Amazon seals $3.5 billion deal for One Medical on long march toward US healthcare

July 21 (Reuters) – Amazon.com Inc (AMZN.O) on Thursday agreed to buy primary care provider One Medical (ONEM.O) for $3.49 billion, expanding the e-commerce giant’s virtual healthcare and adding real doctors. offices for the first time.

The all-cash deal will bring together relatively small players as Amazon continues a long path in healthcare in the US, and seeks to grow at a faster pace.

The online retailer first experimented with virtual care visits for its Seattle employees in 2019 before offering services to other employers under the Amazon Care brand. Similarly, online pharmacy bought PillPack in 2018, supporting the later launched prescription delivery and price comparison site.

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“We believe healthcare is high on the list of experiences that need to be reinvented,” said Neil Lindsay, senior vice president of Amazon Health Services.

The Seattle-based retailer has indicated its ambitions to improve and speed up care. However, a big idea akin to how Amazon could automate the role of cashiers in grocery stores has yet to emerge.

At One Medical, Amazon is acquiring a money-losing company with 767,000 members and institutional clients such as Airbnb Inc (ABNB.O) and Alphabet Inc (GOOGL.O) Google, which provide their services as a benefit to employees, according to its website and recent financial results.

By contrast, larger competitor Teladoc Health Inc (TDOC.N) has more than 54 million paying members in the United States and doubles One Medical’s quarterly revenue. News of the Amazon deal caused shares of Teladoc and drugstore retailers CVS Health Corp (CVS.N) and Walgreens Boots Alliance Inc (WBA.O) to drop between 0.3% and 1.8%.

Citi analyst Daniel Grosslait said the acquisition made sense because “the blending of virtual and personal care is the foundation of both One Medical and AmazonCare’s strategy.”

Expect the accuracy of the deal

US Senator Amy Klobuchar, who is also chair of the Senate Judiciary Subcommittee on Competition Policy, Antitrust and Consumer Rights, on Thursday urged the Federal Trade Commission (FTC) to investigate the proposed Amazon deal, expressing concerns about the implications of the acquisition of personal health data. .

“Amazon has a history of engaging in business practices that raise serious anticompetitive concerns, including forcing small businesses on its site to purchase their logistics as a condition of preferred platform placement, using non-public data for small businesses to compete against.. …” the senator added in her statement.

Amazon Care recently made its virtual care available nationwide and added the option of home calls in Los Angeles, Washington, Dallas and elsewhere. The COVID-19 pandemic helped drive demand as Amazon Care began enrolling customers including Hilton Worldwide Holdings Inc (HLT.N). Read more

One Medical’s latest financial report, which was founded in 2007, showed that Amazon now provides 188 medical offices.

People familiar with the matter said Carlyle Group Inc (CG.O), which paid $350 million for a minority stake in One Medical in 2018, will exit its position as part of the Amazon acquisition.

Amazon agreed to pay $18 per share in One Medical, a premium of 76.8% over the health care company’s last shutdown. One medical stock was trading at $17.12.

The deal is worth $3.9 billion, including One Medical’s net debt.

Analysts said Amazon’s limited healthcare presence should reduce antitrust issues, but risks remain.

Grosslight said Amazon “appears to have a target on its back, and the US Department of Justice has been very aggressive in blocking deals recently.”

“This will certainly expose this acquisition to more scrutiny than usual.”

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Additional reporting by Manas Mishra in Bengaluru and Jeffrey Dustin in New York; Additional reporting by Chibuike Oguh in New York and Akanksha Khushi in Bengaluru; Editing by Bernadette Baum, Magu Samuel and Cynthia Osterman

Our Standards: Thomson Reuters Trust Principles.

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