CVS Health Corp. is exploring an acquisition of Oak Street Health Inc., which runs primary care centers for Medicare recipients, according to people familiar with the matter.

A deal could be reached within weeks that would value Oak Street at more than $10 billion, including debt, said the people, who asked to not be identified because the matter isn’t public. Talks between the companies are ongoing and could end without an agreement, the people said.

Oak Street rose 26% to $28.44 at 9:51 a.m. in New York trading Tuesday, giving the company a market value of about $6.9 billion. CVS fell 2.8% to $88.90, for a market value of about $117 billion.

Representatives for CVS and Chicago-based Oak Street declined to comment.

CVS, a major drugstore operator, has been expanding more directly into health care via acquisitions, agreeing last year to buy Signify Health Inc., a deal that should close in the first half of 2023.

The Woonsocket, Rhode Island-based company also held talks last year to buy health-care provider Cano Health Inc., Bloomberg News reported. CVS, which bought the insurer Aetna in 2018, has said it wants to make health care more convenient and affordable for consumers and has said it plans to partner with doctors or potentially acquire primary care practices.

Oak Street, which went public in 2020, aims to reinvent care for Medicare patients with low incomes and chronic health problems. The company says its high-touch approach — frequent checkups, preventive screenings and meetings with social workers — can reduce patients’ medical costs.

Read more: Arthur J. Gallagher & Co. announces $660M acquisition of Buck

It contracts with insurance companies that offer Medicare health plans, allowing it to pocket some of those savings in exchange for assuming the financial risk of caring for patients.

Oak Street had 169 centers across the US providing care for more than 159,000 patients at the end of last year, according to a company filing. Private equity firms General Atlantic and Newlight Partners collectively own roughly 39% of the company, data compiled by Bloomberg shows.

— With assistance by Liana Baker

Copyright 2023 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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