Why Amazon is buying a little-known medical company for $3.9 billion

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Amazon will significantly expand healthcare with its planned $3.9 billion acquisition of One Medical, a primary care provider with 188 offices in 25 markets nationwide.

The e-commerce giant was a hit: It offered $18 a share for One Medical’s parent company, 1Life Healthcare — 77 percent higher than the previous day’s closing price. Sparks swept Wall Street after Thursday’s announcement, sending the stock up nearly 70 percent.

Despite its rapid growth, One Medical has yet to turn a profit since it went public in 2020. In the first three months of 2022, losses exceeded $90 million.

So, why buy Amazon One Medical? Here’s a brief guide:

What does One Medical do?

One Medical is a subscription-based, technology-leaning primary care provider to build what it calls “a seamless blend of personalized, digital, and virtual care services that are fit for where people work, shop and live.” Headquartered in San Francisco, it operates in major metro areas such as Atlanta, Boston, Chicago, Los Angeles, New York, and the District.

Amazon will see you now: tech giant buys healthcare chain for $3.9 billion

How does One Medical work?

At its core is an app and website that members can use to book appointments, track health records, and renew prescriptions. Patients who sign up on their own will be charged an annual fee of $199 for a range of services including video-on-demand health consultations available at all times and other benefits.

Monitors drew real-time comparisons of Prime, Amazon’s retail membership system, with the type of comprehensive healthcare platform One Medical offers.

Amazon spokeswoman Angie Quinnell declined to comment on whether One Medical’s services would integrate with any of Amazon’s other services, such as Prime, Pharmacy or Care.

(Amazon founder Jeff Bezos owns The Washington Post.)

Why is Amazon spending so much?

In a press release announcing the acquisition, Amazon Vice President Neil Lindsey said healthcare is “number one on the list of experiences that need to be reinvented.” He said the Seattle-based tech giant believed it could expand and improve health care with a “human-centered, technology-driven approach.”

“Book an appointment, wait weeks or even months to be seen, take time off work, drive to the clinic, find a parking space, wait in the waiting room, then the exam room for what often takes a few minutes with the doctor, and then take another trip to the Pharmacy – We see a lot of opportunities to improve the quality of the experience And the “I give people valuable time in their day,” Lindsey said in a statement.

Although One Medical is losing money — not uncommon for a startup — it is growing rapidly: It generated $254 million in total revenue in the first three months of 2022, an increase of nearly 110 percent from the $121 million reported in last year period.

Perspective: Amazon just bought my doctor’s office. This makes me very nervous.

What does Amazon know about healthcare?

The acquisition is part of Amazon’s years-long push into healthcare, though none of its previous moves have carried as much financial leverage.

Amazon bought Internet pharmacy PillPack for $753 million in 2018, which turned into Amazon’s pharmacy two years later. It built Amazon Care with the help of another acquisition, medical technology startup Health Navigator. The service offers telehealth visits and home visits for employees of certain companies, including Hilton, in some cities.

In a leaked audio recording of an extensive meeting in November, Amazon CEO Andy Gacy told employees that AmazonCare is one of the company’s most important innovations, noting that the division aims to expand through new partnerships and services, Insider reported this year.

The company’s cloud computing division, Amazon Web Services, offers healthcare specific products and a healthcare accelerator for startups. The company has also used Amazon Business e-commerce offerings to target hospitals, according to reports.

However, one of her first big moves faltered. Known as Haven, it was an ambitious effort in partnership with JPMorgan Chase and Berkshire Hathaway to tackle high health care costs and improve patient outcomes. But it closed last year after only two years.

What does this mean for patient data?

Quinnell said the acquisition does not change the fact that both companies “have strict policies that protect customer privacy in accordance with HIPAA and all other applicable privacy laws and regulations.”

However, the deal soon attracted scrutiny from some critics, many of whom were concerned about Amazon’s control of many consumer-facing businesses. The company that started as an online bookseller nearly three decades ago has grown its business to include a delivery network roughly the size of UPS, a dominant cloud provider that allows businesses to store data remotely and an extensive ecosystem of Alexa-powered devices. His Prime membership program has grown to more than 200 million members globally.

Others have raised privacy concerns, noting that monetizing consumer data is an important part of other Amazon operations.

“Amazon’s acquisition of One Medical is the latest snapshot in a terrifying new phase in the business model of the world’s largest companies,” said Barry Lynn, CEO of the left-leaning Open Markets Institute.

Lin said he believes the deal will increase Amazon’s ability to collect “the most personal and most private information about individuals, in order to track, target, manipulate and exploit people in ever more intrusive ways.”

Krista Brown, chief political analyst at the American Economic Freedoms Project, a nonprofit advocacy group that supports antitrust causes, called the acquisition “terrifying” in a statement.

“The acquisition of One Medical will bolster Amazon’s growing presence in the healthcare industry, undermining competition.” Brown said. It would also pose grave risks to patients whose sensitive data would be captured by a company whose head of its Office of Information Security once described access to customer data as “free for all.”

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