Pharmacy giant CVS seals deal to take over Oak Street Health

CVS Health, known for its vast network of pharmacies across the US, has boosted its primary care offering by taking over Oak Street Health in a US$10.6 billion deal. 

The retail giant had announced an agreement to acquire the primary care provider, whose head office is in Chicago, back in February.

CVS’ takeover of Oak Street Health represents another milestone in the company’s expansion into primary healthcare. President and CEO Karen Lynch has spoken in the past of her desire to be part of the “entire spectrum of someone’s health journey.”

And Lynch said this week she was “delighted” at the completion of the all-cash transaction, valued at US$39 per share. Posting on LinkedIn, she added: “Together, we will positively impact patients’ long-term health by providing access to affordable care and improving outcomes.”

Oak Street Health provides another string to CVS bow

Founded in 2012, Oak Street Health specialises in caring for older adults at more than 170 centres in states across the US. 

It was previously selected by the AARP – a non-profit organisation dedicated to empowering Americans over the age of 50 – as a trusted primary care provider because of its dedication to high-quality healthcare for all Medicare-eligible adults. In the process, Oak Street Health became the only primary care provider with this distinction. 

Announcing the deal’s competition, CVS Health said its acquisition of Oak Street Health would “significantly benefit patients’ long-term health by improving outcomes and reducing costs – particularly for those in underserved communities."

The corporation, headquartered in Rhode Island, has financed the transaction with borrowings of US$5bn from a term loan agreement to be entered on 1 May 2023, as well as “existing cash and available resources”. 

Oak Street Health will continue to operate as a multi-payer primary care provider as part of CVS Health.

Mike Pykosz, CEO of Oak Street Health, added: “We founded Oak Street Health with a mission to rebuild healthcare as it should be, and our commitment has only strengthened over time.

“I am incredibly proud of the work our team of Oakies does every day to improve health outcomes and experiences – and lower medical costs – for older adults across the country. Together with CVS Health, we have the opportunity to transform primary care in the US.”