Drugstore giant CVS is reportedly in advanced negotiations to acquire primary care provider Oak Street according to Bloomberg and Wall Street Journal. The deal, which would help CVS expand its primary care footprint, is believed to be priced at USD 10.5 billion, including its debt, which translates to USD 39 per share. Both companies are yet to confirm and disclose details of the acquisition.  

CVS has been strategically investing and expanding into the healthcare market, including being part of Monogram Health’s growth funding round in January 2023 , Carbon Health’s Series D round in January 2023 , and the acquisition of Signify Health in September 2022 . It also launched its own virtual primary care platform in May 2022 . 

Analyst QuickTake: The anticipated sale price is at a premium of ~50% to Oak Street’s closing price of USD 25.96 (market value of USD 6.3 billion) on February 6, 2023. Oak Street Health, which went public in 2020, is viewed as a potential target in the current primary care frenzy, especially after Amazon's USD 3.9 billion acquisition of One Medical . CVS previously expressed interest in acquiring One Medical and Cano Health. Despite Oak Street's growth and positive results from its value-based clinical strategy, the company operates at a loss and is not expected to reach profitability until 2025 at the earliest. This could put pressure on CVS financially if a deal is reached.