CVS to buy senior primary care provider Oak Street Health

The pharmacy chain said the $10.6 billion acquisition will help reduce care costs and improve patient outcomes and experiences.
A building with the CVS Health logo.
  • CVS Health plans to acquire Oak Street Health for $10.6 billion. 
  • The all-cash deal would provide CVS access to Oak Street Health’s approximately 600 primary care providers and 169 medical centers.
  • CVS during the past several years has deepened its investment in the health care space beyond pharmacy.

CVS Health said it would purchase Oak Street Health, a value-based primary care provider for older adults on Medicare, in an all-cash deal valued at $10.6 billion. 

The deal was announced in a Feb. 8 release that said CVS would purchase the health care chain, which employs around 600 primary care providers at its 169 medical centers across 21 states. CVS said Oak Street Health had demonstrated that its business model was scalable. 

“Combining Oak Street Health’s platform with CVS Health’s unmatched reach will create the premier value-based primary care solution,” said Karen S. Lynch, CVS Health president and CEO, in the release. “Enhancing our value-based offerings is core to our strategy as we continue to redefine how people access and experience care that is more affordable, convenient and connected.”

CVS said its acquisition of Oak Street Health would help reduce the cost of care and improve health care outcomes, particularly in underserved communities. According to the release, half of Oak Street Health’s patients have housing, food or isolation as a risk factor.

Oak Street Health CEO Mike Pykosz will continue to lead the company under CVS’ ownership. According to the release, the facilities will fall under CVS’ Health Care Delivery organization, its health care services division created last year. In October, CVS selected Dr. Amar Desai to lead the division as president, tasked with managing CVS’ clinical delivery strategy pertaining to retail health, chronic disease management and behavioral health, according to a previous release.

The move to acquire Oak Street Health comes just a few months a year after CVS said it would purchase Signify Health, another value-based health care provider that focuses on at-home and virtual care visits, for $8 billion. 

While CVS has long had investments in health care beyond pharmacy, it's in the last several years amped up its ambitions in the broader category. Lynch in 2021 outlined CVS’ desire to expand its health care portfolio.

Retailers across the industry continue to expand their reach into the health care sector. Amazon, for example, in January said it would offer unlimited generic prescriptions to its Prime customers for $5 each month. Dollar General also recently began piloting mobile clinics outside three of its stores in Tennessee, providing a wide array of medical services, Retail Leader reported. Grocery giant Albertson’s also in February launched a new digital health platform that offers rewards to consumers who make healthier choices.  

"Now is the time to undertake our next major evolution and capitalize on our role as the leading health solutions company in America,” Lynch said during CVS’ 2021 Investor Day. "By leaning into our high-growth foundational businesses and expanding our reach in areas like health services and primary care, we have an opportunity to shift care to be more centered around the consumer while capturing a meaningfully greater portion of health care spend.”