According to latest reports American multinational technology company; Amazon is set to purchase One Medical; a major healthcare establishment.
The deal is valued at around 3.9 billion United States Dollars which is around 462.74 billion Kenyan Shillings and will mark the second entry by Amazon, into the healthcare services sector.
Amazon which focuses on e-commerce, digital streaming, artificial intelligence, and cloud computing made it known through a statement released on Thursday the 21st of July 2022 that it will indeed be purchasing One Medical at the rate of 18 United States Dollars per share which is around 2,136 Kenyan Shillings per share when converted.
The deal which will be an all cash transaction, will be one of Amazon’s largest acquisitions after its 8.5 billion United States Dollars (which is around 1.008 trillion Kenyan Shillings) acquisition of Hollywood studio MGM earlier in the year; 2022, and its 13.7 billion United States Dollars (1.63 trillion Kenyan Shillings) acquisition of American multinational supermarket chain; Whole Foods back in 2017.
One Medical is a service which is membership based and provides virtual care and in person visits to its users.
One Medical also partners with over 8,000 other companies in order to provide its numerous healthcare benefits to its employees. 1Life Healthcare, Inc which is based in San Francisco, is the parent company of One Medical.
As at March of 2022 One Medical had a total of around 767,000 members and a total of 188 medical offices spread across 25 markets. This is according to its first quarter earnings report.
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The earnings report also revealed that the company; One Medical had a net loss of 90.9 million United States Dollars (around 10.78 billion Kenyan Shillings) after generating a revenue of 254.1 million United States Dollars (around 30.137 billion Kenyan Shillings).
The total value of the Amazon and One Medical deal announced on the 21st of July 2022 also includes the debt of One Medical.
The Senior Vice President of Amazon Health Services; Neil Lindsay made it known in a statement that the purchase is aimed at reinventing the healthcare “experience” for service like going to pharmacies, and booking appointments.
In the words of the Senior Vice President, “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.”
The still ongoing Coronavirus pandemic resulted in an explosion of increased demand for virtual healthcare services and telemedicine services.
Insurance companies, employers and other establishments who pay healthcare bills have also begun to place more focus on improving the accessibility for patients to healthcare and to also make sure that said patients are in tune with their health, take their prescriptions and pay regular visits to their doctors.
The costs of Healthcare have in recent years, continued to hit higher levels than inflation and wages, becoming a further indication of the larger expenses now incurred by employers that offer healthcare coverage to staff members. As a result, insurers and employers believe that opting to connect people to steady health care will help reduce extended hospital stays that are expensive, and prevent chronic conditions from going on to becoming much larger issues.
The acquisition by the technology company; Amazon is one more attempt by it to gain momentum in the healthcare services sector. It acquired American online pharmacy; PillPack for 750 million United States Dollars which is around 89.002 billion Kenyan Shillings.
It then went on to launch its very own online pharmacy store that makes it possible for its users to place orders for medications or prescription refills and have them delivered to their front door in just a matter of days.
In 2021, it began to offer its Amazon Care telemedicine program to employers.
The Managing Director of GlobalData Retail; Neil Saunders, stated that Amazon opting to further expand its footprint into the healthcare sector. Its cloud computing business and retail business have grown exponentially into maturity, resulting in the company needing to look for other areas with the potential for fresh growth.
Although the healthcare sector is a very attractive and lucrative option it is to a certain extent, complex as well.
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According to the Managing Director of GlobalData Retail, “Amazon will need to work extremely hard and be extremely innovative if it is to do more than shake things up a little at the margins,” Saunders said in a statement. “Based on past form, the jury is out as to whether Amazon can actually achieve this. As much as it has made some inroads in online pharmacy, it has not revolutionized the market. Nor did its acquisition of Whole Foods – the biggest deal in its history – lead to major disruption.”
The new deal is also coming at a period in time when large technology companies including Amazon, have been facing heat from lawmakers as a result of their perceived market strength. Not long after the One Medical deal was announced, a number of critics asked regulators in the United States (US) to stop the acquisition stating that it would put the privacy of users at risk.
According to said critics, “Amazon’s takeover of One Medical is the latest shot in a terrifying new stage in the business model of the world’s largest corporations,” said Barry Lynn, the executive director of Open Markets Institute, an organization that advocates for stricter antitrust regulation. “The deal will expand Amazon’s ability to collect the most intimate and personal of information about individuals, in order to track, target, manipulate and exploit people in ever more intrusive ways.”
During the peak of the pandemic healthcare establishment; One Medical went through a congressional investigation after a number of reports revealed that the company had disregarded the guidelines for Covid-19 vaccines.
By December of 2021 the congressional investigation concluded that One Medical had utilized “its access to scarce coronavirus vaccines to promote the company’s business interests.”
This resulted in those looking to get vaccinated having to pay for One Medical memberships.
The congressional investigation added that One Medical and its employees made the vaccination of friends and family, a priority.
Shares for 1Life Healthcare the parent company of One Medical, rose by 69 percent to hit 17.17 United States Dollars (around 2,040 Kenyan Shillings) per share. Amazon on the other hand, only increased by 1 percent to hit 123.75 United States Dollars (around 14,697 Kenyan Shillings) per share.
Amazon made it known that the Chief Executive Officer (CEO) of One Medical; Amir Dan Rubin will maintain his position even after the acquisition.
The One Medical acquisition is subject to approval by the regulatory body.
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