Amazon acquires primary care provider One Medical for $3.9B

It's not clear how Amazon will incorporate One Medical, but it could be to expand Amazon Care

Amazon is no stranger to making huge acquisitions; this is the company that bought MGM for $8.5 billion, and Whole Foods for $13.7 billion. Amazon has also been making moves in the healthcare space in recent years, having launched its own pharmacy delivery service, as well as an on-demand, virtual care solution for employees. 

So, it's no surprise that the company would make a big, splashy acquisition of a healthcare company, announcing on Thursday that it entered into a definitive agreement to acquire primary care platform One Medical for $18 per share in all cash deal, or approximately $3.9 billion; that includes One Medical’s net debt. That is a 28.5% increase from One Medical's $14 IPO price. 

Founded in 2007, One Medical is a members-only technology platform that runs its own clinics across the U.S.

For less than $200 a year, patients get access to health professionals, 24/7 virtual care, and same-day appointments. They are able to enjoy more quality time with their provider during longer appointments, they can e-mail their provider directly with follow up questions, get access to 24/7 phone support and stay connected and on top of their health with the One Medical mobile app. Patients can also schedule same- or next-day appointments via phone, app or online.

The company currently has locations in Atlanta, Austin, Boston, Chicago, Columbus, the D.C. Metro Area, Houston, Los Angeles, New York, Orange County, Phoenix, Portland, Raleigh-Durham, San Diego, Seattle, and the SF Bay Area, with locations coming soon to Dallas–Ft. Worth, Miami, and Milwaukee.

Once the transaction is completed, Amir Dan Rubin will continue as CEO of One Medical.

“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,” he said in a statement.

“There is an immense opportunity to make the health care experience more accessible, affordable, and even enjoyable for patients, providers, and payers. We look forward to innovating and expanding access to quality healthcare services, together.”

The company, whose parent company 1Life Healthcare trades under the ticker ONEM, saw its stock jump 69.45%, or $7.07, to $17.25 a share, on the news. 

For Amazon, it's not clear yet how it will integrate One Medical's technology and clinics, but one potential use would be to expand Amazon Care, its on-demand, virtual care solution, which it recently expanded to all 50 states. 

Launched in late 2019, Amazon Care allows users to access primary care doctors by letting them either exchange messages with their healthcare provider, or have a video visit. Visits can include be for conditions such as allergies, cold, flu, or COVID-19, as well as ongoing care needs, including chronic conditions like hypertension, coronary artery disease, asthma, diabetes, and mild to moderate depression and anxiety.

It also provides care for trouble sleeping, managing stress, pre-pregnancy planning, sexual health options, or pre-exposure prophylaxis (PrEP), along with preventive care, such as evidence-based screening and immunizations.

In addition to its virtual platform, Amazon Care also includes at-home visits, which are only available in certain markets; these occur when the Video Care clinician recommends an in-person assessment or treatment, which is then performed by a registered nurse, or what Amazon calls a “Mobile Care nurse,” in the patient's home, a designated room on the Amazon campus, or other private location within its service area. 

Amazon Care also offers prescription medication delivery from a Care Courier.

The service was originally available only to employees who worked for Amazon in Seattle, before it was expanded in 2020 to all Amazon employees in the state of Washington. In 2021, it was reported that Amazon was planning to broaden it out to employees of other companies and, in May of last year, it signed its first enterprise client: Precor, a fitness company owned by Peloton. Other companies offering the services to their employees include semiconductor manufacturer Silicon Labs, specialized workforce solutions provider TrueBlue, and Whole Foods Market.

Amazon had revealed that it was also planning to expand the in-person part of the program by launching in 20 more cities throughout the coming year, including San Francisco, Miami, Chicago, and New York City; in-person visits were already available in Seattle, Baltimore, Boston, Dallas, Austin, Los Angeles, Washington, D.C., and Arlington.

“We think health care is high on the list of experiences that need reinvention. Booking an appointment, waiting weeks or even months to be seen, taking time off work, driving to a clinic, finding a parking spot, waiting in the waiting room then the exam room for what is too often a rushed few minutes with a doctor, then making another trip to a pharmacy – we see lots of opportunity to both improve the quality of the experience and give people back valuable time in their days,” Neil Lindsay, SVP of Amazon Health Services, said in a statement.

“We love inventing to make what should be easy easier and we want to be one of the companies that helps dramatically improve the healthcare experience over the next several years. 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. We look forward to delivering on that long-term mission.”

Amazon's stock rose 1.52% on Thursday, or $1.86, to $124.63 a share.

Amazon in healthcare

Healthcare has been a priority for Amazon for at least the last few years; one of its biggest initiatives was Haven, the healthcare company that emerged from a joint venture between JP Morgan Chase, Amazon and Berkshire Hathaway in 2018. The goal, the company said at the time, was to use technology to make healthcare simpler, higher-quality and lower cost. It quietly shut down last year.  

In addition to Haven, Amazon also debuted its own pharmacy delivery service, which followed its purchase of online pharmacy PillPack for over $700 million in 2018, as well as the launch of its own line of over the counter drugs.

In 2020 alone, Amazon began offering a new family care benefit to its 650,000 full and part-time Amazon and Whole Foods Market employees through Care.com and it announced a healthcare pilot with primary care service provider Crossover Health to establish local, convenient health centers near Amazon fulfillment centers and operations facilities. The company also unveiled a new wearable wristband called Amazon Halo, along with the Amazon Halo app, which uses multiple sensors, including an accelerometer, a temperature sensor, and a heart rate monitor, to monitor activity, sleep, body fat and voice.

2021 saw Amazon began offering a new mental health benefit for its employees, including free one-on-one counseling sessions. It also launched the AWS Health Accelerator, and it launched a prescription savings benefit. The company also made HealthLake, its service for healthcare and life sciences organizations, widely available. 

Amazon also makes money through Alexa: in February, the company partnered with Teladoc to allow users to connect to a physician through Amazon Alexa devices, including the Echo, Echo Dot, and Echo Show.

Through this partnership, customers in the U.S. will be able to connect with a Teladoc care provider 24/7 for non-emergency health needs simply by saying, "Alexa, I want to talk to a doctor." The Echo device will connect the users with the Teladoc call center, and they will then get a call back on their Echo devices from a Teladoc doctor. If the member is insured, the cost can be as low at $0, or $75 if they are uninsured.

These devices can also answer over 80,000 healthcare questions thanks to a 2020 partnership with Sharecare.

(Image source: aboutamazon.com)