Amazon has agreed an all-cash deal to buy US healthcare company One Medical for $3.9 billion, as the e-commerce giant cements its push into the medical industry.
The Seattle-based company will pay One Medical shareholders $18 per share, more than a 75 percent premium over Wednesday’s closing price. The San Francisco company’s stock price closed up 69 percent Thursday.
The acquisition is the latest attempt by Amazon to become a leading player in the healthcare industry, from becoming an online pharmacy to providing telehealth services. One Medical offers a subscription-based model where users can pay a monthly fee to access doctors.
“We believe healthcare is high on the list of experiences that need to be reinvented,” Neil Lindsay, senior vice president of Amazon Health Services said in a statement.
“We love innovating to make what should be easier and we want to be one of the companies that will greatly help improve the healthcare experience over the next several years,” he added.
One Medical went public in early 2020 and its share price has skyrocketed during the coronavirus pandemic, but it has struggled to maintain momentum, with shares now trading below the initial public offering price. Hedge fund Tiger Global and private equity group Carlyle are among its largest shareholders.
The deal, which includes debt, is likely to become a test case for US antitrust regulators in the Biden administration who have publicly criticized Big Tech’s monopoly power.
Lena Khan, chair of the Federal Trade Commission, and Jonathan Kanter, head of antitrust at the US Department of Justice, said it was important to rein in the market power wielded by big tech companies like Amazon and Google.
Amazon has tried to force Khan to drop any online retail issue, arguing that it has “already made up its mind” about the company’s dominant market position. Amazon commands about 40 percent of the online retail sector, according to eMarketer, although other research suggests the number could be higher.
Amazon launched an online pharmacy in 2020 that offers prescription drugs at discounted prices. Two years earlier, it acquired PillPack, a mail-order pharmacy that packages and mail-orders tablets, for about $1 billion.
At the time of the acquisition of PillPack, stocks of listed drugstores decreased significantly as a result of Amazon’s entry into the market.
The company is also leveraging Amazon Web Services cloud services and artificial intelligence in the field for Health so that the data can be used to identify trends, predict disease and treat.
Amazon faces competition from rival Big Tech Alphabet, which acquired fitness tracking company Fitbit last year, and London-based AI firm DeepMind in 2014, whose health team now sits under Google Health.