Amazon scoops up primary care company One Medical in deal valued at $3.9B

There were reports earlier this month that concierge primary care company One Medical was looking at potential suitors for a takeover deal.

It seems Amazon made the right offer.

The online retail giant plans to buy One Medical for $18 per share in an all-cash transaction valued at approximately $3.9 billion including the company's net debt, according to a press release.

The deal expands Amazon's reach into primary care as it also operates Amazon Care, which offers both virtual care services as well as in-home care to employees and other companies.

One Medical went public in January 2020 at a price of $14 a share. But shares in One Medical’s parent company, 1life Healthcare, have lost 75% of their value in the past year.

Acquiring One Medical is part of Amazon's goal to "reinvent" healthcare, said Neil Lindsay, SVP of Amazon Health Services, in the press release.

"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,” he said.

"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. Together with One Medical’s human-centered and technology-powered approach to health care, we believe we can and will help more people get better care, when and how they need it. We look forward to delivering on that long-term mission," Lindsay said.

One Medical was founded in 2007 by physician Tom Lee, who led the company until 2017 when Amir Dan Rubin, a former UnitedHealth Group executive, took the reins as president and CEO. The company grew from a single San Francisco clinic to 188 offices in 29 markets.

One Medical, which is not yet profitable, markets itself as a membership-based, tech-integrated, consumer-focused primary care platform. At the end of March, the company had 767,000 members.

During its fourth-quarter and 2021 earnings call in February, One Medical executives said the company planned to open 30 to 40 new offices this year in cities including Miami, Dallas and Milwaukee.

Last year, One Medical acquired Iora Health, another primary care competitor focused on Medicare patients, in a $2.1 billion deal. The company is pushing more members into at-risk arrangements.

One Medical charted 2021 revenue of $623 million, up 64% from $380 million in 2020. But the company also reported a high medical loss ratio, at 94%, in the fourth quarter of 2021.

While the company has been growing its overall size and reports strong revenue growth, it has continually reported major losses.

For 2021, One Medical reported a loss of $255 million compared to a loss of $89 million in 2020.

Earlier this month there were reports that One Medical was considering its options after attracting and then rejecting preliminary acquisition interest from CVS Health.

“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,” said Rubin in the press release. “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.”