CVS Health is plunging deeper into primary care services, buying Oak Street Health for approximately $10.6 billion.

The drugstore chain said today it would pay $39 per share in cash for each share of Oak Street Health in a deal expected to close this year.

Oak Street Health runs primary care centers mostly for lower-to-middle income people with Medicare Advantage plans. Those are privately run versions of the federal government’s program for people aged 65 and older.

With its latest acquisition, CVS Health Corp. aims to capitalize on the federal government’s interest in cutting costs and improving the health of people in its Medicare program.

The government wants more people in value-based care arrangements, which basically focus on keeping patients healthy and any chronic problems like diabetes under control. The goal: Ward off big medical expenses like hospital stays.

Oak Street Health specializes in this care.

Its centers use doctors, social workers and other care providers to help people manage their health.

Oak Street CEO Michael Pykosz has said that a lot of costs stem from people with chronic health problems who receive poor care and wind up with big medical problems.

“Solving that problem creates a massive, massive market opportunity for Oak Street Health,” Pykosz said in January at an annual conference hosted by JPMorgan.

Founded in 2012, Oak Street runs 169 locations in 21 states. Its revenue grew to $1.43 billion in 2021, and analysts expect that it topped $2 billion last year.

But the company also has booked a string of annual losses as it spends money opening new clinics.

Woonsocket, R.I.-based CVS Health Corp. runs nearly 10,000 retail drugstores around the country and has been expanding the amount of care it provides through them.

It also manages prescription drug benefits and provides insurance through its Aetna arm, which is growing its Medicare Advantage enrollment.

CVS Health leaders have been talking for well over a year about expending into primary care as rival health care giants UnitedHealth Group and Walgreens have done.

“We believe it’s an asset that we want in our portfolio,” CEO Karen Lynch told investors at the JPMorgan conference.

The company is already spending $8 billion on another growth priority: buying home health care provider Signify Health. CVS Health expects that deal to close in the first half of this year.

Shares of Chicago-based Oak Street Health Inc. jumped nearly 5%, while CVS Health’s stock rose slightly today before the opening bell.