One Medical is a member-based primary care service that promises customers “24/7 access to virtual care.” The company operates in a dozen major U.S. markets, according to its website, and works with more than 8,000 companies to offer One Medical health benefits to its employees.
In a statement announcing the acquisition on Thursday, Neil Lindsay, senior vice president of Amazon Health Services, said the e-commerce giant thinks “health care ranks high on the list of experiences that need reinvention. “. Lindsay added that Amazon hopes to be one of the companies “that will help drastically improve the healthcare experience over the next few years.”
The acquisition is just the latest example of the expansion of the technology giant in the healthcare sector. Amazon acquired PillPack, an online pharmacy, in 2018 and later launched its own digital pharmacy in the United States. Separately, Amazon partnered with JP Morgan Chase and Berkshire Hathaway in an effort to provide better health and insurance services at a lower cost to workers and families in all three companies, and possibly other companies as well. This effort, called Haven, closed last year.
In recent years, Amazon has expanded its empire from online retail to entertainment, groceries and more, increasing its vast reach into consumers’ lives in the process. The acquisition of One Medical would be one of the largest in Amazon history. Amazon agreed to buy the food chain Whole Foods in 2017 for $ 13.7 billion and earlier this year closed a $ 8.5 billion deal to buy the iconic Hollywood movie studio MGM.
With the One Medical deal, Amazon would have access to physical health clinics and “hospital system and payer relationships,” Evercore ISI analyst Elizabeth Anderson said in a note Thursday morning.
San Francisco-based One Medical has seen an increase in demand for its services in recent years amid the Covid-19 pandemic and the boom in the telehealth sector. In its most recent quarterly earnings report, One Medical said it had a total membership of 767,000, 28% more than the previous year. One Medical went public in January 2020. Shares of 1life Healthcare ( ONEM ), One Medical’s parent company, jumped more than 65% in early trading Thursday after the announcement. Shares of Amazon opened relatively flat on Thursday. (Shares of CVS Health Corp and Walgreens Boots Alliance fell slightly Thursday morning after the news.)
The agreement remains subject to the approval of One Medical’s shareholders and regulators.
Nicholas Economides, an economics professor at New York University’s Stern School of Business, said he’s skeptical the deal could trigger much formal antitrust scrutiny. He compared the acquisition of One Medical to Amazon’s previous purchase of Whole Foods, saying that Amazon’s pre-existing market share in both industries was quite small at the time of the respective deals. Antitrust regulators have traditionally scrutinized mergers that could eliminate a competitor within the same market, but have rarely opposed deals in which a company buys its way into an adjacent industry.
“The grounds for intervention are even weaker in this case than in Whole Foods because, to some extent, Amazon is a marketplace for selling food, so it was, to a small extent, a competitor to Whole Foods before the merger,” said Economides. “Here, I don’t see Amazon having a significant business in health.”
Some critics in the tech industry, however, were quick to raise concerns about the deal and the data the company could access.
“Amazon having backdoor access to private health data is a frankly terrifying thought and underscores how desperately Congress needs to pass antitrust reform to prevent these tech giants from abusing their monopoly power.” Sacha Haworth, executive director of the Technology Oversight Project. advocacy group, told CNN Business in a statement.
While Amazon’s latest deal may not raise red flags under a traditional antitrust rubric, the announcement comes as officials at the Federal Trade Commission, the Justice Department and Congress have sounded a tougher note on the major technology platforms and have promised to be more creative and aggressive. — On the application of competition law. Some US lawmakers are pushing urgently to pass a bill that could erect new barriers between the tech giants’ different lines of business, preventing them from using their massive scale across multiple verticals as a kind of force multiplier that, according to critics, it harms competition.
CNN’s Brian Fung contributed to this report.