CVS eyes next-generation health clinics after Amazon’s move for One Medical


CVS Health Corp. is investing in a young chain of health clinics, and may be looking to acquire another.

CVS CVS, -0.12% invested $100 million in a Carbon Health Inc., a San Francisco-based chain of urgent- and primary-care clinics, according to a Monday morning announcement. Just hours later, Bloomberg News reported that CVS was in negotiations to buy Oak Street Health Inc. OSH, +4.25%, a decade-old chain of clinics that service Medicare recipients, for more than $10 billion.

Publicly-traded Oak Street ended the day with a market capitalization slightly lower than $5.5 billion. Oak Street shares jumped more than 35% in after-hours trading, while CVS stock was mostly stable. CVS declined comment on the Oak Street report, and declined further comment on the Carbon Health investment.

CVS has spent years and billions of dollars to expand from a chain of drugstores to a full-service healthcare company, most notably with its purchase of insurer Aetna in 2018. Late last year, CVS reportedly outbid Inc. AMZN, +1.49% and UnitedHealth Group Inc. UNH, +0.01% to acquire Signify Health for $8 billion.

CVS was also reportedly interested in One Medical, a chain of primary-care clinics, before Amazon agreed to purchase its parent company, 1Life Healthcare Inc. ONEM, -0.12%, for nearly $4 billion last year. Now, it appears to be betting on other similarly young chains of healthcare clinics.

Carbon Health is a seven-year-old startup that accepted $100 million in investment from CVS Health Ventures, part of a Series D round of funding. The funding was announced just one business day after Chief Executive Eren Bali detailed more than 200 layoffs at the company, explaining Friday on Twitter that Carbon Health was “unwinding major initiatives like public health, RPM, hardware, chronic care programs to focus on our core primary care & urgent care service.”

CVS’s investment in Carbon Health will fund new locations of its primary- and urgent-care clinics across the U.S., Bali said in a news release Monday morning. The company has 125 clinics spread across 13 states currently, according to the announcement.

Oak Street is about three years older and slightly larger, with more than 160 healthcare centers across 21 states. The company went public in August 2020 at $21 a share and was worth more than $15 billion at its 2021 peak.

Oak Street shares have declined 11.4% in the past 12 months, as CVS stock has dropped 12.2% and the S&P 500 index SPX, -0.08% has fallen 16.8%.


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