Updated at 1:12 pm EST
Oak Street Health (OSH) - Get Free Report shares soared higher Tuesday following a report that suggested the primary care center operator is ready to agree a $10 billion takeover by CVS Health (CVS) - Get Free Report.
Bloomberg reported late Monday that CVS, which has been expanding into the healthcare sector as its retail sales growth slows, has been in talks with the Chicago-based Oak Street, which went public in 2020.
The deal, for both Oak Street's equity and debt, would likely rise past $10 billion if completed, and added to CVS's recent acquisition of Signify Health (SGFY) - Get Free Report and its game-changing $69 billion Aetna deal in 2017.
Oak Street Health shares were marked 28.4% higher in early afternoon trading Tuesday to change hands at $28.99 each, a move that would peg the group's equity value at around $7.1 billion. CVS shares were marked 0.8% lower at $90.81 each.
CEO Karen Lynch told the JPMorgan healthcare conference in San Francisco yesterday that CVS Health expects to exceed its full-year revenue forecast of between $309 billion and $314 billion, with adjusted earnings at the higher end of its prior $8.55 to $8.65 per share forecast.
CVS Health Corp lifted its full-year profit forecast in early November following better-than-expected third quarter earnings that offset the impact of a $5 billion agreement to settle lawsuits linked to the U.S. opioid crisis.
The agreement with various state attorneys general will see the group pay around $5 billion over the next ten years, beginning in 2023, to resolve litigation linked to the country's opioid crisis.
CVS said adjusted earnings for the three months ending in September were pegged at $2.09 per share, up 6.1% from the same period last year and 10 cents ahead of the Street consensus forecast, while group revenues rose 10% to $81.2 billion.