Amazon is to acquire primary care organization One Medical in a deal valued at around $3.9 billion, marking another expansion for the healthcare services retailer.
The Seattle-based e-commerce giant said in a statement Thursday that it was buying One Medical for $18 a share in an all-cash transaction. It is one of Amazon’s largest acquisitions, following its $13.7 billion deal to buy Whole Foods in 2017 and its $8.5 billion purchase of Hollywood studio MGM, which was concluded earlier this year.
One Medical, whose parent company is San Francisco-based 1Life Healthcare, Inc., is a membership-based service that offers virtual care as well as in-person visits. It also works with more than 8,000 companies to provide its employee health benefits.
As of March, One Medical had about 767,000 members and 188 medical practices in 25 markets, according to its first-quarter earnings report, which also showed the company suffered a net loss of $90.9 million after posting a revenue of $254.1 million. The total value of the transaction announced Thursday includes the debt of One Medical.
Neil Lindsay, senior vice president of Amazon Health Services, said in a statement that the acquisition aims to reinvent the healthcare “experience” for things like booking appointments and trips to the pharmacy. .
“We love to invent to make what should be easy easier, and we want to be one of the companies that will dramatically improve the healthcare experience for years to come,” Lindsay said.
Overall, consumer demand for telemedicine and virtual healthcare visits has exploded during the Covid-19 pandemic. Health care bill payers, like employers and insurers, are also focusing more on improving patient access to care and making sure their patients stay in tune with their health, see regularly their doctor and take their prescriptions.
Health care costs have been rising faster than wages and inflation for years and are a huge expense for employers who provide coverage. Employers and insurers believe that by connecting people to regular care, they can avoid costly hospital stays or prevent chronic conditions like diabetes from leading to bigger problems.
For Amazon, the acquisition deepens its foray into healthcare services, the latest sector the company has sought to disrupt. In 2018, he bought online pharmacy PillPack for $750 million before opening his own online pharmacy that allows customers to order medications or prescription refills and have them delivered to their doorstep within days. . And last year, it began offering its Amazon Care telemedicine program to employers nationwide.
Neil Saunders, managing director of GlobalData Retail, said it’s no surprise that Amazon is expanding its footprint in healthcare. The company’s retail and cloud computing businesses are becoming more mature and looking to find new growth opportunities, Saunders said. Health, complex but extremely lucrative, is an interesting option. But making a splash isn’t always easy.
“Amazon will have to work extremely hard and be extremely innovative if it is to do more than shake things up a bit at the fringe,” Saunders said in a statement. “Based on past form, the jury is out on whether Amazon can actually pull this off. As much as it has made some inroads into online pharmacy, it hasn’t revolutionized the market. Its acquisition of Whole Foods – the largest transaction in its history – did not lead to major disruptions either.
The deal comes as Amazon and other big tech companies face intense scrutiny from lawmakers over their market power. Shortly after the company’s announcement on Thursday, critics called on US regulators to block the purchase, arguing it endangered privacy.
“Amazon’s takeover of One Medical is the latest blow in a terrifying new step in the business model of the world’s biggest companies,” said Barry Lynn, executive director of the Open Markets Institute, an organization that advocates for a stricter antitrust regulations. “The deal will expand Amazon’s ability to collect the most intimate and personal information about individuals, in order to track, target, manipulate and exploit people in ever more intrusive ways.”
During the pandemic, One Medical faced a congressional investigation following reports that the company flouted guidelines for Covid-19 vaccines. The investigation concluded in December that the company had taken advantage of “its access to scarce coronavirus vaccines to further the company’s business interests” and pressure vaccine applicants to pay for its memberships. He also said the company and its employees are prioritizing vaccinations for family and friends.
In afternoon trading, shares of 1Life Healthcare jumped 69% to $17.17. Amazon added less than 1% to $123.75.
The agreement is subject to regulatory approval. In the end, Amazon said One Medical CEO Amir Dan Rubin would stay on.