CVS Health Inks Final Deal To Acquire Oak Street Health, Forecasts 2025 EPS Outlook Of $10



  • CVS Health Corp CVS agreed to acquire Oak Street Health OSH in an all-cash transaction at $39 per share, or approximately $10.6 billion.

  • Oak Street Health is a multi-payor, value-based primary care company, employing approximately 600 primary care providers and has 169 medical centers across 21 states. 

  • Related: CVS Health Continues M&A Spree, As It Is Close To $10B Bet For Oak Street Health

  • "Combining Oak Street Health's platform with CVS Health's unmatched reach will create the premier value-based primary care solution," said CVS Health President and CEO Karen Lynch

  • Following the close of the transaction, Pykosz will continue to lead Oak Street Health, which will become part of CVS Health's recently formed Health Care Delivery organization. 

  • CVS Health and Oak Street Health anticipate that the transaction will close in 2023.

  • By 2026, Oak Street Health will have over 300 centers, each of which has the potential to contribute $7 million of Oak Street Health Adjusted EBITDA at maturity, representing more than $2 billion of Oak Street Health embedded Adjusted EBITDA at that time. 

  • Additionally, CVS Health projects more than $500 million in synergy potential over time.

  • CVS Health reported Q4 sales of $83.85 billion, up 9.5% Y/Y, driven by growth across all segments, beating the consensus of $76.21 billion. 

  • Operating income decreased 41.3% for FY22 to $7.75 billion, primarily due to $5.8 billion of 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.

  • Guidance: CVS Health projects 2023 Adjusted EPS of $8.70-$8.90 versus the consensus of $8.86. CVS Health is now targeting 2024 Adjusted EPS of approximately $9.00, growing to approximately $10.00 in 2025.

  • Price Action: CVS shares are up 1.92% at $87.63 during the premarket session on the last check Wednesday.



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