Amazon’s Purchase of One Medical is Its Third Largest Ever, Advancing Its Push Into Healthcare

The Terms

Ecommerce giant Amazon (AMZN) is continuing its push into the healthcare space. Yesterday, the company announced it had a deal in place to acquire primary healthcare provider One Medical (ONEM) in an all-cash deal.

The terms value One Medical at around $3.9 billion, which translates to $18 per share. If the deal closes, it will rank as Amazon’s third-largest acquisition to date, behind the $13.7 billion purchase of Whole Foods, and the more recent acquisition of MGM. One Medical is backed by Alphabet’s (GOOGL) GV unit, which had been known as Google Ventures.

Subscription Model

Because of its monthly subscription model, One Medical has been nicknamed the Netflix (NFLX) for healthcare. For $199 per month customers get access to 24/7 telehealth services via video, as well as next-day appointments at 188 medical offices.

One Medical went public in 2020 and has since opened locations in 25 markets. The company counts 767,000 members as of its most recent quarter. It posted a first-quarter loss of $90.9 million on $254.1 million in revenue.

Amazon Care

For years, Amazon has been building up its presence in the healthcare space. It opened Amazon Pharmacy in November 2020 and subsequently expanded its own telehealth service known as Amazon Care. Executives say the company intends to reinvent the healthcare experience.

In 2018, Amazon, JPMorgan Chase (JPM), and Berkshire Hathaway (BRK.A) launched a joint venture by the name of Haven, in an effort to leverage new technology and address healthcare costs. After being set up at a combined cost of $100 million, it was shut down due to issues with data sharing, bureaucracy, and competition. Amazon’s latest acquisition is another attempt to get it right. According to the Centers for Medicare & Medicaid Services, national health spending will grow 5.4% on average through 2028 to reach $6.2 trillion — so it’s not hard to see why the ecommerce giant is so motivated.

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