The deal comes at a time when CVS’ health insurance unit is facing challenges from lower ratings on its Medicare Advantage insurance plans
will buy Oak Street Health Inc for about $9.5-billion in cash, joining rivals in adding primary care to its portfolio as pressure mounts on its health insurance business.
The deal – CVS’ third largest in the last decade – echoes moves by rivals Walgreens Boots Alliance, Cigna Corp and UnitedHealth Group Inc as a focus on primary and urgent care delivery has increased since the COVID-19 pandemic. “We believe the platform makes strategic sense,” said RBC analyst Ben Hendrix, noting that Oak Street operates clinics in U.S. states that have about two-thirds of Aetna’s Medicare Advantage membership.The deal comes as CVS faces challenges from lower ratings on its Medicare Advantage insurance plans and the end of a major PBM contract.
However, CVS will now have its “work cut out” with antitrust regulators, said Evercore analyst Elizabeth Anderson, as it seeks regulatory approval for both the Oak Street deal and pending $8-billion acquisition of home health provider Signify Health.
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