Amazon has agreed an all-cash deal to buy US healthcare provider One Medical for $3.9bn as the ecommerce giant furthers its push into the medical industry.
The Seattle-based company will pay One Medical shareholders $18 per share, a more than 75 per cent premium on its closing price on Wednesday. The San Francisco company’s stock price shot up 66 per cent in pre-market trading on Thursday.
The acquisition is the latest attempt by Amazon to become a leading player in the healthcare industry, from becoming an online pharmacy to providing telehealth services. One Medical offers a subscription-based model where users can pay a monthly fee to have access to doctors.
“We think healthcare is high on the list of experiences that need reinvention,” Neil Lindsay, senior vice-president of Amazon Health Services, said in a statement.
“We love inventing to make what should be easy easier and we want to be one of the companies that helps dramatically improve the healthcare experience over the next several years,” he added.
One Medical went public in early 2020 and its share price skyrocketed during the pandemic but it has since struggled to keep the momentum, with shares now trading below its initial public offering price. It counts hedge fund Tiger Global and private equity group Carlyle among its largest shareholders.
The deal, which includes debt, is likely to become a test case for US antitrust regulators in the Biden administration who have been openly critical of the monopolistic power of Big Tech.
Lina Khan, chair of the Federal Trade Commission, and Jonathan Kanter, head of antitrust at the US Department of Justice, have both said that it is important to rein in the power exercised in the market by large tech companies such as Amazon and Google.
Amazon had tried to force Khan to recuse herself from any case related to the online retailer, arguing that she had “already made up her mind” about the company’s dominant position in the market. Amazon at present captures about 40 per cent of the online retail sector, according to eMarketer, although other research indicates the number could be higher.
Amazon launched an online pharmacy in 2020 delivering prescription drugs at discounted prices. Two years earlier, it acquired PillPack, a mail-order pharmacy that packages and delivers tablets by post, for about $1bn.
At the time of the acquisition of PillPack, stocks of publicly listed pharmacies dropped significantly as a result of Amazon’s entry into the market.
The company is also leveraging its Amazon Web Services cloud and AI services in this area for health, so data can be used to spot trends and make predictions around illnesses and treatment.
Amazon faces competition from its big tech rival Alphabet, which acquired fitness tracking company Fitbit last year and London-based AI company DeepMind in 2014, whose health team now sits under Google Health.