CVS Health to Pay $10.6 Billion for Oak Street Health

Feb. 8, 2023

With focus on value-based care arrangements in underserved communities, Oak Street Health employs approximately 600 primary care providers and has 169 medical centers across 21 states.

David Raths

CVS Health (NYSE: CVS) has announced plans to purchase value-based primary care company Oak Street Health (NYSE: OSH) for $39 per share, or approximately $10.6 billion.

CVS Health said the combination of the two companies could significantly benefit patients' long-term health by reducing care costs and improving outcomes – particularly for those in underserved communities. The company noted that more than 50 percent of Oak Street Health's 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," said CVS Health President and CEO Karen S. Lynch, 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."

Oak Street Health employs approximately 600 primary care providers and has 169 medical centers across 21 states. CVS Health said that Oak Street’s technology solution, Canopy, will be enhanced by CVS Health's community, home and digital offerings.

"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, 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. CVS said that Oak Street Health will continue to serve its extensive network of health plan partners and patients – consistent with CVS Health's payor-agnostic approach.

The press release announcing the acquisition projects that by 2026, Oak Street Health will have over 300 centers, each of which has the potential to contribute $7 million of Oak Street Health Adjusted EBITDA at maturity, representing more than $2 billion of Oak Street Health embedded Adjusted EBITDA at that time. Additionally, CVS Health projects more than $500 million in synergy potential over time, enhancing CVS Health's long-term adjusted operating income growth.

CVS Health also is in the process of buying value-based care company Signify Health for approximately $8 billion.