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Amazon buys into health care market for $3.9 billion cash

Date Posted: 15 February, 2024

Online retail giant Amazon has announced the purchase of primary health care provider One Medical, expanding its presence in yet another key market.

Seattle-based Amazon on Thursday announced its purchase of established primary health care provider One Medical.

The deal reportedly cost Amazon $3.9 billion in cash ($18 per share / $76.8 premium).

This would make it the third-largest acquisition in Amazon’s history: In 2017 it bought upscale grocery chain Whole Foods for $13.7 billion (€13.44) and earlier this year it paid $8.5 billion for MGM Studios in Hollywood.

“We think health care is high on the list of experiences that need reinvention,” said Neil Lindsay, senior vice-president of Amazon Health Services.

News of the deal negatively affected established companies in the health care sector — shares of the market leader Teladoc Health fell by 8% and those of drug retailers CVS and Walgreens fell by 2% each.

Reinventing health care ‘experiences’

The deal expands on the company’s Amazon Care program, which began offering virtual doctors’ visits for Amazon employees in 2019, first in Seattle and then in other cities. It also comes after Amazon opened an online pharmacy in 2020 that lets customers have prescriptions filled online and delivered to their doorstep within days.

One Medical is a membership-based health care provider, offering virtual and in-person visits for 767,000 members at 188 facilities in 25 markets. March earnings reports showed the company generating $254.1 million in 1Q, yet registering net losses of $90.9 million.

The deal also gives Amazon access to One Medical’s rolodex of corporate customers, which includes digital hospitality platform Airbnb and Google parent company, Alphabet.

Neil Lindsay said the purchase stems from Amazon’s desire to reinvent “experiences” like going to the pharmacy or booking doctor’s appointments.

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

Stocks in 1Life Healthcare, Inc., One Medical’s San Francisco-based parent company, were buoyed by the sale, jumping 68% to $17.13 per share.

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