The pursuit of opportunities around healthcare is a top priority for Amazon (AMZN). In the press release, Amazon has confirmed it will acquire 1Life Healthcare (ONEM), which operates under the name One Medical, in an all-cash transaction that values it at $18 a share or $3.9 billion including debt.
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The acquisition comes barely a month after Bloomberg reported One Medical was weighing its options after CVS Health Corp (CVS) showed interest in acquiring it. One Medical Chief Executive Officer, Amir Dan Rubin, will run the business once the deal closes.
One Medical Acquisition to Expand Amazon’s Reach
The acquisition is part of Amazon’s bid to reinvent healthcare experiences. It will result in the merger of One Medical’s human center and technology-powered model and Amazon’s invention and customer obsession.
According to The Wall Street Journal (WSJ), the $3.9 billion deal represents a 77% premium to One Medical’s closing price on Wednesday. With the acquisition, Amazon will gain access to more than 180 medical offices in 25 markets in the U.S.
Amazon should be able to offer health benefits to employees while working with more than 8,000 companies. While acquiring the loss-making One Medical, Reuters reports Amazon will gain access to enterprise clients including Airbnb (ABNB) and Alphabet’s (GOOGL)
According to the WSJ, this is not the first time that Amazon has sought to pursue opportunities in the healthcare sector. It has already launched its own pharmacy business following the acquisition of pharmacy Pillpack two years ago.
The company also tried its luck in healthcare with Haven, a joint venture with JPMorgan Chase & Co (JPM) and Berkshire Hathaway (BRK.B). Nevertheless, the healthcare joint venture hit a snag barely three years after the companies had spent roughly $100 million.
Push for Opportunities in Healthcare
According to TipRanks TV, the One Medical acquisition should help Amazon strengthen its healthcare portfolio. Given that One Medical provides a variety of telemedicine services, the e-commerce behemoth intends to improve how customers schedule appointments and see physicians.
While Amazon is not always successful in new businesses, it has never stopped trying. According to the WSJ, it was forced to shut down its food delivery service, Amazon Restaurants, in 2019. It has since inked an investment and partnership deal with delivery service Grubhub in the recent past.
It remains to be seen if it will get it right with One Medical, whose shares jumped by nearly 70% following news of the takeover bid. Amazon stock was up 1.5%.
Wall Street’s Take
The Street is bullish about the stock, with a Strong Buy consensus rating, based on 38 Buys and one Hold. The average Amazon price target of $173.08 implies 38.88% upside potential from current levels.
Bloggers’ Opinion
TipRanks data shows that financial bloggers’ opinions are 88% Bullish on AMZN, compared to a sector average of 62%.
Key Takeaway for Investors
Strengthening the healthcare portfolio with 1Life Healthcare deal is a strategic push that should help Amazon shrug off any slowdown in its core e-commerce business.
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