CVS pilots primary care model with Carbon Health

The news: CVS Health, through its corporate digital health VC fund CVS Health Ventures, is investing $100 million in primary and urgent care provider Carbon Health. The funding is part of an initial close of Carbon’s Series D round.

How we got here: Carbon said just a few days ago it was slashing its global workforce by more than 200 people—marking its second major round of layoffs in the past 7 months. The startup also said it will be sunsetting certain segments of its business, including remote patient monitoring.

  • These operational cuts were likely necessary to secure the funding from CVS.

CVS’ primary care test run? As part of the deal, CVS will pilot Carbon Health’s primary/urgent care operating model inside select retail stores. That will include using Carbon’s home-grown electronic health record (EHR) to help improve the patient experience.

The retail giant has made its intent to acquire a primary care business blatantly clear. The Carbon investment is not an acquisition, which means CVS could still be on the lookout for one.

  • CVS was in the bidding for concierge primary care company One Medical, but ended up losing to Amazon, per Bloomberg.
  • The retailer was also considered a prospective buyer of senior-focused primary care company Cano Health before ultimately backing out, according to an October report from Barron’s.
  • And on the same day its investment in Carbon was announced, Bloomberg reported that CVS is contemplating a $10 billion+ acquisition of Oak Street Health, another primary care organization serving Medicare patients.

Our take: We see this investment in Carbon as a trial run. If the pilot goes swimmingly, then maybe an acquisition could follow. Or perhaps CVS would be granted the first right of refusal in the event of a Carbon sale.

In the meantime, don’t expect CVS’ explorations into primary care startups and the rumors that follow to stop anytime soon. But it’s likely that CVS’ interest in Oak Street won’t amount to an acquisition, particularly at a price that values the company at nearly 5x its expected 2022 revenues.