Amazon buys US medical provider to cement entry into healthcare | Amazon


Amazon will acquire primary care organization One Medical in a deal worth approximately $3.9 billion, marking another expansion of the retailer into healthcare services.

The Seattle-based e-commerce giant said in a statement Thursday that it is buying One Medical for $18 per share in an all cash transaction. It’s one of Amazon’s biggest acquisitions, following the $13.7 billion deal to buy Whole Foods in 2017 and the $8.5 billion buyout of Hollywood studio MGM that closed earlier this year became.

One Medical, whose parent company is San Francisco-based 1Life Healthcare, Inc, is a membership-based service that offers both virtual care and in-person visits. It also partners with more than 8,000 companies to offer health benefits to its employees.

According to its first-quarter earnings report, One Medical had approximately 767,000 members and 188 medical practices in 25 markets as of March, which also showed the company suffered a net loss of $90.9 million after spending $254.1 million. dollars in sales. The total value of the transaction announced on Thursday includes the debt of One Medical.

Neil Lindsay, the senior vice president of Amazon Health Services, said in a statement the acquisition is aimed at reinventing the healthcare “experience” for things like booking an appointment and driving to the pharmacy.

“We love to invent, to make what should be simple, simpler, and we want to be one of the companies that will help dramatically improve the healthcare experience for years to come,” said Lindsay.

Overall, consumer demand for telemedicine and virtual health visits has exploded during the Covid-19 pandemic. Healthcare bill payers, such as employers and insurers, are also increasingly focused on improving access to patient care and ensuring their patients stay connected to their health, see their doctor regularly and take their prescriptions.

Healthcare costs have risen faster than wages and inflation for years, and represent a huge expense for employers who offer insurance coverage. Employers and insurers believe that by connecting people to regular care, they can prevent expensive hospitalizations or prevent chronic conditions like diabetes from becoming bigger problems.

For Amazon, the acquisition deepens its foray into healthcare services, the latest industry the company has been trying to disrupt. In 2018, the company bought online pharmacy PillPack for $750 million before opening its own online drugstore where customers can order medication or prescription refills and have them delivered to their door in days. And last year, the company began offering its Amazon Care telemedicine program to employers across the country.

Neil Saunders, managing director at GlobalData Retail, said it’s not surprising that Amazon is expanding its presence in healthcare. The company’s retail and cloud computing businesses are maturing and it’s looking for new growth opportunities, Saunders said. Complex but extremely lucrative healthcare is an attractive option. But it’s not always easy to make a big entrance.

“Amazon has to work extremely hard and be extremely innovative if it’s going to do more than shake things up a little on the fringes,” Saunders said in a statement. “As things stand, the jury is divided as to whether Amazon can actually achieve this. As much as it has made some advances in online pharmacy, it hasn’t revolutionized the market. Even the acquisition of Whole Foods – the largest deal in its history – did not result in major disruptions.”

The deal comes as Amazon and other big tech companies come under scrutiny from lawmakers for their market power. Shortly after the company’s announcement on Thursday, critics urged US regulators to block the purchase because it compromised privacy.

“Amazon’s acquisition of One Medical is the latest shot at a startling new phase in the business model of the world’s largest companies,” said Barry Lynn, executive director of the Open Markets Institute, an organization that advocates for tougher antitrust regulations. “The deal will expand Amazon’s ability to collect the most intimate and personal information about individuals to track, target, manipulate and exploit people in increasingly intrusive ways.”

During the pandemic, One Medical faced a congressional scrutiny after reports that the company flouted Covid-19 vaccine guidelines. The investigation, completed in December, found that the company had “used its access to scarce coronavirus vaccines to further the company’s business interests” and urged vaccine seekers to pay for its memberships. It also said the company and its employees are prioritizing vaccinations for family and friends.

In afternoon trade, shares of 1Life Healthcare are up 69% to $17.17. Amazon is up less than 1% to $123.75.

The deal is subject to regulatory approval. Upon completion, Amazon said One Medical CEO Amir Dan Rubin will remain in his position.


About Author

Comments are closed.