🩺📦 Amazon Diversifying
Happy Sunday Everyone! Amazon is getting into the medical space in today’s Featured Story.
Lately on Tik Tok we’ve been doing more “IRL” (in real life) videos, where we (my team & I) go out into the world and get the scoop on different business facts, money saving tips, and financial education. I’d like to think they’re more engaging but sometimes the view numbers on Tik Tok aren’t aligned with how “quality” the video actually is - which I know is opinionated. I think that’s natural, but hopefully our effort is noted is by you, the reader/viewer - let me know if you like the newer type of videos we’ve been releasing! On YouTube we’ll have similar IRL content coming shortly. Enjoy this Sunday edition of Hump Days.
This week, we saw:
Amazon’s Third Biggest Deal. Is This Just The Beginning?
On Thursday, Amazon announced it would purchase One Medical for $18 a share, the third-largest deal for Amazon (behind Whole Foods and MGM).
Founded in 2007 and based in San Francisco, One Medical operates ~180 medical offices in the U.S. in which people pay a subscription for access to doctors and 24/7 digital health services. At the end of 2021, the company had ~740k paying members.
One Medical was started to try and revamp primary-care services with clinics in urban centers that patients or their employers paid a premium to join. For an annual fee, the company promised easier access to appointments and virtual consultations. It struck deals with large health networks such as the Mount Sinai Health System in New York to refer patients for specialty care.
“The opportunity to transform health care and improve outcomes by combining One Medical’s human-centered and technology-powered model and exceptional team with Amazon’s customer obsession, history of invention, and willingness to invest in the long-term is so exciting
There is an immense opportunity to make the health care experience more accessible, affordable, and even enjoyable for patients, providers, and payers. We look forward to innovating and expanding access to quality healthcare services, together.”
- Amir Rubin, One Medical CEO (Source)
Amazon in recent years has been trying to get into the health-care space. In 2018, it purchased PillPack in 2018 for $750 million, later using that acquisition to launch its own online pharmacy. The company has also tried to ramp up its telehealth service, called Amazon Care and has also attempted to develop at-home medical diagnostics.
As one of the least-profitable areas in medicine, primary care has been a place of competition for many retailers, health insures, and drugstore companies. Both CVS and Walgreens have been adding to their primary-care services. In fact, CVS was actually an early interested buyer for One Medical.
Despite billions of dollars fighting over companies trying to reinvent primary care, clinic operators (and the overall healthcare sector) have struggled and valuations have sunk in recent months.
What’s crazy is that even though Amazon paid a ~66% premium for the company, the offer price was 71% off its February 2021 peak. So while the decline in healthcare stocks is related to the overall market, this could give opportunities to companies like Amazon to make more strategic acquisitions in the fight for healthcare market share.
Charts of the Week: The State of Venture Capital
Charts sourced from PitchBook
As public markets have struggled to gain footing, some private market sectors have also began to stumble, although interest in VC lending remains strong.