Chicago-based Oak Street manages a value-based primary care network with more than 160 clinics in 21 states that primarily focus on Medicare beneficiaries — by 2026, the company expects to have more than 300 locations, according to a Feb. 8 news release from CVS.
"Combining Oak Street Health's platform with CVS Health's unmatched reach will create the premier value-based primary care solution," CVS President and CEO Karen Lynch said.
The acquisition would expand CVS' footprint in primary care — the clinics also accept most major payers, including Humana, Cigna, Anthem, UnitedHealthcare and Blue Cross Blue Shield. Oak Street CEO Mike Pykosz will continue to lead the company under CVS' healthcare delivery arm.
The deal is expected to close this year and would be CVS' second multibillion-dollar purchase in the last seven months. In September, it announced plans to acquire Signify Health, a home health network of more than 10,000 clinicians in all 50 states, for around $8 billion.
CVS' venture capital arm also invested $100 million in Carbon Health, a hybrid company focused on primary and virtual care, earlier this year. Carbon Health has 125 physical locations across the U.S. and virtual care.
CVS Health also posted fourth quarter and year-end financial results Feb. 8.
- Total revenues in 2022 were $322.5 billion, a 10.4 percent increase from 2021. Fourth quarter revenues were $83.8 billion.
- Operating income in 2022 was $7.7 billion, a 41.3 percent decrease from 2021. The decrease was attributed to $5.8 billion in opioid litigation charges and a $2.5 billion loss on assets held for sale related to the write-down of the company's Omnicare long-term care business.
- Net income was $4.2 billion in 2022, down from $7.9 billion in 2021. Fourth quarter net income was $2.3 billion, up from $1.3 billion over the same period last year.
Healthcare benefits segment
- Total revenues in 2022 were $91.4 billion, up 11.2 percent year over year. Total revenues in the fourth quarter ended Dec. 31 were $23 billion.
- The medical benefit ratio decreased from 85 percent in 2021 to 84 percent in 2022. The decrease was primarily driven by the net favorable impact of COVID-19 compared to the prior year, partially offset by the unfavorable impact of the flu compared to the prior year.
- Medical membership as of Dec. 31 was 24.4 million, an increase of 548,000 over the same period last year.
Pharmacy Services Segment
- Total revenues in 2022 were $169.2 billion, up 10.6 percent year over year. The increase was attributed to increased pharmacy claims volume, growth in specialty pharmacy and brand inflation, partially offset by continued client price improvements. Revenue in the fourth quarter was $43.7 billion.
- Adjusted operating income was $7.4 billion in 2022, up 7.2 percent year over year.
- Total pharmacy claims processed increased 4.1 percent on a 30-day equivalent basis in 2022. The increase was driven by net new business, increased utilization and the impact of elevated cough, cold and flu season compared to the prior year. This was partially offset by a decrease in COVID-19 vaccinations.
- Total revenues in 2022 were $106.6 billion, up 6.5 percent year over year. Revenue in the fourth quarter was $28.2 billion.
- Adjusted operating income was $6.7 billion in 2022, a 12 percent decrease from 2021. The decrease was primarily driven by decreased COVID-19 vaccinations and diagnostic testing, continued pharmacy reimbursement pressure, increased investments in the segment's operations and capabilities, and decreased gains from legal settlements compared to 2021.
- Prescriptions filled on a 30-day equivalent basis increased 2.3 percent in 2022.