CVS nearing deal to buy Oak Street Health: WSJ

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CVS Health is reportedly getting close to an agreement to acquire Oak Street Health, a primary care provider geared toward the Medicare population, for about $10.5 billion including debt.

According to reporting by the Wall Street Journal that cites sources familiar with the deal, the companies are considering a price of about $39 per share. The acquisition could be announced this week, pushing the pharmacy and retail giant deeper into care delivery.

The primary care provider’s stock soared after the news broke late Monday. Bloomberg first reported last month that CVS was exploring a possible acquisition of Oak Street Health. 

CVS and Oak Street Health said they don’t comment on rumors or speculation.

THE LARGER TREND

According to a presentation at last month’s J.P. Morgan Healthcare conference, Oak Street Health owns and operates 169 clinics in 21 states. In the third quarter, the primary care provider reported revenue of $545.7 million, a 40% year-over-year increase. It also posted a net loss of $130.4 million compared with a loss of $110 million in the Q3 2021. 

Retail companies like CVS, Walgreens, Walmart and Amazon have been expanding their presence in care delivery. 

In January, hybrid care provider Carbon Health announced it had received a $100 million investment from CVS Health Ventures, and the pharmacy company would pilot Carbon’s offerings in select locations. 

CVS also recently agreed to acquire Signify Health for about $8 billion, beating out Amazon, UnitedHealth Group and others to buy the home health platform. At the time, the companies said the deal would likely close during the first half of the year. 

Competitor Walgreens has also been making moves in the space. In November, VillageMD, a primary care provider backed by the company, announced plans to purchase Summit Health, a multispecialty medical practice and parent company of urgent care provider CityMD. Walgreens said it would invest $3.5 billion in a combination of equity and debt to support the deal.

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