CVS acquires Oak Street primary care for $10.6 billion

CVS Health is plunging deeper into providing primary care with an approximately $10.6 billion deal to acquire Oak Street Health.

Associated Press

Feb 8, 2023, 12:36 PM

Updated 475 days ago

Share:

CVS acquires Oak Street primary care for $10.6 billion
CVS Health is plunging deeper into primary care services, buying primary care provider Oak Street Health for approximately $10.6 billion.
The drugstore chain said Wednesday it would pay $39 per share in cash for each share of Oak Street Health in a deal expected to close this year.
Oak Street Health runs care centers mostly for lower-to-middle income people with Medicare Advantage plans. Those are privately run versions of the federal government’s program for people aged 65 and older.
With its latest acquisition, CVS Health Corp. aims to capitalize on the federal government’s interest in cutting costs and improving the health of people in its Medicare program.
The government wants more people in value-based care arrangements, which basically focus on keeping patients healthy and any chronic problems like diabetes under control. The goal: Ward off big medical expenses like hospital stays.
In addition to running nearly 10,000 drugstores nationwide, CVS Health also covers millions of people with Medicare Advantage plans through its Aetna arm. Big insurers like that need a major presence in primary care to help control costs, BTIG analyst David Larsen wrote before Wednesday's deal was announced.
“It is clear that value-based-care is becoming a dominant model in healthcare,” Larsen said.
Oak Street Health specializes in this type of care.
Its centers use doctors, social workers and other care providers to help people manage their health.
Oak Street CEO Michael Pykosz has said that a lot of costs stem from people with chronic health problems who receive poor care and wind up with big medical problems.
“Solving that problem creates a massive, massive market opportunity for Oak Street Health,” Pykosz said in January at an annual conference hosted by JPMorgan.
Founded in 2012, Oak Street runs 169 locations in 21 states. Its revenue grew to $1.43 billion in 2021, and analysts expect that it topped $2 billion last year.
But the company also has booked a string of annual losses as it spends money opening new clinics.
CVS Health Corp., based in Woonsocket, Rhode Island, has been expanding the amount of care it provides through its drugstores, and company leaders have been talking for well over a year about adding more primary care as rival health care giants UnitedHealth Group and Walgreens have done.
“We believe it’s an asset that we want in our portfolio,” CEO Karen Lynch told investors at the JPMorgan conference.
The company is already spending $8 billion on another growth priority: buying home health care provider Signify Health. CVS Health expects that deal to close in the first half of this year.
Shares of Chicago-based Oak Street Health Inc. jumped nearly 5%, while CVS Health’s stock rose slightly in Wednesday before the opening bell.


More from News 12
1:27
Driver airlifted to hospital after crash on Palisades Parkway ramp in Bardonia

Driver airlifted to hospital after crash on Palisades Parkway ramp in Bardonia

2:10
Sunny skies and warm temps for Tuesday in the Hudson Valley

Sunny skies and warm temps for Tuesday in the Hudson Valley

0:24
Appalachian Trail at Bear Mountain State Park reopens after yearlong closure

Appalachian Trail at Bear Mountain State Park reopens after yearlong closure

2:17
Made in the Hudson Valley: Tarrytown's Main Street Sweets celebrates 25 years of homemade ice cream

Made in the Hudson Valley: Tarrytown's Main Street Sweets celebrates 25 years of homemade ice cream

1:01
Headlines: Woodbourne double stabbing, Rye crash, attempted arson in Poughkeepsie

Headlines: Woodbourne double stabbing, Rye crash, attempted arson in Poughkeepsie

News 12 Westchester/Hudson Valley Daily Poll

News 12 Westchester/Hudson Valley Daily Poll

0:22
Traffic Alert: Kingston water department working to locate system leak

Traffic Alert: Kingston water department working to locate system leak

1:59
Stormy weather doesn't deter holiday travelers

Stormy weather doesn't deter holiday travelers

0:33
Speeding tickets, DUIs, and accidents keep state police busy on Memorial Day weekend

Speeding tickets, DUIs, and accidents keep state police busy on Memorial Day weekend

Is your dad awesome? Hudson Valley tell us why your dad rocks!

Is your dad awesome? Hudson Valley tell us why your dad rocks!

0:22
All lanes reopen on Mario Cuomo Bridge following vehicle rollover accident

All lanes reopen on Mario Cuomo Bridge following vehicle rollover accident

1:04
Mount Vernon offers Civil War songs presentation to commemorate Memorial Day

Mount Vernon offers Civil War songs presentation to commemorate Memorial Day

1:58
White Plains celebrates Memorial Day with parade, ceremony to honor those who have served in U.S. military

White Plains celebrates Memorial Day with parade, ceremony to honor those who have served in U.S. military

0:19
Woman arrested for attempted arson in Poughkeepsie

Woman arrested for attempted arson in Poughkeepsie

0:24
Bruce Springsteen postpones 2 more shows due to vocal issues

Bruce Springsteen postpones 2 more shows due to vocal issues

0:24
2 arrested for double stabbing incident in Woodbourne

2 arrested for double stabbing incident in Woodbourne

2:11
Fallen heroes honored during Memorial Day ceremonies in Westchester and Rockland counties

Fallen heroes honored during Memorial Day ceremonies in Westchester and Rockland counties

1:42
Memorial Day ceremonies and parades kick off around the Hudson Valley

Memorial Day ceremonies and parades kick off around the Hudson Valley

1:44
Remember and honor: Mamaroneck Memorial Day parade pays tribute to sacrifices of veterans

Remember and honor: Mamaroneck Memorial Day parade pays tribute to sacrifices of veterans

Wennberg scores in OT, Rangers top Panthers 5-4 to take lead in East finals

Wennberg scores in OT, Rangers top Panthers 5-4 to take lead in East finals