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Amazon Strides Into US Healthcare Sector With A $3.5 Bln Deal For One Medical

Amazon Strides Into US Healthcare Sector With A $3.5 Bln Deal For One Medical Inc agreed to pay $3.49 billion for primary care provider One Medical, expanding the e-commerce giant's virtual healthcare and adding brick-and-mortar doctors' clinics for the first time.
The all-cash transaction would unite two relatively modest players as Amazon continues its years-long march into U.S. healthcare in search of speedier growth.
In 2019, the online retailer launched virtual care visits for its own employees in Seattle before expanding to other companies under the Amazon Care brand. It also purchased online pharmacy PillPack in 2018, which served as the foundation for a prescription delivery and price-comparison website that it later launched.
"We think healthcare is high on the list of experiences that need reinvention," said Neil Lindsay, senior vice president of Amazon Health Services.
The Seattle-based business has stated its desire to improve and accelerate treatment. However, a huge idea similar to how Amazon has automated the function of grocery store cashiers has yet to materialise.
According to its website and recent financial results, Amazon is acquiring One Medical, a loss-making company with 767,000 subscribers and corporate clients such as Airbnb Inc and Alphabet Inc's Google, which offer its services as a benefit to employees.
Teladoc Health Inc, a larger competition, has more than 54 million paying customers in the United States and more than double One Medical's quarterly income. Shares of Teladoc, as well as drugstore chains CVS Health Corp and Walgreens Boots Alliance Inc, fell between 0.3 per cent and 1.8 per cent in response to the Amazon transaction.
According to Citi analyst Daniel Grosslight, the acquisition makes sense since "blending virtual and in-person treatment is essential to both One Medical and Amazon Care's strategy."
Senator Amy Klobuchar, Chairwoman of the Senate Judiciary Subcommittee on Competition Policy, Antitrust, and Consumer Rights, urged the Federal Trade Commission (FTC) on Thursday to investigate Amazon's potential merger, raising worries about the acquisition's consequences for sensitive health data.
"Amazon has a history of engaging in business practices that raise serious anticompetitive concerns, including forcing small businesses on its site to buy its logistics services as a condition of preferred platform placement, using small businesses' non-public data to compete against them....." the Senator added in her statement.
Amazon Care recently expanded its virtual care services to include house calls in Los Angeles, Washington, Dallas, and other cities. The COVID-19 pandemic aided demand as Amazon Care began signing up clients such as Hilton Worldwide Holdings Inc. One Medical, formed in 2007, currently provides Amazon with 188 medical offices, according to its most recent financial report.
According to people familiar with the matter, Carlyle Group Inc, which paid $350 million for a minority share in One Medical in 2018, will divest its position as part of Amazon's acquisition.
Amazon agreed to pay $18 per share for One Medical, a 76.8 per cent premium to the healthcare company's previous closing. One Medical stock was trading at $17.12 per share.
The transaction is priced at $3.9 billion, which includes One Medical's net debt.
Analysts believe that Amazon's minimal healthcare business should reduce antitrust concerns, but risks remain.
Grosslight said Amazon "does seem to have a target on its back, and the DOJ (the U.S. Department of Justice) has been very aggressive in blocking deals recently."
"That will most definitely subject this acquisition to more scrutiny than normal."

Christopher J. Mitchell

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