cvs health’s 106 billion acquisition of oak street health will provide new revenue at a time when growth in its legacy pharmacy and retail businesses is expected to slow down the deal to acquire oak street was formally announced on wednesday morning alongside the pharmacy giant’s strongerthanexpected fourthquarter results cvs said it plans to pay 39 per share in cash a 16 premium over oak street’s closing stock price of 3368 on tuesday the acquisition is expected to close this year shares of cvs cvs were up 45 in trading on wednesday while oak street’s osh stock gained 44 buying oak street and its 169 clinics that provide a range of primarycare services to people covered by medicare fits squarely into the company’s strategy which aims to secure new sources of revenue while also better controlling costs and utilization in its pharmacy and health insurance businesses “we also view the cvsosh partnership as highly strategic given it would allow aetna cvs’s insurance arm to design novel valuebased care vbc medicare advantage products in partnership with osh” william blair analysts told investors on wednesday mike pykosz oak street’s ceo will continue to lead the business within cvs the acquisition is expected to fuel growth yes especially as oak street begins plans to open at least 130 new clinics by 2026 but cvs cfo shawn guertin also told investors that the acquisition will improve “the retention of our aetna medicare advantage members through the improved outcomes and experience provided at oak street clinics” in addition to “driving greater utilization of cvs pharmacy and caremark capabilities” according to its 2023 guidance cvs expects the pharmacy services business which houses its pharmacybenefits manager to grow by 1 to 2 in 2023 while the retail revenues are expected to increase 1 to 3 in comparison both of those businesses grew by 106 and 65 respectively in 2022 primary care has long been viewed as the front door to the us healthcare system it’s where patients with chronic health conditions go to refill prescriptions and get care for new conditions it’s also much less expensive than going to urgentcare center or an emergency room essentially this means it’s a lowspend area of healthcare with a big impact the focus on “owning” primary care is the latest obsession for healthcarehungry tech giants and legacy pharmacy chains and health insurers alike amazon amzn last year announced plans to buy direct primarycare provider one medical onem for 39 billion walgreens boots alliance wba and cigna ci are spending 89 billion to acquire urgentcare provider summit healthcitymd and humana hum teamed up with the privateequity firm welsh carson anderson  stowe to put an additional 12 billion into a venture that wants to build 100 primarycare clinics for seniors “although primary care is a very small proportion of total health spend just about 10 nationally it will have significant influence over healthcare utilization” cvs ceo karen lynch said wednesday “individuals who seek routine primary care services report fewer serious medical diagnoses lower mortality rates and a 33 lower annual healthcare expense” cvs has been telling investors for the better part of a year that it’s interested in building out its healthcare delivery business the company also operates about 1000 retail clinics in its pharmacies and at target stores this interest was also a driver in the 8 billion acquisition of homehealth provider signify health sgfy that was announced in september “as we think about navigating the future of medicare advantage and maybe even a broader opportunity in medicare valuebased care in the feeforservice population i think both signify and oak are exactly the kind of assets that you would like to have at your side as you do that” guertin said cvs shares are down 188 over the past year while oak street’s stock has soared 1139 the sp 500 spx is down 56 over the past 12 months