CVS Health (NYSE:CVS) gained ground on Wednesday, after agreeing to buy Oak Street Health (NYSE:OSH) for about $9.5 billion in cash, expanding its healthcare services by adding hundreds of primary care clinics mostly for older people.
CVS said the value of the deal was $10.6 billion, including debt. Its per share offer of $39 represents about 73% premium to Oak Street’s last closing price before talks of the deal were first reported in January and nearly 16% to Tuesday’s close. Shares of the primary care firm rose 5% before the bell.
The deal marks CVS’ third largest deal in the last decade, closely following its nearly $13 billion buyout of pharmacy services provider Omnicare in 2015 and $69 billion acquisition of health insurer Aetna in 2017, according to Refinitiv data.
The Oak Street deal echoes similar moves by rivals into primary care. Walgreens Boots Alliance and Cigna have made investments in primary care provider VillageMD, and Amazon announced a $3.49-billion deal last year to buy One Medical to expand into the space.
UnitedHealth Group also runs urgent care, primary care and surgical care centers.
CVS has been in the market for a medical services acquisition since last year, as part of its strategy to mitigate the pressure on its health insurance unit from lower ratings on its Medicare Advantage insurance plans and the end of a major pharmacy benefit management contract.
CVS shares hiked $2.72, or 3.2%, to $88.70, while OSH climbed $1.43, or 4.2%, to $35.10.
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