Key Points

• On July 21 2022, Amazon bought One Medical—a San Fransisco-based virtual and in-person primary healthcare company at $3.9 billion for $18 per share. 

• Through this acquisition, Amazon wishes to establish itself as an important player in the healthcare industry, especially in the telemedicine and virtual healthcare sectors. But nothing of this magnitude.

• In the past, Amazon has tried penetrating these lucrative sectors by acquiring the online pharmacy company PillPack in 2018 for $750 million and creating its own health tracker known as Halo which gathers information such as fat percentage, activity levels and sleep. 

About One Medical 

• Founded in 2007, One Medical is a membership-based healthcare provider whose parent company is San Francisco-based 1Life Healthcare, Inc. 

• One Medical has about 767,000 members and offers clinical services in 16 U.S. markets, with three more coming soon.

• As of March 2022, It has incurred a net loss of $90.9m after pulling in $254.1m in revenue. The total deal value includes One Medical’s debt.

When Amazon announced this acquisition on Thursday, shares of 1Life Healthcare surged 69% to $17.17.

But the market enthusiasm wasn't matched by many One Medical customers, who came forward on Twitter to voice their criticism of the deal because they believe it endangers their privacy. Many customers fear that Amazon will utilise their personal health information outside the One Medical silo for targeted advertising and marketing purposes. 

According to Health Insurance Portability and Accountability Act (HIPPA), Amazon can not use the customers’ HIPPA Protected Health Information for any Amazon business other than One Medical. However, this law is not sufficient to pacify the scepticism among the customers and Amazon would have to choose a novel path to regain their trust.

The Covid-19 pandemic has resulted in a boom in the virtual healthcare industry. According to research by McKinsey & Co., telehealth utilisation has reached levels 38X higher than before the pandemic. Thus, it's understandable why Amazon is eager to expand to this lucrative industry.

References

1. https://www.theguardian.com/technology/2022/jul/21/amazon-buys-medical-provider-one-medical
2. https://www.cnbc.com/2022/07/23/amazon-one-medical-deal-gives-it-access-to-my-most-personal-info.html‍
3. https://www.onemedical.com/locations/
4. https://www.mckinsey.com/industries/healthcare-systems-and-services/our-insights/telehealth-a-quarter-trillion-dollar-post-covid-19-reality

‍

‍