Health and wealth
CVS Health Corp. has agreed to buy Oak Street Health, a network of 169 primary-care medical centers across the nation, in a deal reportedly worth $10.6bn.
It’s the latest move that reflects a broader trend in the sector, which has seen large retail players look to consolidate primary-care practices and bring them under their corporate umbrellas. CVS had already acquired Signify Health for $8bn last September, rival Walgreens gained hundreds of primary-care practices after its subsidiary VillageMD splashed ~$9bn on acquiring Summit Health, and Amazon bought One Medical last year.
The pharmacy footprint
In the pharmacy world, CVS and Walgreens have long been the two main retail players, with Nasdaq estimating that the pair controls over 40% of the market between them. Walgreens had a head start after Charles Walgreen Sr. took over the Chicago drugstore he worked at in 1901, but it’s CVS, founded in 1963, that’s the largest in the US, with nearly 10,000 stores.
Building an integrated healthcare offering has become the de facto strategy in recent years, with obvious potential synergies across the sprawling healthcare supply chain. On top of its retail footprint, CVS also operates CVS Caremark, its pharmacy benefit manager, it owns insurance provider Aetna, and it has 1,100 walk-in clinics. Those activities combined for a whopping $322bn of sales last year.
