CVS Pharmacy to offer primary care with purchase of Oak Street Health

Woonsocket, Rhode Island: In line with rivals Walgreens, Cigna and UnitedHealth in adding primary care to its portfolio CVS Health will purchase unprofitable Oak Street Health for some $9.5 billion in cash.

Since 2022, CVS Health, which includes one of the largest pharmacy chains in the US, along with pharmacy benefit managers and health insurers, with its Aetna unit, had been in the market for a medical services acquisition.

The Oak Street acquisition will add more than 160 primary care centers, which provide routine health screening and diagnostic services to older adults.

CVS Chief Executive Karen Lynch said the company could start to refer customers it reaches in home health assessments to Oak Street for care and help them fill their prescriptions at CVS pharmacies.

"Thirty million Americans depend on Medicare Advantage, and it is proven to save costs," she said.

"We believe the platform makes strategic sense," added RBC analyst Ben Hendrix, as quoted by Reuters.

CVS is currently facing challenges related to lower ratings on its Medicare Advantage insurance plans and the end of a major pharmacy benefit managers contract.

"Strategically, we like the addition of primary care assets to the company’s diverse mix of businesses," said Morningstar analyst Julie Utterback, according to Reuters.

However, as it aims to gain regulatory approval for both the Oak Street deal and a pending $8 billion acquisition of home health provider Signify Health, CVS will now have its "work cut out" with antitrust regulators, said Evercore analyst Elizabeth Anderson.