Oak Street Health shares soared 33.2% to $34.56 at market open Tuesday following a report that pharmacy giant CVS Health is nearing an acquisition of the primary care provider.
The Wall Street Journal, citing people familiar with the matter, reported after the markets closed on Monday that CVS Health is prepared to allocate $10.5 billion in cash and debt to purchase Chicago-based Oak Street Health as soon as this week. Under the terms of this potential deal, Oak Street Health would be valued at $39 per share, according to the Wall Street Journal.
CVS Health shares declined 0.1% overnight to $85.15. The company has been seeking a primary care asset, CEO Karen Lynch said at the J.P. Morgan Healthcare Conference this month. Oak Street Health operates more than 160 primary care clinics for Medicare beneficiaries in 21 states.
The possible Oak Street Health acquisition comes as retailers such as CVS Health, Walgreens Boots Alliance and Amazon have been making deals to enter or expand their presences in the healthcare services market.
CVS Health is working to close an $8 billion acquisition of Signify Health, a home health and physician enablement technology company, under regulatory scrutiny. The company nevertheless expects to finalize the transaction during the first half of the year.
Walgreens’ VillageMD unit announced an $8.9 billion deal to buy Summit Health-CityMD this month. Walgreens also is expected to finalize its acquisition of home care company CareCentrix in the third quarter.
Amazon’s foray into healthcare took a major step forward when the company announced its plans to acquire New York-based primary care provider One Medical for $3.9 billion n July.
Oak Street teamed up with Walmart in 2020 to open clinics at the some of the company’s locations.
CVS Health will release its fourth quarter and full-year financial results Wednesday.“