CVS Seeking Private Equity Investor to Fund Oak Street Health

The company reportedly wants a partnership to back the opening of new clinics.

CVS Health appears committed to growing its Oak Street Health business, but reportedly wants help with its expansion efforts.

The retail giant is on the lookout for a private equity partner to bring in funding for the primary care provider it purchased a year ago for $10.6 billion, according to Bloomberg News.

A potential joint venture would lessen the financial burden on CVS as it aims to open new clinics without being encumbered by heavy losses.

The report stated that the company is working with financial advisers and has reached out to multiple private equity firms about a partnership. However, the discussions are in the preliminary stage so it’s possible a deal may not happen.

Bloomberg cited that CVS is eyeing a similar joint venture to the one Humana forged with Welsh, Carson, Anderson & Stowe (WCAS) in 2020 and 2022 for CenterWell Senior Primary Care, which allowed Humana to buy back its interest over time while netting WCAS a return.

CVS said in February that it wants to have more than 300 Oak Street clinics by 2026, including the opening of 50 to 60 clinics this year.

While the company pushes forward with expansion, other retailers such as Walmart and Walgreens have retreated from their primary care business due to difficulties in scaling.

The primary care business is a slow burn because it is cost-intensive, but allows organizations to guide patients to more lucrative care and services.

By bringing in a private equity firm to share the investment required to prop up Oak Street, CVS would have more leeway to see through its long-term vision for the clinics.