(CTN News) – On Thursday, Amazon.com Inc (AMZN.O) agreed to buy primary care provider One Medical (ONEM.O) for $3.49 billion, expanding its virtual healthcare service and adding brick-and-mortar doctors’ offices.
One Medical & Amazon, Dive Brief:
- Amazon will acquire primary care network One Medical for $18 a share, valuing the company at $3.9 billion.
- According to Bloomberg, the all-cash deal for San Francisco-based One Medical comes after months of speculation about an acquisition. CVS Health has reportedly shown interest in the company.
- One Medical, which has grown rapidly since it was founded in 2007, could be acquired at a significant premium, analysts say. Compared to Wednesday’s closing price of $10.18, Amazon’s price of $18 represents a 43% premium.
In an effort to lower sharply rising healthcare costs, Amazon is elbowing into the industry. E-commerce giant Amazon launched a hybrid care program for employers two years ago, which combines virtual care with in-person care.
It is estimated that Amazon will offer its in-person care benefit in roughly 30 U.S. cities by the end of this year, despite expanding its virtual care program nationwide in February.
The acquisition of One Medical, which operates an extensive network of clinics and claims to be the largest independent practice in the country, could strengthen Amazon Care.
As of yet, Amazon has not commented on how One Medical will be integrated into its existing healthcare operations.
As a result of Amazon’s deal, the healthcare sector was somewhat surprised. According to Citi analysts earlier this month, One Medical’s cash-burning and riskier Medicare segment may be unpalatable for larger tech firms such as Amazon.
Aside from One Medical’s direct-to-consumer medical model, the primary care network also offers its services to about 8,000 employers through its employer network, as well as to their employees.
Medical CEO Amir Dan Rubin said, “Given how human-centered and technology-powered One Medical’s model and team are, it is so exciting to be able to combine One Medical’s dedication to patients, history of innovation, and commitment to the long-term with Amazon’s customer obsession, history of invention, and commitment to long-term investment.
There will be no change in Dan Rubin’s role as head of the division after the deal has been completed.
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