CVS Health reportedly seeking investor to fund Oak Street expansion

CVS Health (NYSE:CVS) has been looking for a private equity partner to help expand its primary care company, Oak Street Health, acquired following a $10.6B all-cash deal about a year ago, Bloomberg reported Thursday, citing people familiar with the matter.

According to the people, the company has engaged financial advisers to help seek capital to fund a new set of primary care clinics that Oak Street plans to operate.

The sources chose to remain anonymous due to the confidential nature of the information.

A potential joint venture is also on the cards, as Woonsocket, Rhode Island-based healthcare giant, has contacted several private equity firms about the plans.

Despite initial antitrust concerns, CVS acquired Oak Street Health, a value-based primary care company focused on older adults, in May 2023.

New clinics tend to lose money initially as they enroll patients. The people added that a JV structure will help the company keep those losses off its balance sheet.

There is no guarantee a deal will be finalized, according to the people, who also noted that discussions are early, and the ownership structure CVS Health (CVS) is considering might change. A company representative declined to comment.