FAQ: Why Amazon is shopping for One Medical for $3.9 billion

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Amazon will dramatically develop its health-care attain with its deliberate $3.9 billion acquisition of One Medical, a main care supplier with 188 places of work in 25 markets nationwide.

The e-commerce big went huge: It supplied $18 a share for One Medical’s father or mother firm, 1Life Healthcare — 77 p.c larger than the day gone by’s closing value. Sparks flew on Wall Avenue after Thursday’s announcement, powering the top off practically 70 p.c.

And although it has grown rapidly, One Medical has but to show a revenue since going public in 2020. Within the first three months of 2022, losses topped $90 million.

So, why is Amazon shopping for One Medical? Right here’s a short information:

What does One Medical do?

One Medical is a subscription-based main care supplier that leans into expertise to construct what it calls “a seamless mixture of in-person, digital, and digital care companies which might be handy to the place individuals work, store, and reside.” Headquartered in San Francisco, it operates in main metro areas like Atlanta, Boston, Chicago, Los Angeles, New York and the District.

Amazon will see you now: Tech big buys health-care chain for $3.9 billion

How does One Medical work?

At its core is an app and web site that members can use to e book appointments, monitor well being information and renew prescriptions. Sufferers who join on their very own are charged an annual charge of $199 for a set of companies that embody on-demand video well being consultations accessible in any respect hours and different advantages.

Observers drew speedy comparisons between Prime, Amazon’s retail membership system, with the form of all-encompassing health-care platform supplied by One Medical.

Amazon spokeswoman Angie Quennell declined to touch upon whether or not One Medical’s companies shall be built-in with any of Amazon’s different companies, resembling Prime, Pharmacy or Care.

(Amazon founder Jeff Bezos owns The Washington Put up.)

Why is Amazon spending a lot?

In a information launch saying the acquisition, Amazon senior vice chairman Neil Lindsay mentioned well being care is “excessive on the checklist of experiences that want reinvention.” The Seattle-based tech big believes it could possibly develop and enhance well being care via a “human-centered and technology-powered strategy,” he mentioned.

“Reserving an appointment, ready weeks and even months to be seen, taking break day work, driving to a clinic, discovering a parking spot, ready within the ready room then the examination room for what is simply too typically a rushed jiffy with a physician, then making one other journey to a pharmacy — we see numerous alternative to each enhance the standard of the expertise and give individuals again worthwhile time of their days,” Lindsay mentioned in an announcement.

Although One Medical is shedding cash — not unusual for a start-up — it’s rising rapidly: It captured a complete income of $254 million within the first three months of 2022, a roughly 110 p.c leap over the $121 million recorded within the year-ago interval.

Perspective: Amazon simply purchased my physician’s workplace. That makes me very nervous.

What does Amazon find out about well being care?

The acquisition is a part of Amazon’s years-long push into well being care, although none of its earlier strikes carried as a lot monetary firepower.

Amazon purchased on-line pharmacy PillPack for $753 million in 2018, which become Amazon Pharmacy two years later. It constructed Amazon Care with the assistance of one other acquisition, the medical tech start-up, Well being Navigator. The service gives telehealth visits and in-home visits for workers of sure corporations, together with Hilton, in some cities.

In leaked audio of an all-hands assembly in November, Amazon chief govt Andy Jassy instructed workers that Amazon Care is without doubt one of the firm’s prime improvements, highlighting that the division is aiming to develop via partnerships and new companies, Insider reported this 12 months.

The corporate’s cloud computing division, Amazon Net Companies, gives particular merchandise for well being care and a health-care accelerator for start-ups. The corporate has additionally used its Amazon Enterprise e-commerce providing to focus on hospitals, in accordance with experiences.

One in every of its first huge strikes floundered, nevertheless. Often called Haven, it was an bold effort undertaken in partnership with JPMorgan Chase and Berkshire Hathaway to deal with hovering health-care prices and enhance affected person outcomes. Nevertheless it shuttered final 12 months after solely two years.

What does this imply for affected person knowledge?

Quennell mentioned the acquisition doesn’t change the truth that each corporations “have stringent insurance policies defending buyer privateness in accordance with HIPAA and all different relevant privateness legal guidelines and rules.”

Nonetheless, the deal rapidly drew scrutiny from some critics, lots of whom are cautious of Amazon’s management over quite a few consumer-facing companies. The corporate that received its begin as a web based bookseller practically three a long time in the past has grown its enterprise to embody a supply community roughly the dimensions of UPS, a dominant cloud supplier that enables corporations to retailer knowledge remotely and an unlimited ecosystem of Alexa-powered units. And it has grown its Prime membership program to greater than 200 million globally.

Others raised privateness considerations, mentioning that monetizing shopper knowledge is a vital a part of Amazon’s different operations.

“Amazon’s takeover of One Medical is the most recent shot in a terrifying new stage within the enterprise mannequin of the world’s largest companies,” mentioned Barry Lynn, the manager director of the left-leaning Open Markets Institute.

Lynn mentioned he thinks the deal will develop Amazon’s skill to gather “probably the most intimate and private details about people, to be able to monitor, goal, manipulate, and exploit individuals in ever extra intrusive methods.”

Krista Brown, a senior coverage analyst on the American Financial Liberties Challenge, a nonprofit advocacy group that helps antitrust causes, known as the acquisition “terrifying” in an announcement.

“Buying One Medical will entrench Amazon’s rising presence within the well being care business, undermining competitors.” Brown mentioned. “It would additionally pose critical dangers to sufferers whose delicate knowledge shall be captured by a agency whose personal Chief Data Safety Workplace as soon as described entry to buyer knowledge as ‘a free-for-all.’”

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