Amazon Acquiring One Medical for $3.9 Billion

VENTURE CAPITAL CENTRAL

Amazon Acquiring One Medical for $3.9 Billion

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Amazon is hitting Healthcare hard

The future is One, for Amazon, at least.

JULY 21ST, 2022 11:15 AM MONTREAL, CANADA.

Hey Guys,

We know that Alphabet, Apple and Amazon really are interested in the healthcare vertical. They are all uniquely positioned.

For Amazon this is a major subscription play, think about it, One Medical is a Netflix-for-primary-care is a $199 subscription to a modern doctor’s office.

One Medical went public in 2020 and Amazon said it will be paying $18/share for the company, working out to an enterprise value of $3.9 billion. ONEM 0.00 the stock is up 70% today at the time of writing.

As the pandemic changed telemedicine, One Medical, which went public in 2020, operates a network of boutique primary-care practices. Now called 1Life Healthcare , it’s a San Francisco-based chain of primary healthcare clinics. One Medical is a membership-based primary care service with in-person care and online resources, including a mobile app.

Amazon here is upgrading its digital presence in Healthcare pretty significantly. It’s an important acquisition. Among other things, the deal deepens Amazon’s presence in health care, an area in which it has sought to expand by launching an online pharmacy and ramping up a telehealth service, and it could have synergy with other products of Amazon’s approach to the future of healthcare.

Amazon looking to reinvent healthcare ‘experience’

The Stock at its current price has a valuation of $3.3 Billion. Amazon paying $4 Billion is fine. Amazon can thus work in reinventing a new model of healthcare and a more personalized healthcare experience.

DISRUPTING HEALTHCARE

Amazon explains it thus: One Medical is a human-centered, technology-powered national primary care organization on a mission to make quality care more affordable, accessible, and enjoyable through a seamless combination of in-person, digital, and virtual care services that are convenient to where people work, shop, and live.

“We think health care is 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,” said Neil Lindsay, SVP of Amazon Health Services.

Amazon’s approach considering its growth in E-commerce, hardware, logistics and the evolution of Amazon Prime and the Cloud means it’s fairly well positioned to get into digital healthcare. AWS and Prime can essentially “pay” for a lot of innovation in new industries.

One Health is a bit premium. Backed by Alphabet’s GV unit (formerly Google Ventures), One Medical’s pitch includes an app, 24/7 access to on-demand telehealth services over video, and guaranteed same- or next-day appointments available through more than 125 offices. According to TechCrunch, Amazon is so far not saying much at all about how its plans for One Medical under the wing of Amazon.

“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,” Lindsay said.

Future of Healthcare

So I think I agree with a number of analysts here who see this rise of services like One Medical’s notionally fitting very closely into a wider vision of digital services — replacing those same services delivered by more traditional, and often analogue, means — as played out by Amazon across a number of other verticals. Telemedicine and more personalized healthcare experiences are here to stay and will only get better.

Amazon has made many acquisitions related to the healthcare space now. Amazon’s stock is down 27% YTD. AMZN -0.88%↓

Amazon acquired PillPack in 2018 for around $1 Billion.

As interest rates rise major M&A is beginning to occur. One Medical has now grown to oversee 188 medical offices in 25 markets, and counts 767,000 members, according to its latest quarterly results. One Medical reported a net loss of $90.9 million on revenue of $254.1 million in the first quarter.

One Medical went from a $10 dollar stock, to ONEM 0.00 to $17 today. One Medical has $750 million in revenue. Total membership count as of quarter-end was 736,000 compared to 549,000, a 34% increase. If Amazon can scale this, it could be yet another subscription cash-cow for the behemoth.

I like the level of detail involved in One Medical, even the design and style.

The summary for this video reads: “We can’t make a trip to the doctor’s office feel like vacation, but we can make the waiting room feel more like a hotel lobby.

So what if the Healthcare experience was personalized and felt easy and smooth all along the process? Amazon is famous for being customer-centric after all. One Medical must have impressed them with the foundation it had created.

Amazon’s philosophy is unique and competitors fear it when it makes move into their industry.

Amazon is guided by four principles:

1. customer obsession rather than competitor focus
2. passion for invention
3. commitment to operational excellence
4. and long-term thinking. Amazon strives to be Earth’s Most Customer-Centric Company, Earth’s Best Employer, and Earth’s Safest Place to Work.

Pharmacy, Telehealth and now Physical Retail Clinic Ecosystem

Amazon has already set up an infrastructure to take on existing giants in the healthcare market, launching Amazon Pharmacy in 2020 and recently expanding its Amazon Care telehealth program nationwide.

Eventually Google, Amazon and others might be designing clinics and hospitals of the future, as well as getting into lucrative B2B Cloud and related contracts. It’s all extremely profitable.

Research shows that the healthcare sector will reach $10.059 trillion by 2022. That’s for instance many times bigger than Tesla’s supposed huge lead in the EV sector. Meanwhile Tesla’s stock is worth more than all other car companies combined because some suggest its margins “look” more like a Tech company.

Thanks for reading!

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