Amazon buys One Medical for $3.9 billion as it expands its healthcare footprint

One Medical is a membership-based primary care service that promises customers “24/7 access to virtual care.” The company operates in a dozen major U.S. markets, according to its website, and works with more than 8,000 companies to offer One Medical health benefits to their employees.

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In a statement Thursday announcing the acquisition, Neil Lindsay, senior vice president of Amazon Health Services, said the e-commerce giant believes “healthcare is high on the list of experiences in need of reinvention.” Lindsay added that Amazon hopes to be one of the companies “that helps dramatically improve the healthcare experience over the next few years.”

The acquisition is just the latest example of the technology giant expanding its footprint in the healthcare sector. Amazon acquired PillPack, an online pharmacy, in 2018 and later launched its own digital pharmacy in the US. Separately, Amazon partnered with JP Morgan Chase and Berkshire Hathaway in an effort to offer better health care and insurance at a lower cost to workers and families at the three companies, and possibly other businesses as well. That effort, called Haven, folded last year.

In recent years, Amazon has expanded its empire from online shopping to entertainment, groceries and more, increasing its enormous reach into consumers’ lives. The One Medical acquisition would be one of the largest in Amazon’s history. Amazon agreed to buy grocery chain Whole Foods in 2017 for $13.7 billion and earlier this year closed an $8.5 billion deal to buy iconic Hollywood movie studio MGM.

With the One Medical deal, Amazon will gain access to brick-and-mortar health clinics and “payer-hospital system relationships,” Evercore ISI analyst Elizabeth Anderson said in a note Thursday morning.

One Medical, headquartered in San Francisco, has seen demand for its services increase in recent years amid the Covid-19 pandemic and the rise of the telehealth sector. In its latest quarterly report, One Medical said it had a total membership of 767,000, up 28% year-on-year. One Medical was listed on the stock exchange in January 2020.
Shares for 1life Healthcare (ONE), the parent company of One Medical, surged more than 65% in early trading Thursday following the announcement. Amazon stock opened relatively flat on Thursday. (Shares of CVS Health Corp and Walgreens Boots Alliance fell slightly Thursday morning after the news.)

The agreement is subject to approval from One Medical’s shareholders and regulators.

While Anderson argued that there is minimal antitrust risk given Amazon’s limited healthcare footprint, some critics of the tech industry were quick to raise concerns about the deal and the data the company could access.

“Amazon having backdoor access to private healthcare is frankly a terrifying thought and highlights how desperately Congress needs to pass antitrust reform to prevent these tech giants from abusing monopoly power,” Sacha Haworth, executive director of the Tech Oversight Project advocacy group, told CNN Business in a statement.

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