CVS Health will buy Chicago-based primary care provider Oak Street Health in a deal valued at $10.6 billion, the healthcare pharmacy said Wednesday.
Woonsocket, Rhode Island-based CVS has agreed to pay $39 per share in cash and assume debt in a transaction set to close this year, assuming regulatory approval. Oak Street CEO Mike Pykosz will continue to lead the operation.
Oak Street, which will become part of CVS’ healthcare delivery organization, employs about 600 providers in 169 locations across 21 states. It is expected to grow to 300 locations by 2026, CVS said.
The Oak Street acquisition comes as major retailers, including Walgreens Boots Alliance and Amazon, have been striking deals to expand their presence in healthcare services.
“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 President and CEO Karen Lynch said in a news release.
In September, CVS announced plans to buy Signify Health, a home health and physician enablement technology company, in an $8 billion deal set to close in the first half of the year. Signify employs more than 10,000 clinicians in all 50 states.
CVS on Wednesday reported operating income of $3.62 billion in the fourth quarter, a 62.3% increase from a year ago. Revenue rose 9.5% to $83.85 billion. Operating costs increased 7.9% to $80.23 billion.
The Wall Street Journal on Monday reported that CVS and Oak Street were expected to close the deal as early as this week, sending Oak Street shares soaring when the market opened on Tuesday. Shares were up 3.3% at $34.72 each in pre-market trading on Wednesday morning.
This is a developing story. Check back for updates.