CVS Health (NYSE: CVS) announced on Wednesday that it will acquire Oak Street Health (NYSE: OSH), a senior-focused, multi-payer value-based primary care company, in a $10.6 billion all-cash transaction. The move underscores CVS’ commitment to strengthening its primary care presence while accelerating its broader value-based care strategy, particularly in the behavioral health space. The acquisition is expected to close in 2023, pending regulatory approval, at $39 per share.
Oak Street Health, founded in 2012 and headquartered in Chicago, operates 169 value-based primary care centers across 21 states, serving over 159,000 at-risk Medicare patients. Its innovative approach extends beyond traditional primary care to include comprehensive preventive services and home-based care, offering patients both convenience and a high standard of care. Oak Street’s collaborative care model systematically screens patients for mental health and substance use disorders, integrating behavioral health into value-based primary care and positioning the company as a leader in senior care.
Integrating Primary and Behavioral Health
CVS Health has a long history of integrating behavioral health into its primary care initiatives. The company has invested millions in Array Behavioral Health Care and launched the CVS Health Community Equity Alliance, a mental health-focused initiative. CVS’ pending acquisition of Signify Health is also expected to provide valuable insights into behavioral health needs for Aetna members in home-based settings. By combining Oak Street’s expertise with CVS’ extensive retail health network—including over 1,100 MinuteClinics—the company aims to deliver a more coordinated, preventive, and patient-centered approach to health care, centered on value-based primary care.
“We are making significant progress advancing our strategy, which includes expanding our care delivery and health services capabilities in primary care, home health, and provider enablement,” CVS Health President and CEO Karen Lynch said during a Wednesday morning conference call on the company’s fourth-quarter financial results. She emphasized that Oak Street’s model will allow CVS to engage patients more frequently, more conveniently, and more effectively, leveraging its value-based primary care approach.
Financial and Strategic Rationale
From a financial standpoint, Oak Street complements CVS’ Medicare-focused efforts and provides a strong, payer-agnostic value-based primary care platform. CVS CFO Shawn Guertin highlighted that Oak Street was “the most strategically and financially compelling primary care asset” identified after an extensive market review. The integration allows CVS to leverage its scale, data, and consumer touchpoints to expand access to value-based primary care while continuing its work with other payers.
Oak Street’s CEO, Mike Pykosz, will continue leading the company under CVS’ recently formed health care delivery organization. Oak Street is projected to grow to over 300 centers by 2026, and its alignment with CVS’ assets—including retail clinics and virtual care offerings—positions the company to enhance chronic care management, preventive services, and behavioral health support within value-based primary care networks.
Behavioral Health Expertise and Impact
Behavioral health is a critical component of Oak Street’s care model. Nearly half of the patients screened through its collaborative care program are identified as at risk for behavioral health challenges, including depression, anxiety, and substance use disorders. Once identified, patients are proactively enrolled with a qualified mental health professional who is embedded in the primary care team. When needed, a virtual network of over ten psychiatric providers supports the patient-provider triad, ensuring timely interventions and continuity of care.
The need for integrated behavioral health care has only increased since the COVID-19 pandemic. According to the Kaiser Family Foundation, more than a quarter of adults ages 65 to 74 report feelings of anxiety or depression. CVS’ behavioral health initiatives, including virtual primary care services with on-demand mental health support, reflect its commitment to treating both physical and mental health needs. “Your head is connected to your heart, your heart is connected to your head, and that is the premise we go with,” said Cara McNulty, president of behavioral health and mental wellbeing at CVS Health.
By integrating Oak Street’s collaborative care approach with CVS’ existing infrastructure, the combined organization has the potential to reduce behavioral health-related exacerbations, improve patient outcomes, and lower costs for the U.S. health care system—a win-win for patients, providers, and payers alike.
Broader Implications for the Health Care Landscape
The acquisition signals a larger trend in U.S. health care: the convergence of primary care and behavioral health within a value-based primary care framework. By embedding behavioral health professionals in primary care and leveraging virtual care solutions, organizations can proactively identify and treat conditions before they escalate, ultimately improving quality of care and reducing avoidable hospitalizations.
For CVS, Oak Street represents a strategic opportunity to expand its preventive care and chronic care management capabilities. This aligns with the company’s broader goal of transforming the patient experience and offering more comprehensive, integrated care. Lynch emphasized that the combination of CVS’ extensive consumer touchpoints with Oak Street’s innovative care model could significantly enhance patient engagement, access, and satisfaction.
CVS Health Financial Performance
CVS Health continues to show strong financial performance, reporting total revenues of $83.8 billion for the fourth quarter of 2022, a 9.5% increase from the previous year. Full-year revenues reached $322.5 billion, up 10.4% from 2021. The acquisition of Oak Street Health further positions CVS to capture growth opportunities in the Medicare market while advancing its value-based primary care initiatives.
Looking Ahead
As Oak Street joins the CVS ecosystem, the company’s collaborative care model will be scaled alongside CVS’ retail and virtual care offerings, creating a more seamless experience for patients. By combining expertise in primary care, preventive care, and behavioral health, CVS aims to transform health care delivery for older adults and at-risk populations nationwide. Oak Street’s proven approach, integrated with CVS’ assets, sets the stage for a future where health care is not only more accessible but also more proactive and patient-centered, driven by value-based primary care principles.
