Amazon to acquire primary healthcare provider One Medical for $3.9B
Amazon.com Inc. today announced plans to acquire One Medical, a publicly traded primary healthcare provider, for $3.9 billion.
The $3.9 billion price tag includes One Medical’s net debt and values the company at $18 per share. That represents a 76.8% premium to the company’s last closing price.
One Medical, officially 1Life Healthcare Inc., operates a network of primary healthcare clinics throughout the U.S. The company launched in 2007 with a single clinic. One Medical has experienced rapid growth since and, as of March 31, operates 188 medical offices that provide healthcare services to 767,000 members.
One Medical’s rapid growth is reflected in its recent financial results. During the quarter ended March 31, the company generated net revenue of $254.1 million, which represents a year-over-year increase of 109%.
“We think health care is high on the list of experiences that need reinvention,” said Neil Lindsay, senior vice president of Amazon Health Services. “Together with One Medical’s human-centered and technology-powered approach to health care, we believe we can and will help more people get better care, when and how they need it.”
Lindsay, a longtime Amazon executive, was appointed to lead the company’s Amazon Health Services division last December. The executive previously played a key role in driving the adoption of offerings such as the company’s Prime membership program.
The Amazon Health Services division includes several businesses and product lines that previously operated separately. Among them is Amazon Care, the company’s telehealth service. The division also includes the Amazon Pharmacy online pharmacy, which the company launched in 2020 after acquiring startup PillPack Inc. the year prior for $753 million.
Amazon’s acquisition of One Medical will further expand its presence in the healthcare sector. “This leaves no doubt that Amazon is serious about healthcare,” commented Paddy Padmanabhan, founder and chief executive of Damo Consulting, a growth strategy and digital transformation advisory firm that works with healthcare organizations.
Gaining access to Amazon’s resources could potentially help One Medical address growing competition in its market. “For One Medical, getting acquired by Amazon provides a great path to sustained growth in a market where the battle for primary care is intensifying and leading health systems step up their consumer digital efforts to focus on growth and retention,” Padmanabhan said.
“AMZN created great concern in the pharmacy industry with its 2018 acquisition of PillPack, which was rebranded into the Amazon Pharmacy offering,” Cowen Inc. wrote in a memo to investors today. “The acquisition of ONEM marks a shift into a new market segment for AMZN, but not inconsistent with what it has been communicating regarding its healthcare strategy.”
The deal is the latest in a series of multibillion-dollar acquisitions that Amazon has made over the past five years. Previously, the company acquired storied film studio MGM in a $8.45 billion transaction that closed this past March. Earlier, Amazon bought Whole Foods Market Inc. in 2017 for $13.7 billion.
Alongside acquisitions, Amazon’s in-house technical expertise is another important component of its market expansion strategy. Amazon is building a presence in the nascent drone delivery market with a fleet of custom delivery drones powered by machine learning software. In the retail sector, the company uses internally-developed technology to power its growing network of cashierless Amazon Go stores.
The company’s technical expertise could help One Medical enhance its capabilities. Amazon’s cloud unit, Amazon Web Services Inc., offers multiple cloud services designed to streamline healthcare organizations’ operations. AWS also has an extensive ecosystem of partners focused on helping healthcare organizations adopt new technologies to support their work.
“The opportunity to transform health care and improve outcomes by combining One Medical’s human-centered and technology-powered model and exceptional team with Amazon’s customer obsession, history of invention, and willingness to invest in the long-term is so exciting,” said One Medical CEO Amir Dan Rubin. “There is an immense opportunity to make the health care experience more accessible, affordable, and even enjoyable for patients, providers, and payers.
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