Drugstore giant CVS signed a definitive agreement to acquire primary care provider Oak Street in an all-cash transaction of USD 10.6 billion, at USD 39 per share. The acquisition was previously reported by Bloomberg and Wall Street Journal . The transaction is expected to close during 2023, subject to approval. Further, CVS will fund the acquisition using its existing resources and financing capacity. 

The acquisition will allow CVS Health to offer a value-based primary care platform in its portfolio and expects its adjusted operating profit to grow at 200bps in the long term. Upon completion of the transaction, Oak Street Health will be part of CVS Health’s Health Care Delivery company and will continue its usual operations under the leadership of its current CEO, Mike Pykosz. 

The long-term plans for the companies include Oak Street Health having over 300 medical centers (currently 169) by 2026, which will contribute USD 7 million to its adjusted EBITDA at maturity and achieve a combined synergy of more than USD 500 million over time. After the acquisition, CVS projects earning an adjusted EPS in the range of USD 8.7–8.9 in 2023, USD 9.0 in 2024, and USD 10.0 in 2025.