After weeks of rumors, CVS Health announced plans to acquire Oak Street Health, a primary care provider geared toward the Medicare population, in a deal worth approximately $10.6 billion.

Chicago-based Oak Street Health runs 169 clinics in 21 states, employing about 600 primary care providers. CEO Mike Pykosz will continue to head up the company following the deal's close, which the companies expect this year. 

The planned acquisition marks another big move in healthcare delivery for retail players like Walgreens, Walmart and Amazon. In an earnings call, CVS Health president and CEO Karen S. Lynch said combining with the pharmacy giant will allow the primary care provider to keep in touch with patients more often and more conveniently.

"Combining Oak Street Health’s platform with CVS Health’s unmatched reach will create the premier value-based primary care solution," Lynch said in a statement. "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."

THE LARGER TREND

The announcements come after rumors swirled for weeks about a potential acquisition. In January, Bloomberg reported the pharmacy giant was exploring a possible acquisition of Oak Street Health, and earlier this week The Wall Street Journal said the acquisition was coming soon.

It also follows another huge deal for CVS – the planned purchase of home care platform Signify Health for $8 billion – which is under regulatory review.

CVS sees a big opportunity to expand Oak Street Health, saying the primary care provider will have more than 300 centers by 2026. 

According to BTIG healthcare IT and digital health analyst David Larsen, Oak Street Health got a good deal at $39 per share. Other big moves in the market like Amazon's planned purchase of primary care provider One Medical and Cigna's investment in VillageMD likely "drove up the price CVS Health is willing to pay for OSH."

ON THE RECORD

"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," Pykosz said in a statement.

"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."