CVS Health completed its $10.6 billion cash acquisition of Oak Street Health on Tuesday, adding an extensive network of doctor-staffed clinics that serve primarily seniors.
The deal comes amid a wave of doctor buyouts by retailers such as Walgreens, Walmart and Amazon.
“This acquisition expands CVS Health’s value-based primary care platform, improving outcomes and reducing costs to deliver significant long-term health benefits for patients, especially in underserved areas. patients,” CVS said Tuesday. “Oak Street Health will continue to operate as a multi-payer primary care provider as part of CVS Health.”
The deal, first announced in February, Oak Street is valued at $39 a share, and CVS rival Walgreens Boots Alliance has already invested heavily in VillageMD, another national developer of doctor-staffed clinics. Just a few months after the addition. VillageMD has hundreds of doctor-staffed clinics adjacent to Walgreens.
Oak Street Health employs about 600 “primary care providers and has 169 medical centers in 21 states,” the companies said in February. By 2026, CVS said Oak Street Health will have “more than 300 centers, each of which could contribute $7 million to Oak Street Health’s adjusted EBITDA at maturity.” said.
For CVS, the acquisition of Oak Street is the latest part of CEO Karen S. Lynch’s strategy to expose CVS and its companies to “the full spectrum of someone’s wellness journey.”
CVS has operated nurse-staffed in-store clinics for many years and is expanding the number of healthcare services and products in-store by converting certain stores to HealthHUBs. Last year, CVS agreed to spend his $8 billion to acquire home health care provider Signify Health.
CVS’s deal with Oak Street is just the latest move by a major retailer and health insurer to get into healthcare. Amazon has already spent $4 billion on One Medical this year. It is a chain of primary care clinics and also has a national presence in virtual care.
Meanwhile, health insurer Cigna is investing $2.5 billion to acquire VillageMD’s Summit Health, which operates physician practices and clinics, to expand Evernorth’s portfolio of medical services. Cigna’s investment is part of his $8.9 billion acquisition of Summit by Walgreens-backed VillageMD announced in November. The investment in Cigna adds a new national network of healthcare providers to his Evernorth portfolio of health insurers, which already includes Express Scripts, one of the largest pharmacy benefit managers in the US.
Other health insurers, such as UnitedHealth Group, the largest U.S. health insurer, have long eclipsed physician practice and other primary care businesses, including emergency care and surgery centers, through their Optum health services business. . Walmart is also opening new doctor-staffed “Walmart Health” centers in multiple states and plans to double the number of such facilities to about 80 by the end of next year.
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