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Amazon is taking a $3.9 billion step toward expanding its primary care options this morning with the acquisition of One Medical.
One Medical is a publicly traded, membership-based primary care practice offering virtual and brick-and-mortar services to commercially insured patients.
Under terms of the all-cash deal, Amazon will pay $18 a share for One Medical. Amir Dan Rubin, One Medical’s CEO, plans to stay on after the transaction. The deal must be approved by One Medical’s shareholders and federal regulators.
The deal was announced before the stock market opened. One Medical, which closed at $10.18 per share yesterday, is trading around $17.18 per share midday.
In 2022 first quarter, One Medical lost $90 million, although revenues increased 110% to $254 million. Last year, San-Francisco-based One Medical acquired Iora Health for $2.1 billion with plans to break into the Medicare Advantage market.
Amazon has been persistent in its healthcare push even after the company’s joint healthcare-specific venture with J.P. Morgan Chase and Berkshire Hathaway disbanded last year. Amazon signed its first customers to Amazon Care, a medical care service it’s selling to employer health plans, last year, and in February said it was expanding Amazon Care’s virtual primary care and urgent care services nationally into 20 cities.
Late last year, Amazon launched a central arm to consolidate its pharmacy, care and diagnostics businesses, tapping a former senior vice president of its Amazon Prime business, Neil Lindsay, to lead it. At the time, Amazon said centralizing its healthcare efforts would help the company develop new “customer-centric” ways for patients to access healthcare.
Amazon has also been striking deals to bring its Alexa voice assistant and cloud services into healthcare organizations.
“We think health care is high on the list of experiences that need reinvention,” Lindsay said in a news release. “We want to be one of the companies that helps dramatically improve the healthcare experience over the next several years.
Christina Farr, an investor at venture firm, OMERS Ventures, said the move reveals that Amazon is not afraid of low margin business lines, which is different from many competitors.
“It is definitely a foothold to more diverse patient populations, including seniors,” Farr said. “For startups, I think it sends a signal that Amazon could be an interesting partner if you’re in the world of primary care or consumer health.”
We will have more on this story as it develops.
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