CVS Health and Oak Street deal report boosts stocks

Shares of Oak Street Health rose 33.2% to $34.56 at the open on Tuesday after reports that pharmaceutical giant CVS Health is close to acquiring a primary care provider.

The Wall Street Journal, citing people familiar with the matter, reported after markets closed on Monday that CVS Health is ready to commit $10.5 billion in cash and debt to buy Chicago-based Oak Street Health as early as this week. Under the terms of this potential deal, Oak Street Health will be valued at $39 per share, according to the Wall Street Journal.

Shares of CVS Health fell 0.1% overnight to $85.15. The company is looking for a primary care asset, CEO Karen Lynch said at the JP Morgan Healthcare conference this month. Oak Street Health operates more than 160 primary care clinics for Medicare recipients in 21 states.

The possible Oak Street Health acquisition comes as retailers such as CVS Health, Walgreens Boots Alliance and Amazon are making deals to enter or expand their footprint in the healthcare market.

CVS Health is working to complete an $8 billion acquisition of Signify Health, a home health and physician technology company, which is under regulatory scrutiny. However, the company expects to close the deal within the first half of the year.

Walgreens VillageMD this month announced a deal to buy Summit Health-CityMD for $8.9 billion. Walgreens is also expected to complete its acquisition of home care company CareCentrix in the third quarter.

Amazon’s foray into healthcare was a major step forward when the company announced plans in July to acquire New York-based primary care provider One Medical for $3.9 billion.

Oak Street teamed up with Walmart in 2020 to open clinics at some of the company’s locations.

CVS Health will publish its fourth quarter and full year financial results on Wednesday.