Los Angeles Times

Amazon to buy medical provider

Company deepens its push into healthcare with a $3.49-billion plan to purchase a primary care chain.

- By Matt Day and John Tozzi Day and Tozzi write for Bloomberg.

Amazon.com Inc. announced it would buy primary care company One Medical for $18 a share, the latest move by the e-commerce giant to muscle into the healthcare market.

The all-cash transactio­n has an equity value of $3.49 billion.

One Medical, whose parent is 1Life Healthcare Inc., operates 182 medical offices in 25 markets in the U.S. Customers pay a subscripti­on fee for access to its physicians and around-theclock digital health services.

“We think healthcare is high on the list of experience­s that need reinventio­n,” said Neil Lindsay, the senior vice president leading Amazon’s healthcare push.

Amazon in recent years has launched an online drugstore, following its purchase of mail-order pharmacy PillPack Inc., and started a primary care clinic for its workers and other companies, among other health-focused initiative­s.

The One Medical deal would be Amazon’s thirdbigge­st acquisitio­n, trailing only its purchases of Whole Foods Market and film studio Metro-Goldwyn-Mayer.

One of the least-profitable areas in medicine, primary care has been attracting investment from retailers, health insurers and drugstore chains.

Shares of Walgreens Boots Alliance Inc. and CVS Health Corp., which are both adding primary care services to their stores, fell on the news. Walgreens, which last year agreed to pay $5.2 billion for a controllin­g stake in clinic chain VillageMD, fell 1.2% and CVS lost 1.5%. Meanwhile, virtual-care company Teladoc Health Inc. rose about 1%.

Amazon shares rose 1.5% and 1Life Healthcare increased 69.5%.

One Medical began as an early attempt to revamp primary care services with sleek clinics in urban centers that patients or employers paid a premium to join.

For an annual fee, the company promised easier access to appointmen­ts and virtual consultati­ons as well as a higher level of customer service than typical medical practices. It struck deals with large health networks such as Mount Sinai Health System in New York to refer patients for specialty care.

But unlike other investor-backed clinic chains such as Oak Street Health Inc., One Medical has historical­ly focused on fee-for-service medical care, rather than new payment models that much of the industry is moving to.

That changed last year with the company’s $1.4-billion acquisitio­n of Medicarefo­cused chain Iora Health Inc., known for trying to reinvent senior care by improving quality while managing costs.

Despite billions of dollars invested in companies trying to reinvent primary care, clinic operators have struggled on the public markets, and valuations have sunk in recent months. Before the deal was announced, One Medical was trading below the price of its 2020 initial public offering.

Bloomberg reported this month that One Medical was weighing its options after attracting takeover interest, including from CVS.

Completion of the transactio­n is subject to customary closing conditions, including approval by One Medical’s shareholde­rs and regulatory approval. On completion, Chief Executive Amir Dan Rubin will continue to run One Medical.

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