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Oak Street Health: Bar Of Expectation May Be Set A Little Too High

Apr. 09, 2021 6:21 PM ETCVS Health Corporation (CVS)4 Comments


  • Oak Street is pioneering a new approach to primary care provision for Medicare patients managing chronic conditions.
  • The company operates branded healthcare centers supported by a digital data analytics platform focused on providing cost-effective, streamlined, value-based care.
  • Oak Street is based in Chicago and raised $328m in an August '20 IPO to fund expansion into new territories, followed by an $800m convertible debt offering.
  • The company has ambitious growth plans, operating almost like a franchise, as a middleman between payors, providers, and patients.
  • At current price of $62, and market cap >$15bn, I think Oak Street could struggle to meet the market's growth expectations, but an entry point of ~$50 could be attractive.
  • Looking for more investing ideas like this one? Get them exclusively at Haggerston BioHealth. Learn More »
Doctors Appointment
Photo by Geber86/E+ via Getty Images

Investment Thesis

Oak Street Health (OSH) looks to be a strong emerging player in the primary care sector, albeit with a share price to match.

Oak Street IPOd in August last year, raising $328m at a price of $21 per share, and its

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This article was written by

Edmund Ingham profile picture

Edmund Ingham is a biotech consultant. He has been covering biotech, healthcare, and pharma for over 5 years, and has put together detailed reports of over 1,000 companies. He leads the investing group Haggerston BioHealth.

The group is for both novice and experienced biotech investors. It provides catalysts to look out for and buy and sell ratings. It also provides product sales and forecasts for all the Big Pharmas, forecasting, integrated financial statements, discounted cash flow analysis and market by market analysis. Learn more.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Comments (4)

lgcallahan profile picture
conference call re 10Q nugget- On November 1, 2021, the Company received a civil investigative demand (“CID”) from the United States Department of Justice. According to the CID, the Department of Justice is investigating whether the Company may have violated the False Claims Act, 31 U.S.C. §§ 3729-3722. The CID requests certain documents and information related to the Company’s relationships with third-party marketing agents and related to the Company’s provision of free transportation to federal health care beneficiaries and requests information and documents related to such matters. We intend to cooperate with the Department of Justice and produce information and documentation in response to the CID. We are currently unable to predict the outcome of this investigation or whether litigation is probable. Regardless of the outcome, this inquiry has the potential to have an adverse impact on us due to any related defense and settlement costs, diversion of management resources, and other factors. See Note 10, Commitments and Contingencies.

In addition to the provisions of the FCA, which provide for civil enforcement, the federal government can use several criminal statutes to prosecute persons who are alleged to have submitted false or fraudulent claims for payment to the federal government.

If any of our operations are found to violate these or other government laws or regulations, we could suffer severe consequences that would have a material adverse effect on our business, results of operations, financial condition, cash flows, reputation and stock price, including:
lgcallahan profile picture
can you update your analysis based on Q3 results? I cannot say anything here other than buzzwords, losses and BS press releases about AARP, customer surveys and questionable acquisition and most of all relentless insider selling
Looks like company more concerned with saving insurance company money than treating patients. I doubt if they refer much to specialists.
Thank you, interesting article. What are your thoughts on JWS/Cano Health?

Same business model but lower valuation. I also like the approach of the CEO/founder, who also has a social mission. Great board as well.
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