Amazon to acquire primary care company One Medical for $3.9B
Is this part of a future consolidation strategy?
On July 21, Amazon announced it has agreed to purchase One Medical for $18 per share in an all-cash transaction (a $3.9 billion valuation including net debt). The deal is subject to “closing conditions, including approval by One Medical's shareholders and regulatory approval”.
Founded in 2007, One Medical is a US-based primary care organization which serves 767,000 members via 182 medical offices in 25 regional markets. It operates under a hybrid model which provides both in-person and telehealth services. The vast majority of members use One Medical via a supplementary health insurance scheme. In early 2020 the company began trading on the Nasdaq.
Towards a product consolidation strategy?
Of course that’s not Amazon’s first healthcare move into the US healthcare sector. In 2018, the Big Tech firm acquired PillPack, a popular online pharmacy. In the last few years, we’ve also witnessed the development of Amazon Care, a telehealth service that incorporates home visits by health workers.
There are synergies among the three entities for sure. It would make sense to combine all into a single brand to: 1/ exploit product/service complementarity, 2/ achieve economies of scale (e.g. schedule an appointment and get your prescription meds at the same time… so to speak).
It’s perhaps a bit premature to jump into conclusions but such strategy wouldn’t be far-fetched.
Update: In late August 2022, Neil Lindsay, Amazon's senior vice president of health services, told employees in an email that Amazon Care will close at the end of the year.