Amazon to Pay $3.9 Billion for One Medical

“They’re going to bundle primary care subscription with Prime, aren’t they?” That was the initial reaction of Aaron Neinstein, M.D., vice president of digital health for UCSF Health, in a tweet upon seeing the July 21 announcement that Amazon was acquiring One Medical, which has built a national primary care network. And he may be right.

San Francisco-based One Medical (Nasdaq: ONEM) is a membership-based and technology-powered primary care platform that offers digital health and in-office care. In addition to direct-to-consumer memberships, more than 8,000 employers have sponsored memberships on behalf of their employees and dependents.

Seattle-based Amazon (NASDAQ: AMZN) will acquire One Medical for $18 per share in an all-cash transaction valued at approximately $3.9 billion, including One Medical’s net debt. On completion of the deal, Amir Dan Rubin will remain CEO of One Medical.

Amazon has always been seen as a threat by traditional healthcare players if it could bring its success in retail customer relationships to the field. Its Amazon Care virtual health services are now available nationwide—and in-person services are being rolled out in more than 20 new cities this year. Teladoc Health recently teamed up with Amazon to launch Teladoc on Alexa. (Shares of Teladoc initially fell more than 7 percent on word of the Amazon-One Medical deal but steadily recovered those losses.) It also acquired drugs-by-mail startup PillPack. A much-vaunted collaboration with Berkshire Hathaway and JPMorgan Chase & Co. called Haven Healthcare disbanded in 2021. But clearly the company still has healthcare in its sights.

“The opportunity to transform healthcare and improve outcomes by combining One Medical’s human-centered and technology-powered model and exceptional team with Amazon’s customer obsession, history of invention, and willingness to invest in the long-term is so exciting,” Rubin said in a statement. “There is an immense opportunity to make the healthcare experience more accessible, affordable, and even enjoyable for patients, providers, and payers. We look forward to innovating and expanding access to quality healthcare services, together.”

In its first-quarter earnings statement released in May, One Medical reported a net loss of $90 million, while total membership count as of quarter-end was 767,000 compared to 598,000 a year earlier, a 28 percent increase. Net revenue was $254.1 million compared to $121.4 million, a 109 percent increase.

In 2021, One Medical bought Iora Health in an all-stock transaction valued at approximately $2.1 billion. That extended the company’s offerings to 28 markets at the time. In May 2020, Baylor Scott & White Health, the largest nonprofit health system in Texas, announced a partnership with One Medical to deliver coordinated care in the Dallas-Fort Worth metropolitan area.

In a statement, Neil Lindsay, senior vice president of Amazon Health Services, said the company sees healthcare as “high on the list of experiences that need reinvention. Booking an appointment, waiting weeks or even months to be seen, taking time off work, driving to a clinic, finding a parking spot, waiting in the waiting room then the exam room for what is too often a rushed few minutes with a doctor, then making another trip to a pharmacy – we see lots of opportunity to both improve the quality of the experience and give people back valuable time in their days. 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. Together with One Medical’s human-centered and technology-powered approach to healthcare, we believe we can and will help more people get better care, when and how they need it. We look forward to delivering on that long-term mission.”

Lindsay became senior vice president of Amazon Health Services and Amazon Stores in November 2021 after previously serving as senior vice president of Prime and marketing.

Reporting to Lindsay is Aaron Martin, who left a position as executive vice president and chief digital and innovation officer at Providence to return to Amazon, where he worked a decade ago on the Kindle e-reader, according to a Bloomberg news report.

As part of this transaction, investment firm Carlyle said it is exiting its position with One Medical. It had made a significant minority investment of up to $350 million in 2018 and has supported the company through its IPO and several strategic merger opportunities over the course of its investment.