CVS plans foray into urgent care with $9.5 billion Oak Street Health deal

[February 08, 2023]  (Reuters) -CVS Health Corp said on Wednesday it would buy primary care provider Oak Street Health Inc for about $9.5 billion in cash as the pharmacy giant looks to foray into the urgent care business.

CVS said the value of the deal was $10.6 billion, including debt. Its per share offer of $39 represents about 73% premium to Oak Street's last closing price before talks of the deal were first reported in January and nearly 16% to Tuesday's close.

The Oak Street deal marks CVS' third largest deal in the last decade, closely following its nearly $13 billion buyout of pharmacy services provider Omnicare in 2015 and $69 billion acquisition of health insurer Aetna in 2017, according to Refinitiv data.

With the acquisition of Oak Street, CVS will get control over 160 primary care centers that serve those insured under the U.S. government's Medicare program, which is for people aged 65 years and older or who qualify because they have a disability.

Primary care centers typically offer routine health screenings, preventive medicine as well as diagnosis, and management and treatment of a wide variety of chronic health problems.

CVS Health logo is seen displayed in this illustration taken, May 3, 2022. REUTERS/Dado Ruvic/Illustration

CVS has been in the market for a medical services acquisition since last year. It had tried to buy primary care provider One Medical, which Amazon.com eventually agreed to acquire for $3.5 billion in July, according to Bloomberg News.

Shares of Oak Street rose 5%, while CVS Health fell nearly 1% before the bell.

(Reporting by Bhanvi Satija and Raghav Mahobe in Bengaluru; Editing by Shinjini Ganguli)

[© 2023 Thomson Reuters. All rights reserved.]This material may not be published, broadcast, rewritten or redistributed.  Thompson Reuters is solely responsible for this content.