CVS Health and Oak Street Health Deal: CEO Mike Pikosh Reaps the Benefits

The amount that Pykosz will receive as a result of the transaction depends on the composition of its directly held shareholdings, shares subject to unexercised share options and restricted shares. According to the merger agreement, directly owned shares will be converted into cash at the transaction price, option shares will be converted into cash in an amount equal to the excess of the transaction price over the exercise price of the option, and restricted shares not transferred to ownership , will be converted into limited shares of CVS Health. stock. Oak Street has yet to provide details of Pikosh’s holdings.

The buyout bonanza would not be Picoche’s first profitable Oak Street stock sale. According to SEC data compiled by GuruFocus, it has sold more than $68.7 million worth of shares, ranging from $30 to $64 a share, in a series of deals since Oak Street went public in 2020.

Oak Street declined to comment on the numbers. Pikosh is expected to remain with the combined companies and lead Oak Street, which he co-founded a decade ago.

Pikosh’s potential payout could exceed some of the biggest payouts to Chicago CEOs who have sold companies in recent years. For example, Horizon Therapeutics CEO Tim Walbert is expected to make $150 million in his company under consideration sale Amgen. Former Hospira CEO Michael Ball was expected to take home $80 million when Pfizer acquired his company.

“That’s a huge salary,” says Mark Reilly, managing director of Overture Alliance, an executive search and compensation consulting firm. “But when you’re a founder, starting a business and growing it, that kind of thing happens a lot.”

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Pikosh launched Oak Street Health in 2012 with Dr. Griffin Myers and Jeffrey Price to provide primary care for people receiving healthcare. By offering a value-based care model and additional support to low-income patients with chronic health problems, Oak Street claims it can reduce hospitalizations and the high costs associated with them.

Oak Street currently has about 600 primary care providers at 169 health centers in 21 states. Before going public, the company raised more than $400 million from investors, including private equity firms General Atlantic and Newlight Partners, who collectively own about 39% of the company, according to SEC filings. Bloomberg reports that General Atlantic intends to earn 3 billion dollars on a deal.

Although Oak Street has been in business for more than a decade, it focuses on growth over profitability. The company’s revenue for the nine months ended Sept. 30 was $1.6 billion, up 52% ​​from the same period last year. But Oak Street’s losses rose almost 40% to $376.2 million in the same period.

The CVS buyout price is about 73% higher than Oak Street’s prior market value. reports first surfaced in January about the deal. But the buyback price of $39 per share is equal to Oak Street’s share price at the close on August 7, 2020. Oak Street stock hit a high of $64.99 in February 2021 and a low of around $16 in June 2022.

This story first appeared in Crane’s Chicago business.