FTC reportedly hiring outside economists to probe Amazon's One Medical deal

Amazon's One Medical deal could be hitting a major snag as the Federal Trade Commission is reportedly stepping up scrutiny into the proposed $3.9 billion acquisition.

SeekingAlpha reported on Feb. 3 that the FTC has allegedly hired outside economists to review the deal. The Wall Street Journal and Bloomberg also reported on Friday that the FTC is prepping a possible antitrust lawsuit against the e-commerce giant in a bid to challenge some of the company's business practices as anti-competitive. 

The allegations the agency is preparing to make and the timeline for filing a complaint are still in flux, Bloomberg reported, citing sources who asked not to be named speaking about a confidential probe.

The agency has been investigating Amazon for several years, Bloomberg reported. Amazon has two deals under antitrust review at the FTC: One Medical parent company 1Life Healthcare Inc. and Roomba vacuum maker iRobot Corp. Those deals could be included in an FTC antitrust complaint, according to Bloomberg. The lawsuit could be filed as soon as this spring, the publication said.

Picking up One Medical is Amazon's billion-dollar bid to grow its reach in healthcare. The proposed deal cleared one regulatory hurdle in January when Oregon’s health agency approved the $3.9 billion acquisition.

In filings with the U.S. Securities and Exchange Commission back in September, both Amazon and One Medical received a request from the FTC for “additional information and documentary materials … in connection with the FTC’s review of the merger,” according to the SEC filings.

Amazon announced its $18-per-share purchase of One Medical in July. The news had followed weeks of selloff rumors for the concierge primary care company, which had gone public at $14 per share in January 2020, skyrocketed up to $58 per share in early 2021 and then spent much of 2022 in the $7-$11 range.

The tech giant has since announced plans to end operations of its Amazon Care service, which offered virtual and limited in-person primary care to employer customers, by Dec. 31. Analysts and other experts painted the shutdown as “a strategic move,” noting that One Medical operated a much more mature version of Amazon Care with its 188 clinics, more than 8,000 employer customers and a trove of member data.

The online retailer has since rolled out Amazon Clinic, a virtual medical clinic that aims to treat common conditions like allergies, hair loss and skin conditions.

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 membership-based, tech-integrated, consumer-focused primary care platform, and the company currently has 815,000 members.

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.