WOONSOCKET, R.I., AND CHICAGO — CVS Health (NYSE: CVS) has agreed to acquire Oak Street Health (NYSE: OSH) in an all-cash transaction at $39 per share, representing a total purchase price of roughly $10.6 billion. The price represents a premium of approximately 11.9 percent over Oak Street’s opening price per share this morning.
Chicago-based Oak Street Health is a network of primary care centers for adults on Medicare. The company employs approximately 600 primary care providers and maintains 169 medical centers across 21 states. By 2026, Oak Street Health plans to grow to more than 300 centers.
Oak Street Health’s technology solution, Canopy, is fully integrated with its operations and utilized when determining the appropriate type and level of care for each patient. That care will be enhanced by CVS Health’s community, home and digital offerings, according to the companies.
Bringing CVS Health and Oak Street Health together can significantly benefit patients’ long-term health by reducing care costs and improving outcomes, particularly for those in underserved communities, according to a news release. Oak Street Health centers are located where healthcare services are needed most; more than 50 percent of Oak Street Health’s patients have a housing, food or isolation risk factor.
“This agreement with CVS Health will accelerate our ability to deliver on our mission and continue improving health outcomes, lowering medical costs and providing a better patient experience while offering significant value to our shareholders,” says Mike Pykosz, CEO of Oak Street Health.
Following the close of the transaction, Pykosz will continue to lead Oak Street Health, which will become part of CVS Health’s recently formed Health Care Delivery organization.
Woonsocket-based CVS Health expects to fund the transaction through available resources and existing financing capacity. The board of directors at each company approved the transaction, which is subject to approval by a majority of Oak Street Health’s stockholders, receipt of regulatory approval and satisfaction of other customary closing conditions. The deal is expected to close this year.
CVS Health’s stock price opened at $88.12 per share Wednesday, Feb. 8, down from $110.83 per share one year ago. Oak Street Health’s stock price opened at $34.86 per share, up from $16.46 per share one year ago.
— Kristin Harlow