Upon closing of the transaction, Oak Street Health will become part of CVS Health's recently established Health Care Delivery organisation, and will operate under the leadership of Oak Street Health CEO Mike Pykosz

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CVS Health to acquire Oak Street Health. (Credit: Adhy Savala on Unsplash)

US-based health care solutions company CVS Health has agreed to acquire Oak Street Health, a network of primary health care centres, for a total consideration of around $10.6bn.

Under the terms of the agreement, CVS will buy all the outstanding shares of Oak Street Health’s common stock at a price of $39 per share in cash.

The transaction was approved by the Board of Directors of both the companies.

Certain Oak Street Health Board of Directors, and shareholders who collectively own around 45% of the company shares, have agreed to vote in favour of the transaction.

It is anticipated to close in 2023, subject to regulatory approvals, approval by majority of Oak Street Health’s stockholders, and other customary closing conditions.

CVS intends to fund the transaction through available resources and existing financing capacity, while maintaining its current credit ratings.

CVS Health president and CEO Karen S Lynch said: “Combining Oak Street Health’s platform with CVS Health’s unmatched reach will create the premier value-based primary care solution.

“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.”

Oak Street Health has 169 medical centres across 21 states, where health care services are needed most, and employs around 600 primary care providers.

The company’s unique technology solution, Canopy, is fully integrated with its operations and is used to determine the suitable type and level of care for each patient.

Upon closing of the transaction, Oak Street Health will become part of CVS Health’s recently established Health Care Delivery organisation.

Oak Street Health CEO Mike Pykosz will continue in his current position.

The business combination of Oak Street Health and CVS Health is expected to benefit patients through reduced care costs and improved outcomes in underserved communities.

Credit Suisse Securities (USA) and Lazard served as co-financial advisors, and Shearman & Sterling, Dechert and McDermott Will & Emery served as legal advisor to CVS Health.

Centerview Partners served as financial advisor, and Kirkland & Ellis as legal advisor to Oak Street Health.

Oak Street Health CEO Mike Pykosz said: “This agreement with CVS Health will accelerate our ability to deliver on our mission and continue improving health outcomes, lowering medical costs, and providing a better patient experience while offering significant value to our shareholders.

“Together with CVS Health, we will have access to greater resources and capabilities to expand the reach of our platform, provide more opportunities for our teammates and, most importantly, make a meaningful difference in the lives of the patients we serve.”