CVS Health buys Oak Street Health in $10.6B deal

Steven Loeb · February 8, 2023 · Short URL:

Oak Street Health will become part of CVS's Health Care Delivery organization

Over the last decade, CVS Health has made a name for itself as company willing to spend large amounts of money on major acquisitions; that includes its purchase of Aetna for $69 billion in 2017, one of the largest healthtech acquisitions ever, as well as Signify Health, which it bought for $8 billion in 2021.

There's a good reason that, at the beginning of this year, health tech experts said they believed CVS would the most talked about acquirer over the next 12 months, and it didn't take long for the company to prove them right: on Tuesday, CVS Health announced a definitive agreement to buy value-based primary care platform Oak Street Health. The deal is valued at $10.6 billion, or $39 per share. 

Oak Street Health employs roughly 600 primary care providers and operates 169 medical centers in 21 states; that number is expected to grow to over 300 by 2026. The company serves the Medicare population, with a focus on underserved communities; more than 50% of its patients have a housing, food, or isolation risk factor.  

"Combining Oak Street Health's platform with CVS Health's unmatched reach will create the premier value-based primary care solution," Karen S. Lynch, President and CEO of CVS Health, said in a statement.

"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."

CVS Health and Oak Street Health expect the transaction to close sometime this year. Going forward, Oak Street CEO Mike Pykosz will continue to lead the company, which will become part of CVS Health's recently formed Health Care Delivery organization. 

"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."

CVS is just the latest large healthtech company to make a recent acquisition in the primary care space. That includes Amazon's $3.9 billion acquisition of One Medical in July and VillageMD buying Summit Health-CityMD for $8.9 billion in November, which included investments from Cigna subsidiary Evernorth and Walgreens Boots Alliance. 

UnitedHealthcare, meanwhile, launched its own virtual primary care offering in early 2021.

CVS Health's stock was up 4.38%, or $3.77, to $89.77 a share on Tuesday, while Oak Street's stock was up 4.45%, or $1.50, to $35.19 a share.  

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