Amazon strikes $3.5 billion deal for One Medical in long march to US healthcare

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

The all-cash deal would combine two relatively small players as Amazon continues a years-long march into U.S. healthcare, seeking to expand at a faster pace.

The online retailer first piloted virtual care visits for its own staff in Seattle in 2019 before offering services to other employers under the Amazon Care brand. He also bought online pharmacy PillPack in 2018, underpinning a prescription delivery and price comparison site he later launched.

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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 signaled its ambitions to improve and accelerate care. However, a big idea akin to how Amazon has automated the role of cashiers in grocery stores has yet to emerge.

In One Medical, Amazon is acquiring a loss-making company with 767,000 members and corporate customers such as Airbnb Inc (ABNB.O) and Google Alphabet Inc (GOOGL.O), which offer its services as employee benefits, according to its site. Web and the latest financial results.

Big rival Teladoc Health Inc (TDOC.N), on the other hand, has more than 54 million paying members in the United States and doubles One Medical’s quarterly revenue. News of the deal with Amazon sent shares of Teladoc as well as drugstore retailers CVS Health Corp (CVS.N) and Walgreens Boots Alliance Inc (WBA.O) falling between 0.3% and 1.8%.

The acquisition makes sense because “the combination of virtual and in-person care is core to One Medical’s and Amazon Care’s strategy,” said Citi analyst Daniel Grosslight.

CASE REVIEW EXPECTED

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

“Amazon has a history of engaging in business practices that raise serious anti-competitive issues, including forcing small businesses on its site to purchase its logistics services as a condition of preferred platform placement, using data not small businesses to compete with them. …,” the senator added in her statement.

Amazon Care recently made its virtual care available nationwide and added the option of home visits in Los Angeles, Washington, Dallas and elsewhere. The COVID-19 pandemic helped boost demand as Amazon Care began to recruit customers, including Hilton Worldwide Holdings Inc . Read more

One Medical, founded in 2007, now gives 188 medical practices to Amazon, according to its recent financial report.

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

Amazon agreed to pay $18 for each share of One Medical, a premium of 76.8% at the healthcare company’s last close. Shares of One Medical were trading at $17.12.

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

Amazon’s limited presence in the healthcare sector should minimize antitrust concerns, but risks remain, analysts said.

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

“This will most certainly subject this acquisition to more scrutiny than normal.”

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

Our standards: The Thomson Reuters Trust Principles.

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