Amazon strikes $3.5 bln deal for One Medical in lengthy march into U.S. healthcare

July 21 (Reuters) – Amazon.com Inc (AMZN.O) on Thursday agreed to purchase main care supplier One Medical (ONEM.O) for $3.49 billion, increasing the e-commerce large’s digital healthcare and including brick-and-mortar medical doctors’ places of work for the primary time.

The all-cash deal would mix two comparatively small gamers as Amazon continues a years-long march into U.S. healthcare, looking for to develop at a quicker tempo.

The web retailer first piloted digital care visits for its personal workers in Seattle in 2019 earlier than providing companies to different employers beneath the Amazon Care model. It likewise purchased on-line pharmacy PillPack in 2018, underpinning a prescription supply and price-comparison web site it later launched.

“We expect healthcare is excessive on the listing of experiences that want reinvention,” mentioned Neil Lindsay, senior vice chairman of Amazon Well being Companies.

The Seattle-based retailer has signaled its ambitions to enhance and pace up care. Nevertheless, an enormous concept akin to how Amazon has automated the position of cashiers in grocery shops has but to emerge.

In One Medical, Amazon is buying a loss-making firm with 767,000 members and enterprise shoppers reminiscent of Airbnb Inc (ABNB.O) and Alphabet Inc’s (GOOGL.O) Google, which provide its companies as a profit to staff, in response to its web site and up to date monetary outcomes.

Bigger rival Teladoc Well being Inc (TDOC.N), against this, has greater than 54 million paying members in the US and double One Medical’s quarterly income. Information of the Amazon deal despatched shares of Teladoc in addition to drugstore retailers CVS Well being Corp (CVS.N) and Walgreens Boots Alliance Inc (WBA.O) down between 0.3% and 1.8%.

The acquisition is smart because the “mixing of digital and in-person care is core to each One Medical and Amazon Care’s technique,” mentioned Citi analyst Daniel Grosslight.

DEAL SCRUTINY EXPECTED

U.S. Senator Amy Klobuchar, who can also be the Chairwoman of the Senate Judiciary Subcommittee on Competitors Coverage, Antitrust, and Shopper Rights on Thursday urged the Federal Commerce Fee (FTC) to research Amazon’s proposed deal, expressing considerations over the acquisition’s implications for private well being information.

“Amazon has a historical past of partaking in enterprise practices that increase severe anticompetitive considerations, together with forcing small companies on its web site to purchase its logistics companies as a situation of most well-liked platform placement, utilizing small companies’ personal information to compete towards them…..” the Senator added in her assertion.

Amazon Care just lately made its digital care accessible nationwide and added the choice for house-calls in Los Angeles, Washington, Dallas and elsewhere. The COVID-19 pandemic helped improve demand as Amazon Care began signing up shoppers together with Hilton Worldwide Holdings Inc (HLT.N). learn extra

One Medical, based in 2007, now offers Amazon 188 medical places of work, its latest monetary report confirmed.

Carlyle Group Inc (CG.O), which had paid $350 million for a minority stake in One Medical in 2018, will exit its place as a part of Amazon’s acquisition, folks conversant in the matter mentioned.

Amazon agreed to pay $18 for every share of One Medical, a premium of 76.8% to the healthcare agency’s final shut. One Medical shares have been buying and selling at $17.12.

The deal is valued at $3.9 billion together with One Medical’s internet debt.

Amazon’s restricted healthcare presence ought to decrease antitrust points, however dangers stay, analysts mentioned.

Grosslight mentioned Amazon “does appear to have a goal on its again, and the DOJ (the U.S. Division of Justice) has been very aggressive in blocking offers just lately.”

“That can most positively topic this acquisition to extra scrutiny than regular.”

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

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