CVS Health will acquire primary care provider Oak Street Health in an all-cash transaction at $39 per share, representing an enterprise value of approximately $10.6 billion. The combination is designed to improve patients’ long-term health by reducing care costs and improving outcomes, particularly in underserved communities.
Oak Street Health is a multi-payor, value-based company that aims to help older adults stay healthy and live life more fully. More than 50% of Oak Street Health’s patients have a housing, food or isolation risk factor, and its 169 medical centers across 21 states are primarily located where healthcare is needed the most.
The healthcare company employees 600 primary care providers and offers a technology solution called Canopy, which is fully integrated with Oak Street Health’s operations and utilized when determining the appropriate type and level of care for each patient. CVS is seeking to enhance these capabilities with its own community, home and digital offerings.
“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 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.”
“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 Mike Pykosz, CEO of Oak Tree Health in a statement. “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.”
Following the close of the transaction, Pykosz will continue to lead Oak Street Health, which will become part of CVS Health’s recently formed Health Care Delivery organization. Additionally, Oak Street Health will continue to serve its extensive network of health plan partners and patients.
This deal is CVS’ second major healthcare acquisition in less than six months, further fueling its medtail ambitions. In September 2022, CVS acquired Signify Health for $8 billion to gain access to the platform’s advanced analytics, technology and nationwide healthcare provider networks, which will help the retailer expand its own offerings.