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Amazon strikes $3.5 billion deal for One Medical in long march to US healthcare

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July 21 (Reuters) – Amazon.com Inc (AMZN.O) on Thursday agreed to buy primary care provider One Medical (ONEM.O) for $3.49 billion, expanding the e-commerce giant’s virtual healthcare to include conventional doctors. offices for the first time.

The all-cash deal will bring two relatively small players together as Amazon continues its multi-year push into US healthcare as it looks to grow at a faster pace.

The online store first piloted virtual visits for its employees in Seattle in 2019 before offering services to other employers under the Amazon Care brand. He also bought an online pharmacy, PillPack, in 2018, which formed the basis of the prescription delivery and price comparison site he later launched.

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“We think healthcare is high on the list of services to rethink,” said Neil Lindsay, senior vice president of Amazon Health Services.

The Seattle-based retailer has announced its ambition to improve and speed up care. However, a big idea similar to how Amazon has automated the role of cashiers in grocery stores has yet to emerge.

In One Medical, Amazon is acquiring a loss-making company with 767,000 members and corporate customers, such as Airbnb Inc (ABNB.O) and Google Alphabet Inc (GOOGL.O), which offer their services as an employee benefit, according to its website and latest financial results.

Larger competitor Teladoc Health Inc (TDOC.N), by contrast, has over 54 million paying members in the United States and is doubling One Medical’s quarterly revenue. The news of the Amazon deal sent shares of Teladoc, as well as pharmacy retailers CVS Health Corp (CVS.N) and Walgreens Boots Alliance Inc (WBA.O) down 0.3-1.8%.

The acquisition makes sense because “the combination of virtual and in-person care is at the heart of One Medical and Amazon Care’s strategy,” said Citi analyst Daniel Grosslight.

DEAL PENDING VERIFICATION

U.S. Senator Amy Klobuchar, who also chairs the Senate Judiciary Subcommittee on Competition Policy, Antitrust and Consumer Rights, on Thursday called on the Federal Trade Commission (FTC) to investigate Amazon’s proposed deal, raising concerns about the implications of the acquisition on personal health data. .

“Amazon has a history of doing business that raises serious anti-competitive concerns, including forcing small businesses on its site to buy logistics services as a condition of preferential placement on the platform, using private data from small businesses to compete with them. …” the senator added in his statement.

Amazon Care recently made its virtual assistance available nationwide and added the ability to make home calls in Los Angeles, Washington DC, Dallas and more. The COVID-19 pandemic helped boost demand as Amazon Care began signing up customers including Hilton Worldwide Holdings Inc (HLT.N). read more

One Medical, founded in 2007, now provides Amazon with 188 medical offices, its recent financial report showed.

Carlyle Group Inc (CG.O), which paid $350 million for a minority stake in One Medical in 2018, will exit its position as part of the Amazon acquisition, people familiar with the matter said.

Amazon agreed to pay $18 for each share of One Medical, representing a 76.8% premium to the medical firm’s last closure. Shares of One Medical traded at $17.12.

The deal is valued at $3.9 billion, including One Medical’s net debt.

Amazon’s limited presence in healthcare should minimize antitrust concerns, analysts say, but risks remain.

Grosslight said that Amazon “looks like it has a target and the US Department of Justice has been blocking deals very aggressively lately.”

“This will definitely result in this acquisition coming under more scrutiny than usual.”

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Reporting by Manas Mishra in Bangalore and Jeffrey Dustin in New York; Additional reporting by Chibuike Ogu from New York and Akanksha Khushi from Bangalore; Editing: Bernadette Baum, Maju Samuel and Cynthia Osterman.

Our Standards: Thomson Reuters Trust Principles.

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