CVS just struck a $10.6 billion deal with Oak Street Health to become a one-stop shop for healthcare

• CVS Health is buying Oak Street Health for $10.6 billion, its biggest move into primary care yet.
• The deal adds 169 clinics to CVS's network and goes beyond the MinuteClinics and HealthHubs it has.

CVS Health is planning to buy primary care company Oak Street Health for $10.6 billion, a deal that will add clinics to the drug store's strategy of becoming a one-stop shop for medical care.

The deal, announced Wednesday, is the largest by dollar value since 2017, when CVS agreed to acquire health insurer Aetna for $70 billion. It's also the drug store chain's biggest move into primary care yet.

CVS operates its own MinuteClinics and HealthHubs, which provide basic health services like physicals and blood pressure screenings. But the Oak Street deal will add full-service medical clinics to what CVS offers. Competition is heating up among major healthcare companies to be the first place you go when you need medical care.

"Combining Oak Street Health's platform with CVS Health's unmatched reach will create the premier value-based primary care solution," CVS CEO Karen Lynch said in a news release. "Enhancing our value-based offerings is core to our strategy as we continue to redefine how people access and experience care that is more affordable, convenient and connected."

Oak Street's patients are mostly adults 65 and older. The company strikes contracts with health insurers through Medicare or Medicare Advantage plans and offers services through 169 clinics in 21 states, CVS said.

CVS will pay a premium for Oak Street compared to the clinic operator's IPO price. Oak Street went public in August 2020 at $21 a share.

In Wednesday's all-cash deal, CVS valued Oak Street at $39 a share.

CVS has been talking about expanding its primary care options for years. Last year, Insider profiled several companies that could make attractive buys for CVS, including Oak Street. In September, CVS said it would pay $8 billion for home-healthcare provider Signify Health.

In January, the chain made a $100 million investment in Carbon Health, which operates clinics that provide primary and urgent care.

Rival pharmacy giant Walgreens has also been interested in primary care, but it's yet to make a big acquisition in the space. Walgreens is the majority shareholder in VillageMD, which provides urgent care services. Village MD said last year that it would merge with Summit Health-CityMD, and health insurer Cigna said it would put $2.7 billion behind the combination.