Is Amazon About to Push Into the Medical Office Space?

Amazon announced that it’s acquiring One Medical, a membership-based US primary healthcare organization for $18 a share in an all-cash transaction valued at about $3.9 billion.

One Medical is the brand of 1Life Healthcare, a Nasdaq-listed company that, as of Wednesday, had a market cap of $1.98 billion according to S&P Global Market Intelligence. The membership model provides 24 hour a day, seven day a week digital services as well as in-office care covered by insurance. 

According to One Medical’s first quarter results, it had a total membership of 767,000. Its Q1 revenue was $254.1 million, up 109% year over year.

This isn’t a new area for Amazon. In the 2022 Q1 earnings announcement, the company noted, “Customers can now ask Alexa about symptoms for common health ailments and possible causes, and virtually connect to health care professionals through a new collaboration with Teladoc.”

Under the category of emerging businesses, Amazon noted: “Amazon Care’s virtual health services are now available 24/7 across the U.S. Additionally, Amazon Care expanded its in-person services to Atlanta, Chicago, Los Angeles, Philadelphia, and San Francisco, and will add more than 15 other cities this year, including Houston, Miami, New York City, and Phoenix. The service provides immediate access to a wide range of urgent and primary care services, including COVID-19 and flu testing, vaccinations, treatment of illnesses and injuries, preventive care, sexual health, and prescription requests and refills.”

Amazon also wrote, “Amazon expanded its mental health benefits to provide employees, their families, and their household members in more than 50 countries worldwide with a single starting point for personalized, convenient, and confidential mental health and daily life support. These mental health benefits enhance existing benefits, which include 24/7 access to free, one-on-one counseling sessions, suicide prevention resources, and customized support.” And what’s available to Amazon employees could also be opened to the wider public.

The One Medical acquisition is a clear expansion of a business line Amazon has been developing over time, using a combination of virtual and in-person services and facilities.

This is important to consider as the company can move big in real estate. Even as it has been reportedly ready to dump some 5% of the expanded warehouse capabilities it obtained during the pandemic, the need for healthcare is likely a bigger and steadier growth market than logistics. 

The medical office building market has been hot and Amazon has been willing to pay well for what it wants, and likely to block out competitors.