CVS Health (NYSE: CVS) moves up around 2% in pre session on Wednesday as the company is reportedly close to acquiring Oak Street Health for about $10.5 billion in a deal that highlights the race to own the primary care market in the United States. Oak Street (OSH) stock was up about 33% in premarket trading on Tuesday, a day after a Wall Street Journal report said CVS may pay $39 per share for Oak Street, which provides medical care to Medicare beneficiaries. “At this juncture, we would expect the company to look at any and all available public and private primary care assets,” Bank of America’s Michael Cherny wrote in an investor note on Tuesday.
According to the Wall Street Journal, CVS may pay $39 per share to acquire Oak Street, which provides medical care to Medicare beneficiaries. In early January, Bloomberg reported that CVS was interested in purchasing the company.
“At this juncture, we would expect the company to look at any and all available public and private primary care assets,” Bank of America’s Michael Cherny wrote in an investor note on Tuesday. “A hypothetical acquisition of [Oak Street] would make sense to us because OSH has exposure to the strategically important, rapidly growing Medicare Advantage value-based care market, which CVS could scale as part of its larger healthcare enterprise.”
According to a CVS spokesperson, the company does not comment “on rumors or speculation.”
If the deal goes through, it will be just one of several multibillion-dollar acquisitions of primary-care companies announced in the last year. Amazon (AMZN) announced in July that it would pay $3.9 billion for One Medical (ONEM), a direct primary-care provider known as 1Life Healthcare. Walgreens Boots Alliance (WBA) announced plans in November to acquire Summit Health—CityMD, a privately held provider of primary and urgent care services, for $8.9 billion through its majority ownership of VillageMD and in collaboration with Cigna (CI).
“We’ve been very clear in the three strategic areas where we plan to deploy capital — home health, provider enablement, and primary care,” said CVS CEO Karen Lynch at the J.P. Morgan Healthcare Conference last month. “We will continue to work hard to identify additional assets, such as primary-care capabilities, that will complement our foundational businesses and advance our strategic vision.”
The company is scheduled to report fourth-quarter earnings on Wednesday morning, “which seems like a logical time to announce this acquisition,” according to Stifel analysts on Monday night.
