CVS Health in $10.6 billion deal to buy primary care provider Oak Street Health
CVS Health Corp. continues its push into health care, making one of its biggest investments yet in direct patient care.
The pharmacy giant will acquire Oak Street Health in an all-cash transaction at $39 per share, in a deal valued at approximately $10.6 billion.
The Chicago-based Oak Street operates primary care centers that service people with Medicare Advantage plans, particularly those in underserved areas and with chronic health problems. The company, which went public in 2020, employs approximately 600 primary care providers and has 169 medical centers across 21 states. By 2026, Oak Street Health will have over 300 centers, the company said.
CVS, which purchased insurance giant Aetna in 2018, has been steadily expanding in health care. The company entered into an agreement in 2022 to acquire home health care services company Signify Health for $8 billion, with the deal expected to close in the first half of this year. And in January, CVS Health Ventures, the corporate venture capital platform of CVS Health, announced a partnership with primary care provider Carbon Health, along with a $100 million investment.
“Combining Oak Street Health's platform with CVS Health's unmatched reach will create the premier value-based primary care solution," said Karen S. Lynch, president and CEO of CVS Health, which has some 9,900 locations across the country. "Enhancing our value-based offerings is core to our strategy as we continue to redefine how people access and experience care that is more affordable, convenient and connected."
The deal comes amid a push from the federal government to cut costs and improve the health of people on Medicare with value-based programs that help patients manage their care and keep their chronic conditions under control. Oak Street specializes in this type of care.
“This agreement with CVS Health will accelerate our ability to deliver on our mission and continue improving health outcomes, lowering medical costs, and providing a better patient experience while offering significant value to our shareholders," said Oak Street Health CEO Mike Pykosz. "Together with CVS Health, we will have access to greater resources and capabilities to expand the reach of our platform, provide more opportunities for our teammates and, most importantly, make a meaningful difference in the lives of the patients we serve."
When the deal is completed, Pykosz will continue to lead Oak Street Health, which will become part of CVS Health's recently formed Health Care Delivery organization.
The transaction was approved by the boards of both companies and is subject to approval by a majority of Oak Street Health's stockholders, regulatory approval and satisfaction of other customary closing conditions.
“Oak Street Health is a premier value-based primary care platform," said Shawn M. Guertin, CFO of CVS. "We believe that in partnership with CVS Health, Oak Street Health can accelerate its growth and provide an attractive return to our shareholders over time.”