Amazon has accelerated its expansion into the healthcare sector with an all-cash deal to acquire One Medical, a US group that provides virtual and in-person primary care services using a subscription model.
Amazon is buying One Medical for $18 a share, valuing the company at about $3.9 billion, making it one of the online retail giant’s largest acquisitions to date — and by far the largest in the healthcare category.
The addition of One Medical’s primary care capabilities is a big step forward for Amazon as it seeks to become a major player in the health space, providing services across a widening spectrum, including online pharmacy, telemedicine and home care, and digital health technologies.
One Medical, based in San Francisco, covers the last three of those categories, as well as physical clinics that Amazon doesn’t currently have.
It currently has more than 180 office locations and more than 8,000 customer companies, so it will quickly increase Amazon’s capacity for near-site primary care, 24-hour telemedicine and on-site care.
One Medical founder and CEO Amir Dan Rubin will retain that role after the acquisition closes, Amazon said.
Earlier this year, the company reached a major milestone in its healthcare business after making its Amazon Care telehealth platform available to employers nationwide in the US and rolling out in-person services in dozens of cities across the country. The company said it is committed to eventually expanding in-person services to all 50 states.
One Medical’s first-quarter earnings call showed it operates 25 locations, with about 767,000 members on its books and net revenue of $254 million, more than double the same period in 2021. Operating loss was 93 million dollars.
“We think healthcare is high on the list of experiences that need to be reinvented,” Neil Lindsay, senior vice president of Amazon Health Services, commented in a statement.
“We love inventing to make what should be simple easier, and we want to be one of the companies that helps dramatically improve the healthcare experience over the next few years,” he added.
Completion of the transaction is subject to customary closing conditions, including approval by One Medical stockholders and regulatory approval, Amazon said.
Antitrust issues could come into play as One Medical is one of Amazon’s key competitors in the telehealth and in-person healthcare category, along with Carbon Health. In addition, activist groups have also criticized the merger and called for it to be challenged by the Federal Trade Commission.
“The acquisition of One Medical will solidify Amazon’s growing presence in the healthcare industry and undermine competition,” said Krista Brown, senior policy analyst at the American Economic Liberties Project.
“It will also pose serious risks to patients whose sensitive data will be captured by a company whose chief information security office once described access to customer data as a ‘free-for-all,'” she added.
Amazon Care’s consultative-to-pharmacy healthcare approach is also competing for market share with platforms offered by Hims & Her health, Teladoc and Ro.
Meanwhile, Amazon is also entering the wearable health market with its own Halo device and building out the health-related capabilities of its Alexa virtual assistant.
The jury is out on whether Amazon’s health push will pay off, given that previous forays into online pharmacy with its acquisition of Pillpack and grocery with its acquisition of Whole Foods have failed to revolutionize the market as promised.
Without a doubt, Amazon’s determination to disrupt health care and the financial strength it has to test, and in its favor is the challenging U.S. market, where care is hard to come by and expensive.
Meanwhile, Amazon is a relative newcomer to healthcare, which could allow it to avoid antitrust concerns, and will argue that change is needed to reform the system.
“There is a tremendous opportunity to make the healthcare experience more accessible, affordable and even enjoyable for patients, providers and payers,” One Medical’s Dan Rubin said after the deal was announced.
“We look forward to working together to innovate and expand access to quality health care.”
