Amazon to buy One Medical for US$3.9b

Amazon announced on Thursday that it will acquire the primary care organisation One Medical in a deal valued roughly at US$3.9 billion, marking another expansion for the retailer into healthcare services.

The Seattle-based e-commerce giant said in a statement that it will acquire One Medical for US$18 per share in an all-cash transaction. It’s one of Amazon’s biggest acquisitions, following its US$13.7-billion deal to buy Whole Foods in 2017 and its US$8.5-billion purchase of Hollywood studio MGM, which closed earlier this year.

One Medical, whose parent company is the San-Francisco based 1Life Healthcare, Inc, is a membership-based service that offers virtual care as well as in-person visits. It also works with more than 8,000 companies to provide its health benefits to employees.

As of this March, One Medical had about 767,000 members and 188 medical offices in 25 markets, according to its first-quarter earnings report, which also showed the company had incurred a net losses of US$90.9 million after pulling in US$254.1 million in revenue. The total deal value announced on Thursday includes One Medical’s debt.

Neil Lindsay, the senior vice-president of Amazon Health Services, said in a statement the acquisition is geared towards reinventing the healthcare “experience” for things like booking an appointment and taking trips to the pharmacy.

“We love inventing to make what should be easy, easier; and we want to be one of the companies that helps dramatically improve the healthcare experience over the next several years,” Lindsay said.

Overall, consumer demand for telemedicine and virtual healthcare visits has exploded during the COVID-19 pandemic. Healthcare bill payers, like employers and insurers, are also becoming more focused on improving access to patient care and making sure their patients stay tuned in to their health, see their doctors regularly, and take their prescriptions.

Healthcare costs have risen faster than wages and inflation for years, and represent a huge expense to employers that offer coverage. Employers and insurers think that by connecting people to regular care, they can prevent expensive hospital stays from happening, or keep chronic conditions, like diabetes, from leading to bigger problems.

For Amazon, the acquisition deepens its foray into healthcare services. In 2020, the retail colossus opened an online drug store that allows customers to order medication or prescription refills, and have them delivered to their front door in a couple of days. Last year, it began offering its Amazon Care telemedicine programme to employers nationwide.

In morning trading, shares of 1Life Healthcare surged 68 per cen to US$17.13.

The deal is subject to regulatory approval. On completion, Amazon said One Medical’s CEO Amir Dan Rubin will remain in his position.

– AP