Amazon to buy One Medical for $3.9 billion as it expands its presence in health care

Amazon to buy One Medical for $3.9 billion as it expands its presence in health care
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One Medical is a membership-based primary 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 their 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 experiences that need to be reinvented.” Lindsay added that Amazon hopes to be one of the companies “that helps dramatically improve the healthcare experience for years to come.”

The acquisition is just the latest example of the tech giant expanding its presence in the healthcare industry. Amazon acquired PillPackan online pharmacy, in 2018 and then launched its own digital pharmacy in the U.S. Separately, Amazon has partnered with JP Morgan Chase and Berkshire Hathaway in an effort to provide better health care and insurance services at lower cost to workers and families at all three companies, and possibly to other companies as well. That endeavor, called Haven, to close last year.

In recent years, Amazon has expanded its empire from online retail to entertainment to grocery stores and more, increasing its vast reach into consumers’ lives in the process. The acquisition of One Medical would be one of the largest in Amazon’s history. Amazon agreed to buy supermarket 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.

With the One Medical deal, Amazon would gain access to physical health clinics and “hospital and payer system relationships,” Elizabeth Anderson, an analyst at Evercore ISI, said in a note Thursday morning.

Headquartered in San Francisco, One Medical has seen demand for its services increase in recent years amid the Covid-19 pandemic and the rise of the telehealth industry. In its most recent quarterly earnings reportOne Medical said it had a total member count of 767,000, up 28% year over year. One Medical went public in January 2020.
Actions for 1life health care (ONEM), the parent company of One Medical, surged more than 65% in early trading on Thursday after the announcement. Amazon shares opened relatively flat on Thursday. (Shares of CVS Health Corp and Walgreens Boots Alliance fell slightly Thursday morning after the news.)

The deal remains subject to approval by One Medical shareholders and regulators.

Nicholas Economides, an economics professor at New York University’s Stern School of Business, said he’s skeptical the deal could trigger formal antitrust scrutiny. 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. Antitrust regulators have traditionally scrutinized mergers that could eliminate a competitor in the same market, but have rarely opposed deals in which one company makes its way into an adjacent industry.

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

However, some tech industry critics were quick to raise concerns about the deal and the data the company could access.

“The fact that Amazon has backdoor access to private healthcare data is frankly a scary thought and calls attention to how desperately Congress needs to pass antitrust reform to prevent these tech giants from abusing their monopoly power.” said Sacha Haworth, executive director of Tech Oversight. Project, an advocacy group, told CNN Business in a statement.

While the latest Amazon deal may not raise red flags under the traditional antitrust rubric, the announcement comes as officials from the Federal Trade Commission, Justice Department and Congress have sounded a harsher note in the courts. big tech platforms and vowed to be more creative and aggressive. .— on the application of competition law. Some US lawmakers are urgently pushing to pass a bill that could erect new barriers between the tech giants’ various lines of business, preventing them from using their massive scale across multiple verticals as a kind of force multiplier that, According to critics, it hurts competition.

CNN’s Brian Fung contributed to this report.

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