Amazon is making a $3.9 billion move this morning to expand its primary care options with the acquisition of One Medical.
One Medical is a publicly traded, membership-based primary care practice offering virtual and physical services to commercially insured patients.
Under the deal, paid entirely in cash, Amazon will pay $18 per share of One Medical. Amir Dan Rubin, CEO of One Medical, plans to stay after the deal. The deal is subject to approval by One Medical’s shareholders and federal regulators.
The deal was announced before the opening of the stock market. One Medical, which closed at $10.18 a share yesterday, is trading around $17.18 a share at noon.
In the first quarter of 2022, One Medical lost $90 million, although revenue increased 110% to $254 million. San Francisco-based One Medical acquired Iora Health for $2.1 billion last year with plans to enter the Medicare Advantage market.
Amazon has aggressively promoted its healthcare business even after dissolving the company’s healthcare-focused joint venture with JP Morgan Chase and Berkshire Hathaway last year. Last year, Amazon brought its first customers to Amazon Care, the healthcare service it sells to employers’ health insurance plans, and in February said it was expanding Amazon Care’s virtual first aid and emergency services across the country in 20 cities.
Late last year, Amazon launched a central division to consolidate its pharmaceuticals, care and diagnostics business, appointing Neil Lindsay, former senior vice president of its Amazon Prime business, to lead it. Amazon said at the time that centralizing its healthcare efforts would help the company develop new “customer-centric” ways for patients to access healthcare.
Amazon is also making deals to bring its Alexa voice assistant and cloud services to healthcare organizations.
“We think healthcare is at the top of the list of activities that need to be updated,” Lindsey said in a press release. “We want to be one of the companies that will help significantly improve the quality of healthcare over the next few years.
Christina Farr, an investor in venture capital firm OMERS Ventures, said the move shows that Amazon isn’t afraid of low-margin lines of business, unlike many competitors.
“This is definitely a foothold for a more diverse patient population, including the elderly,” Farr said. “For startups, I think this sends a message that Amazon can be an interesting partner if you’re in primary care or consumer health.”
We will have more on this story as it develops.