Amazon will acquire primary care organization One Medical in a deal valued at roughly $3.9 billion, marking another expansion for the retailer into health services.
The Seattle-based e-commerce giant said in a statement Thursday that it will buy One Medical for $18 a share in an all-cash transaction. It is one of Amazon’s biggest acquisitions, following its $13.7 billion deal to buy Whole Foods in 2017 and its $8.5 billion purchase of Hollywood studio MGM, which closed earlier this year. year.
One Medical, whose parent company is San Francisco-based 1Life Healthcare, Inc, is a membership-based service that offers virtual care and in-person visits. It also works with more than 8,000 companies to offer their health benefits to employees.
As of March, One Medical had about 767,000 members and 188 medical offices in 25 markets, according to its first-quarter earnings report, which also showed the company incurred a net loss of $90.9 million after having earned $254.1 million in revenue. The total value of the deal announced Thursday includes One Medical’s debt.
Neil Lindsay, senior vice president of Amazon Health Services, said in a statement that the acquisition is aimed at reinventing the healthcare “experience” for things like booking an appointment and making trips to the pharmacy.
“We love inventing to make what should be easy easy, and we want to be one of the companies that helps dramatically improve the healthcare experience for years to come,” said Lindsay.
In general, consumer demand for telemedicine and virtual healthcare visits increased during the Covid-19 pandemic. Healthcare bill payers, such as employers and insurers, are also focusing more on improving access to patient care and making sure their patients are informed about their health, consult their doctors regularly and take their prescriptions.
Health care costs have risen faster than wages and inflation for years and represent a huge expense for employers who offer coverage. Employers and insurers think that by connecting people to regular care, they can prevent costly hospital stays from occurring or prevent chronic conditions like diabetes from causing bigger problems.
For Amazon, the acquisition deepens its foray into health services, the latest industry the company has been trying to disrupt. In 2018, he bought online pharmacy PillPack for $750 million before opening his own online pharmacy that allows customers to order drugs or prescription refills and have them delivered to their front door in a couple of days And last year, it began offering its Amazon Care telemedicine program to employers nationwide.
Neil Saunders, CEO of GlobalData Retail, said it’s no surprise that Amazon is expanding its footprint in healthcare. Saunders said the company’s retail and cloud computing businesses are becoming more mature and it is looking for new growth opportunities. Healthcare, which is complex but very lucrative, is an attractive option. But making a big splash isn’t always easy.
“Amazon is going to have to work really hard and be extremely innovative if it wants to do more than shake things up a bit on the margins,” Saunders said in a statement. “Based on past form, the jury is out on whether Amazon can really pull it off. As much as it has made some forays into online pharmacy, it hasn’t revolutionized the market. Neither has its acquisition of Whole Foods, the biggest deal in its history, caused major disruption.”
The deal comes as Amazon and other big tech companies face 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 jeopardizes privacy.
“Amazon’s acquisition of One Medical is the latest in a terrifying new phase in the business model of the world’s largest corporations,” said Barry Lynn, executive director of the Open Markets Institute. , an organization that advocates for stricter antitrust regulation. “The deal will expand Amazon’s ability to collect the most intimate and personal information about people in order to track, target, manipulate and exploit people in increasingly intrusive ways.”
During the pandemic, One Medical faced a congressional investigation after reports that the company ignored guidelines for Covid-19 vaccines. The investigation concluded in December that the company had used “its access to scarce coronavirus vaccines to further the company’s commercial interests” and push vaccine applicants to pay for their memberships. He also said the company and its employees prioritized vaccinations for family and friends.
By afternoon, 1Life Healthcare shares were up 69% to $17.17. Amazon added less than 1% to $123.75.
The deal is subject to regulatory approval. Upon termination, Amazon said One Medical CEO Amir Dan Rubin will remain in his role.