CVS Health to buy Oak Street Health for $10.6 billion

CVS Health will buy Chicago-based primary care provider Oak Street Health in a $10.6 billion deal, the medical pharmacy said Wednesday.

Woonsocket, Rhode Island-based CVS has agreed to pay $39 per share in cash and take on debt in the deal, which is due to close this year, subject to regulatory approval. Oak Street CEO Mike Pikosh will continue to lead the operation.

Oak Street, which will become part of the health care organization CVS, has about 600 health care providers at 169 locations in 21 states. It is expected to grow to 300 points by 2026, according to CVS.

The Oak Street acquisition comes as major retailers, including Walgreens Boots Alliance and Amazon, struck deals to expand their footprint in the healthcare industry.

“Expanding our value-driven offerings is at the heart of our strategy as we continue to redefine how people access and get more accessible, convenient and connected care,” CVS President and CEO Karen Lynch said in a press release.

In September, CVS announced plans to buy Signify Health, a home health technology and physician support technology company, in an $8 billion deal due to close in the first half of the year. Signify employs over 10,000 clinicians in all 50 states.

CVS on Wednesday reported fourth-quarter operating income of $3.62 billion, up 62.3% from a year ago. Revenue rose 9.5% to $83.85 billion. Operating expenses rose by 7.9% to $80.23 billion.

The Wall Street Journal reported on Monday that CVS and Oak Street were due to close the deal as early as this week, sending Oak Street shares soaring as the market opened on Tuesday. Shares rose 3.3% to $34.72 a share in pre-market trading on Wednesday morning.

This is an evolving story. Stay tuned.