Amazon buys One Medical for $3.9 billion as it expands into healthcare

One Medical is a membership-based primary health care service that promises customers “24/7 access to virtual care.” The company operates in a dozen major US markets, according to its website, and works with more than 8,000 companies to offer One Medical health benefits to its employees.

In a statement Thursday announcing the acquisition, Neil Lindsay, senior vice president of Amazon Health Services, said the e-commerce giant believes “healthcare is high on the list of services that need to be rethought.” Lindsey added that Amazon hopes to be one of the companies “that will help significantly improve the quality of healthcare over the next few years.”

The acquisition is just the latest example of the tech giant expanding its presence in the healthcare industry. Amazon bought pillsonline pharmacy, in 2018, and then launched its own digital pharmacy In the United States. Separately, Amazon is partnering with JP Morgan Chase and Berkshire Hathaway to bring better health care and lower cost insurance to workers and families at the three companies and possibly other businesses. This effort called Haven malfunction last year.

Amazon has expanded its empire in recent years from online retail to entertainment, groceries and more, expanding its reach into consumer lives. The acquisition of One Medical will be one of the largest in Amazon’s history. Amazon agreed to buy grocery store chain Whole Foods in 2017 for $13.7 billion, and earlier this year closed an $8.5 billion deal to buy iconic Hollywood movie studio MGM.

Through the deal with One Medical, Amazon will gain access to physical health clinics and “relationships with payers and hospitals,” Evercore ISI analyst Elizabeth Anderson said in a note Thursday morning.

San Francisco-headquartered One Medical has experienced a surge in demand for its services in recent years amid the Covid-19 pandemic and the growth of the telemedicine sector. In his latest quarterly income statementOne Medical said it has a total membership of 767,000, up 28% from last year. One Medical went public in January 2020.
Promotions for 1life Healthcare (ONE), the parent company of One Medical, rose more than 65% in early trading on Thursday after the announcement. Amazon shares opened relatively unchanged on Thursday. (Shares of CVS Health Corp and Walgreens Boots Alliance fell slightly on Thursday morning after the news.)

The transaction is subject to approval by One Medical’s shareholders and regulators.

Nicholas Economides, an economics professor at New York University’s Stern School of Business, said he was skeptical that the deal would trigger a formal antitrust review. He compared the acquisition of One Medical to Amazon’s earlier purchase of Whole Foods, saying that Amazon’s pre-existing market share in both industries was quite small at the time of the respective deals. Traditionally, competition authorities scrutinize mergers that could eliminate a competitor from the same market, but rarely object to transactions in which one company enters an adjacent industry.

“The grounds for intervention in this case are even weaker than in Whole Foods, because Amazon is to some extent a marketplace for selling food, so it was a competitor to Whole Foods to a small extent before the merger,” Economides said. “God, I don’t see Amazon having a significant healthcare business.”

However, some tech industry critics were quick to raise concerns about the deal and the data the company might have accessed.

“Amazon’s black hat access to private health data is a frankly terrible idea that makes you wonder how desperately Congress needs to pass antitrust reform to prevent these tech giants from abusing their monopoly power,” Sasha Haworth, Executive Director of the Tech Oversight Project. advocacy group, CNN Business said in a statement.

While Amazon’s latest deal may not raise suspicions under the traditional antitrust rubric, the announcement comes after officials from the Federal Trade Commission, the Justice Department, and Congress have taken a tougher note on major tech platforms and vowed to become more creative and aggressive. — on the application of competition law. Some US lawmakers are urgently pushing for a bill that could raise new barriers between the tech giants’ different lines of business, preventing them from using their sheer scale across multiple verticals as a kind of force multiplier that critics say hurts competition.

Brian Fung of CNN contributed to this report.