Amazon eyes One Medical for $3.9B
The San Francisco company has about 767,000 members and 188 medical offices
Amazon will acquire the primary care organization One Medical in a deal valued roughly at $3.9 billion, marking another expansion for the retailer into health care services.
The Seattle-based e-commerce giant said Thursday it is buying One Medical for $18 per share cash. Its 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.
One Medical, whose parent company is the San Franciscobased 1Life Healthcare, 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 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 had incurred a net loss of $90.9 million after pulling in $254.1 million in revenue. The total deal value announced Thursday includes One Medical’s debt.
Neil Lindsay, the senior vice president of Amazon Health Services, said in a statement the acquisition is geared toward reinventing the health care “experience” for things like booking an appointment and taking trips to the pharmacy.
“We love inventing to make what should be easy easier and we want to be one of the companies that helps dramatically improve the healthcare experience over the next several years,” Lindsay said.
Overall, consumer demand for telemedicine and virtual health care care visits exploded during the COVID-19 pandemic. Health care bill payers like employers and insurers are also becoming more focused on improving access to patient care and making sure their patients stay tuned in to their health, see their doctors regularly and take their prescriptions.
Health care costs have risen faster than wages and inflation for years and represent a huge expense to employers that offer coverage. Employers and insurers think that by connecting people to regular care, they can prevent expensive hospital stays from happening or keep chronic conditions like diabetes from leading to bigger problems.
For Amazon, the acquisition deepens its foray into health care services, the latest industry the company has sought to disrupt. In 2018, it bought the online pharmacy PillPack for $750 million before opening its own online drug store that allows customers to order medication or prescription refills, and have them delivered to their front door in a couple of days. Last year, it began offering its Amazon Care telemedicine program to employers nationwide. Experts say the latest deal will allow it to bolster its employer clientele, which its been aiming to build up.
“They will have a much bigger footprint in this market immediately,” said Andrew Ching, a professor at Johns Hopkins University who focuses on the business of health.
Neil Saunders, managing director at GlobalData Retail, said its unsurprising Amazon is expanding its footprint in health care. The company’s retail and cloud-computing businesses are becoming more mature and it’s looking to find new opportunities for growth, Saunders said. Health care, which is complex but extremely lucrative, is an attractive option. But making a big splash isn’t always easy.
“Amazon will need to work extremely hard and be extremely innovative if it is to do more than shake things up a little at the margins,” Saunders said in a statement. The deal is subject to regulatory approval. On completion, Amazon said One Medical’s CEO Amir Dan Rubin will remain in his position.