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Amazon has taken another giant stride into the healthcare space with the acquisition of primary healthcare chain One Medical.
Amazon (NASDAQ: AMZN) is reportedly lining up approximately $3.9 billion to acquire primary health-care provider One Medical. The e-commerce giant seeks to use this acquisition to further steepen its presence in the healthcare sector.
Amazon revealed on Thursday that it has already agreed with One Medical to buy the company in an all-cash deal. This will expand the tech company’s footprint in the healthcare space where it already operates a virtual pharmacy, among other things. According to Neil Lindsay, senior vice president of Amazon Health Services, the company prioritizes healthcare highest on its list of “experiences that need reinvention”. Lindsay explained that Amazon wants to improve the quality of booking physician appointments. The SVP also said the experience of consultation and treatment will also improve.
Amazon’s acquisition deal for One Medical will also reportedly combine two relatively small players. In addition, the e-commerce giant will pay $18 for each share of One Medical which has 767,000 members and enterprise clients, including Airbnb Inc and Alphabet Inc’s Google.
One Medical shares shot up more than 65% in early trading on Thursday following the announcement. Meanwhile, by comparison, Amazon’s shares closed up 1.5% on Thursday. Commenting on the deal, One Medical CEO Amir Dan Rubin issued a statement that read:
“There is an immense opportunity to make the health care experience more accessible, affordable and even enjoyable for patients, providers, and payers.”
The deal is still subject to approval from One Medical’s shareholders and regulators. Upon conclusion, Rubin will continue to run One Medical.
Reactions to Amazon Acquisition Deal with One Medical
Several other observers from various fields have offered their opinions on the Amazon-One Medical deal. Some are lauding the initiative as a much-needed breakthrough in the healthcare system, while others are cynical of Amazon’s involvement.
For instance, Citi analyst Daniel Grosslight described the deal as one that makes sense. According to him, this is because it offers the combined advantages of online and in-person care to both Amazon and One Medical. With the acquisition, Amazon now has access to 188 physical medical offices in 25 markets.
Meanwhile, US Senator Amy Klobuchar expressed concerns over the acquisition’s implications for personal health data. Urging the Federal Trade Commission (FTC) to investigate Amazon’s proposed deal, Klobuchar stated:
“Amazon has a history of engaging in business practices that raise serious anticompetitive concerns, including forcing small businesses on its site to buy its logistics services as a condition of preferred platform placement, using small businesses’ non-public data to compete against them…”
Founded back in 2007, and headquartered in San Francisco, One Medical went public in January 2020. Although demand for its services has surged in recent years due to Covid, the healthcare company was operating at a loss at the time of the Amazon acquisition. One Medical reported a net loss of $90.9 million on revenue of $254.1 million in the first quarter. However, the healthcare firm also stated that its total 767,000 membership count represents a 28% increase year-over-year. One Medical works with more than 8,000 companies that offer employees several health benefits. The company also promises “24/7 access to virtual care.”