The amount Pykosz will pay in the deal depends on his holding composition of outright owned shares, shares subject to unexercised stock options, and unrestricted shares investment. Under the merger agreement, the wholly owned shares will convert to cash at the agreed price, the options shares will convert to cash in an amount equal to the excess of the agreed price over the strike price. Uninvested restricted stock options and shares will convert into CVS Health Restricted Shares. Oak Street has yet to provide a detailed analysis of Pykosz’s shares.
The acquisition is not Pykosz’s first profitable sale of Oak Street stock. He has sold more than $68.7 million worth of shares at prices ranging from $30 to $64 per share in a series of transactions since Oak Street went public in 2020, according to filing data. SEC filings compiled by GuruFocus.
Oak Street declined to comment on the figures. Pykosz is expected to stay with the incorporated companies and lead Oak Street, which he co-founded a decade ago.
Pykosz’s potential payout could exceed some of the largest payouts available to Chicago CEOs who have sold the company in recent years. For example, Tim Walbert, CEO of Horizon Therapeutics, is expected to earn $150 million in his pending sale of the company to Amgen. Former Hospira CEO Michael Ball is expected to make $80 million when Pfizer buys his company.
“It was a huge payday,” said Mark Reilly, chief executive officer of Overture Alliance, a search and compensation consulting firm. “But when you’re a founder and you start a business and you grow it, it wouldn’t be strange if that happened.”
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Pykosz founded Oak Street Health in 2012 with Drs Griffin Myers and Geoffrey Price to provide primary care to people with Medicare. By providing a value-based model of care and additional support for low-income patients with chronic health problems, Oak Street claims it can reduce hospital admissions and costs. high fees associated with them.
Oak Street currently employs approximately 600 primary care providers at 169 health centers across 21 states. Prior to going public, the company raised more than $400 million from investors, including private equity firms General Atlantic and Newlight Partners, which collectively own about 39% of the company’s shares. , according to SEC filings. Bloomberg reports that General Atlantic will make $3 billion from the deal.
Although Oak Street has been in business for more than a decade, it has emphasized growth over profits. The company posted $1.6 billion in revenue for the nine months ended September 30, up 52% year-over-year. But Oak Street’s losses jumped nearly 40% to $376.2 million over the same period.
CVS’s acquisition price was about 73% above the stock market value of Oak Street before reports first emerged in January about the deal. But the buyback price of $39 per share is equal to the closing price of Oak Street’s stock on the day it went public on August 7, 2020. Shares of Oak Street hit a peak of $64.99 dollars in February 2021 and a low of around $16 in June 2022.
This story first appeared in Crain’s Chicago Business.
