CVS reportedly in discussions to buy Oak Street Health for US$10B

USA — CVS Health is reportedly exploring an acquisition of Oak Street Health, which runs primary care centers for Medicare recipients, according to a Bloomberg report.

Citing people familiar with the matter, the report noted that talks are ongoing and a deal could be reached within weeks.

The deal would value Oak Street at more than US$10 billion, including debt. However, the talks could cease without an agreement, the report noted.

Oak Street Health operates primary care centers across the United States for Medicare recipients, the United States’ government insurance program for Americans 65 and older.

According to Bloomberg, private equity firms General Atlantic and Newlight Partners collectively own roughly 39% of Oak Street Health.

The purported deal comes after CVS Health, which operates nearly 10,000 retail pharmacy stores, announced in 2022 it would acquire home healthcare company Signify Health for US$8 billion. That deal is expected to close in the first half of 2023.

With a network of more than 10,000 clinicians across all 50 states and a nationwide value-based provider network, combined with its proprietary analytics and technology platforms, Signify Health is improving patient engagement, patient outcomes, and care coordination for stakeholders across the healthcare system, CVS Health said.

The Signify deal also includes Caravan Health, which was acquired by Signify in early 2022 and is designed to assist in the establishment of accountable care programs.

Lynch stated that Caravan’s capabilities will be critical to CVS’s future provider ambitions.

Both deals move CVS Health, which also owns health insurer Aetna, squarely into the healthcare services provider field.

The retail pharmacy chain has operated clinics within its stores for many years, but its recent massive acquisitions will extend the brand’s reach in the type of services offered.

The news also comes just after Oak Street Health appointed its first-ever chief wellness officer, creating the position to support provider wellness. Oak Street Health’s provider strategy includes a high-touch approach with patients

Last year, CVS Health held discussions to buy healthcare provider Cano Health.

CVS Health in October inked a major deal with the telehealth company Amwell to provide its new virtual primary care offering, which includes on-demand behavioral health services.