Amazon to Acquire One Medical for $3.5 Billion to Speed Up Growth in Healthcare Sector

Amazon will acquire loss-making company One Medical which has 7,67 lakh members and enterprise clients such as Airbnb and Google.

By Reuters | Updated: 22 July 2022 13:25 IST

Amazon to Acquire One Medical for $3.5 Billion to Speed Up Growth in Healthcare Sector

Amazon agreed to pay $18 (roughly Rs. 1,400) for each share of One Medical

Highlights

Amazon agreed to buy primary care organisation One Medical
One Medical was founded in 2007
One Medical will give Amazon 188 medical offices

Amazon.com on Thursday agreed to buy primary care provider One Medical for $3.49 billion (roughly Rs. 279 crore), expanding the e-commerce giant's virtual healthcare and adding brick-and-mortar doctors' offices for the first time.

The all-cash deal would combine two relatively small players as Amazon continues a years-long march into US healthcare, seeking to grow at a faster pace.

The online retailer first piloted virtual care visits for its own staff in Seattle in 2019 before offering services to other employers under the Amazon Care brand. It likewise bought online pharmacy PillPack in 2018, underpinning a prescription delivery and price-comparison site it later launched.

Amazon Prime Day Sale Starts Tonight: How to Prepare

"We think healthcare is high on the list of experiences that need reinvention," said Neil Lindsay, senior vice president of Amazon Health Services.

The Seattle-based retailer has signaled its ambitions to improve and speed up care. However, a big idea akin to how Amazon has automated the role of cashiers in grocery stores has yet to emerge.

In One Medical, Amazon is acquiring a loss-making company with 767,000 members and enterprise clients such as Airbnb and Alphabet's Google, which offer its services as a benefit to employees, according to its website and recent financial results.

Amazon Prime Day 2022 Sale: Grab These Freebies Before the Sale Begins

Larger rival Teladoc Health, by contrast, has more than 54 million paying members in the United States and double One Medical's quarterly revenue. News of the Amazon deal sent shares of Teladoc as well as drugstore retailers CVS Health Corp and Walgreens Boots Alliance Inc down between 0.3 percent and 1.8 percent.

The acquisition makes sense as the "blending of virtual and in-person care is core to both One Medical and Amazon Care's strategy," said Citi analyst Daniel Grosslight.

Deal scrutiny expected

Amazon Care recently made its virtual care accessible nationwide and added the option for house-calls in Los Angeles, Washington, Dallas and elsewhere. The COVID-19 pandemic helped increase demand as Amazon Care started signing up clients including Hilton Worldwide Holdings Inc.

One Medical, founded in 2007, now gives Amazon 188 medical offices, its recent financial report showed.

Carlyle Group, which had paid $350 million (roughly Rs. 2,796 crore) for a minority stake in One Medical in 2018, will exit its position as part of Amazon's acquisition, people familiar with the matter said.

Amazon agreed to pay $18 (roughly Rs. 1,400) for each share of One Medical, a premium of 76.8 percent to the healthcare firm's last close. One Medical shares were trading at $17.12 (roughly Rs. 1,300).

The deal is valued at $3.9 billion (roughly Rs. 31,167 crore) including One Medical's net debt.

Amazon's limited healthcare presence should minimise antitrust issues, but risks remain, analysts said.

Grosslight said Amazon "does seem to have a target on its back, and the DOJ (the US Department of Justice) has been very aggressive in blocking deals recently."

"That will most definitely subject this acquisition to more scrutiny than normal."

Here are some of the deals and steps taken by Amazon in its healthcare journey

Year	Event
2022	Tied up with the biggest telehealth company, Teladoc Health, to help patients connect with a doctor or another health provider through Alexa. Partnered with the Fred Hutchinson Cancer Center in research to develop vaccines for melanoma and breast cancer.
2021	Struck a deal to sell virtual medical services to Hilton in the United States. Expanded the company's virtual healthcare service to its own employees and other businesses nationwide.
2020	Launched its first fitness band and subscription service, Halo, taking on Apple, Fitbit and Samsung in the crowded fitness tracker market.
2019	The joint venture between Amazon.com, Berkshire Hathaway and JPMorgan Chase closed down, three years after the companies came together in a bid to reduce escalating healthcare costs. Piloted its on-demand health offering called Amazon Care for its employees around Seattle. Bought healthcare startup Health Navigator, its second purchase in the healthcare services industry
2018	Amazon bought online pharmacy PillPack for $753 million (roughly Rs. 17,047 crore), a move that put it in direct competition with drugstore chains, drug distributors and pharmacy benefit managers.

Why is Oppo making strange choices with its flagship Reno series? We discuss this on Orbital, the Gadgets 360 podcast. Orbital is available on Spotify, Gaana, JioSaavn, Google Podcasts, Apple Podcasts, Amazon Music and wherever you get your podcasts.

Affiliate links may be automatically generated - see our ethics statement for details.

Comments

For the latest tech news and reviews, follow Gadgets 360 on X, Facebook, WhatsApp, Threads and Google News. For the latest videos on gadgets and tech, subscribe to our YouTube channel. If you want to know everything about top influencers, follow our in-house Who'sThat360 on Instagram and YouTube.