Amazon recently agreed to purchase One Medical in a multi-billion-dollar deal, but it wasn’t the only company that was interested. Going forward, acquiring primary care and other health-related companies may result in fierce bidding wars as more corporations seek to expand into health care.
Amazon was not the only one in talks for One Medical
In July, Amazon announced a deal to buy One Medical, a primary care company owned by 1Life Healthcare, for $18 a share, or approximately $3.9 billion, including the company’s net debt. This acquisition marks Amazon’s latest efforts to expand into the health care industry.
However, Amazon was not the only company that had been in talks with One Medical. According to Bloomberg, CVS Health originally approached One Medical about a deal in October 2021 and was a contender for a purchase up until a few weeks before Amazon reached its own deal.
In fact, CVS in June had also offered to pay $18 a share for its deal, but later voiced concerns about moving at an “expedited paced,” Bloomberg reports. Later, CVS pulled out of the deal after Bloomberg leaked the news.
Amazon eventually went through with its own deal with One Medical, with a stipulation that it would end the talks if its interest was leaked like CVS’ had been. Ultimately, Amazon reached a deal to buy One Medical on July 20.
“We think health care is high on the list of experiences that need reinvention,” said Neil Lindsey, SVP of Amazon Health Services, adding that Amazon sees “lots of opportunity to both improve the quality of the experience and give people back valuable time in their days.”
Will this be a ‘catalyst’ for health care expansion by tech companies?
According to STAT+, many of Amazon’s competitors view its recent acquisition of One Medical as “a catalyst for [their] health care expansions.”
“We see this movement by Amazon as a very strong accelerant to many of our customers,” said Amwell CEO Ido Schoenberg, “who can use our platform in order to survive and flourish in a marketplace that is becoming incredibly more sophisticated and more competitive to them.”
After the One Medical deal was announced, several other companies that operate primary care clinics, including Oak Street Health, Cano Health, and CareMax, have seen increased interest from potential investors.
“What you’re going to see is continued growth and consolidation,” said Marlow Hernandez, CEO of Cano Health, which owns 143 primary care clinics. “You’re going to need to get to scale, and you’re going to need to get to scale quickly … there’s a huge scarcity of providers [who] have that primary care base.”
Currently, several large retail-based companies are working to build up their health care offerings, both through virtual and in-person care. For example, Walmart is currently building primary care clinics in its stores and recently acquired MeMD, a telehealth company. In addition, Walgreens increased its investment in VillageMD, a primary care network, and CareCentrix, a home care company.
CVS has also made its plans for new acquisitions clear to investors, STAT+ reports. “We’re looking at capabilities, obviously, in the primary care space, in the home space. and in the provider enablement space,” said CVS CEO Karen Lynch. “It’s not a kind of one-and-done activity. We’ll continue to evaluate a number of these options.”
Currently, CVS is in talks to buy Signify Health, a company that uses analytics and technology to help health plans and providers with in-home care. (Herman/Palmer, STAT+ [subscription required], 8/11; Davis, Bloomberg, 8/10; Davis, Bloomberg, 7/5)