CVS Bolsters Primary Care With Completion Of $10.6 Billion Oak Street Health Deal

CVS Health Tuesday completed its acquistion of Oak Street Health for $10.6 billion in cash, adding a large network of doctor-staffed clinics primarily used by seniors.

The closing of the deal comes amid a physician buyout wave by retailers including Walgreens, Walmart and Amazon.

“The acquisition will broaden CVS Health’s value-based primary care platform and significantly benefit patients’ long-term health by improving outcomes and reducing costs – particularly for those in underserved communities,” CVS said Tuesday. “Oak Street Health will continue to operate as a multi-payor primary care provider as part of CVS Health.”

The deal, which was first announced in February, values Oak Street at $39 a share, and comes just months after CVS rival Walgreens Boots Alliance increased its already sizable investment into VillageMD, another national developer of doctor-staffed clinics. VillageMD is attaching hundreds of doctor-staffed clinics adjacent to Walgreens.

Oak Street Health employs about 600 “primary care providers and has 169 medical centers across 21 states,” the companies said in February. By 2026, CVS said Oak Street Health “will have more than 300 centers, each of which has the potential to contribute $7 million of Oak Street Health Adjusted EBITDA at maturity.”

For CVS, the acquisition of Oak Street is the latest part of chief executive officer Karen S. Lynch’s strategy to have CVS and its companies touch the “entire spectrum of someone’s health journey.”

CVS, which for years now has operated in-store clinics staffed by nurse practitioners and has expanded the number of healthcare services and products within its retail locations by converting certain stores into HealthHUBs continues its push deeper into healthcare. Last year, CVS agreed to spend $8 billion to buy home care provider Signify Health.

CVS’ Oak Street deal is just the latest effort by big retailers and health insurers to push into healthcare. Amazon, which this year already spent $4 billion on One Medical, a chain of primary care clinics that also has a national presence in virtual care.

Meanwhile, the health insurer Cigna is investing $2.5 billion into doctor practice and clinic operator VillageMD’s Summit Health acquisition to grow its Evernorth portfolio of health services. Cigna’s financial stake is part of Walgreens-backed VillageMD’s $8.9 billion acquisition of Summit that was announced in November. The Cigna investment adds a new national network of medical care providers to the health insurer’s Evernorth portfolio, which already includes Express Scripts, one of the nation’s largest pharmacy benefit management companies.

Other health insurers, like UnitedHealth Group, the nation’s largest health insurance company, have long been gobbling up doctor practices and other primary care operations including urgent care and surgery centers via its Optum health services business. And Walmart has opened several new doctor-staffed “Walmart Health” centers in several states and is doubling the number of such facilities by the end of next year to around 80.