OSH - CVS Pulls Off Another Big Acquisition -- Is It Worth the $10 Billion It Cost?
CVS Health (NYSE: CVS) has been no stranger to mergers and acquisitions. The company is always on the lookout for opportunities to get bigger and more diverse. One of the areas it has focused on is becoming a broader healthcare business; last year, it announced plans to acquire home health company Signify Health . But another area that has been on its radar for some time is primary care.
This month, the company finally announced an acquisition target there as well: Oak Street Health (NYSE: OSH) . At around $10.6 billion, it's a significant purchase for CVS -- but will it make the stock a better buy?
By diversifying into primary care, CVS believes it can lower medical costs for its customers while providing them with a better, more comprehensive experience. Oak Street Health has a presence in 21 states with 169 medical centers. It also employs close to 600 primary-care providers. Oak Street CEO Mike Pykosz believes that the transaction can help accelerate the company's growth: "Together with CVS Health, we will have access to greater resources and capabilities to expand the reach of our platform." Oak Street has already been a relatively fast-growing business all on its own, reporting $1.4 billion in revenue for 2021, which was a 62% increase from the previous year.
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CVS Pulls Off Another Big Acquisition -- Is It Worth the $10 Billion It Cost?