2026 | $4–5 bn |
| Expected year-end 2026 EBITDAR leverage | 3.6x |
| Longer-term leverage range | 3.25x–3.75x |
Fitch expects adjusted operating cash flow to remain around $11–12 bn annually after 2026.
The agency also assumes CVS will resume share repurchases in the fourth quarter of 2026, financed through available cash and free cash flow.
What could trigger a CVS Health rating upgrade?
Fitch identified sustained debt reduction and stronger cash generation as the principal conditions for a potential upgrade.
Positive rating action could follow if:
- Adjusted EBITDAR leverage remains below 3.25x.
- The ratio of cash flow after capital expenditure to debt stays above 17.5%.
- CVS successfully manages regulatory and market pressures affecting operating margins.
Negative rating action could occur if operating performance weakens or leverage remains above 3.75x while cash flow after capital expenditure falls below 12.5% of debt.
Changes in US healthcare regulations that materially affect demand or profitability could also pressure the ratings.
CVS Health maintains $5.9 bn in available cash
CVS held approximately $5.9 bn in cash and cash equivalents at the parent company and unrestricted subsidiaries as of September 30, 2026.
Fitch considers these funds readily available to support operations and financial obligations. The company also maintains $7.5 bn in revolving credit facilities with staggered expiration dates.
Additional liquidity comes from operating cash flow and access to the commercial paper market. Fitch expects CVS to use operating cash generation to finance capital expenditure and shareholder returns as leverage remains within its target range.
Aetna ratings remain linked to CVS Health
Fitch continues to assess CVS Health and Aetna under its parent-subsidiary linkage methodology.
The agency considers CVS’s assumption of Aetna debt, ownership control and financial support when evaluating their credit profiles. As a result, the two companies’ long-term issuer ratings remain linked.
Following the separation, CVS Health will have a greater concentration of earnings from insurance and related healthcare services.
The final rating will depend on how this business mix affects financial flexibility, capital requirements and debt repayment capacity.
Fitch said its review will remain open until sufficient information is available to assess the post-separation company.
For now, the positive watch signals that the planned restructuring could strengthen CVS Health’s credit profile, although an upgrade has not yet been confirmed.
