General Atlantic is poised for a more than $3 billion windfall from CVS Health Corp.’s $10.6 billion deal this week for primary care provider Oak Street Health Inc., according to people familiar with the matter and Bloomberg calculations.
(Bloomberg) — General Atlantic is poised for a more than $3 billion windfall from CVS Health Corp.’s $10.6 billion deal this week for primary care provider Oak Street Health Inc., according to people familiar with the matter and Bloomberg calculations.
The growth equity-investment firm first backed Oak Street in 2015 when it was a startup. It invested $60 million in its series B funding round, the people said, asking not to be identified because the details aren’t public.
The firm also led Oak Street’s so-called crossover funding round, or its last funding round before going public, the people added. It’s currently Oak Street’s largest investor, with a more than 25% stake, according to data compiled by Bloomberg.
A representative for General Atlantic declined to comment.
New York-based General Atlantic initially bought into the company on the thesis that the US health-care system would move toward so-called value-based care, a model in which providers are reimbursed for their quality of care.
Oak Street, based in Chicago with 169 centers across the US, aims to reinvent care for Medicare patients with low incomes and chronic health problems. It does that by contracting with insurance companies that offer Medicare health plans, allowing it to pocket savings it generates in exchange for assuming the financial risk of caring for the elderly and disabled.
CVS is paying $39 a share in cash for Oak Street, valuing its equity at about $9.47 billion. General Atlantic, led by Chief Executive Officer Bill Ford, has $73 billion assets under management, according to its website. Robbert Vorhoff, the firm’s global head of health care, led its investment in Oak Street. CVS has said it expects the deal to close this year.
–With assistance from Michael Hytha.
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