Image source: One Medical, Amazon
What's going on?
Amazon announced on Thursday that it’s agreed to buy healthcare provider One Medical for nearly $4 billion.
What does this mean?
Amazon’s been moving into the healthcare space for a while now, having launched – among other things – an online drug store following a $1 billion acquisition of mail-order pharmacy PillPack in 2018. And it continued down that path on Thursday, announcing that it’d be buying One Medical for $18 a share – around 75% more than it was worth before the deal was announced. The move gives Amazon a lot to work with: One Medical offers round-the-clock digital health services to nearly 800,000 fee-paying members, while its 188 offices across 25 markets gives it an expansive physical presence too. The ecommerce giant, for its part, said its goals were noble: it’s planning to use the company to make healthcare more affordable and accessible for everyone.
Why should I care?
For markets: Saving patients kills companies.
Amazon’s announcement doesn’t bode well for Walgreens Boots Alliance and CVS Health, both of which have been adding primary care services to their stores recently. Another competitor in the space is never good news, let alone when that competitor has the sheer size and staying power to cut prices, invest heavily in the product, and dominate the market. And since even trying to compete could harm profits even more, investors sent both companies’ stocks down after the news.
Zooming out: The ECB stops fighting it.
No self-serving American would turn up their noses at cheaper healthcare right now, not while they’re being squeezed by rising prices and interest rates. That’s a double whammy Europeans are about to become very familiar with: the European Central Bank increased rates by 0.5% on Thursday – its first hike in 11 years, and the biggest since 2000. There could be more to come too, with the central bank warning that more hikes will be needed in the next few months if it’s going to get a handle on inflation.
Originally posted as part of the Finimize daily email.
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