By: Michael White

Amazon has taken another step towards its goal of reinventing health care with the recent announcement of its acquisition of One Medical.  Amazon announced the $3.9 billion acquisition on July 21, 2022 and it follows a spate of acquisitions and announcements beginning in 2017 related to their interest in healthcare. One Medical, a subscription-based healthcare program which offers guaranteed same- or next-day appointments, went public in 2020. One Medical operates a network of boutique primary care practice and offers a range of telemedicine services. One Medical has now grown to 188 medical offices in 25 markets with over 767,000 members.

“We think health care is high on the list of experiences that need reinvention,” senior vice president of Amazon Health Services Neil Lindsay said in a statement. “Booking an appointment, waiting weeks or even months to be seen, taking time off work, driving to a clinic, finding a parking spot, waiting in the waiting room then the exam room for what is too often a rushed few minutes with a doctor, then making another trip to a pharmacy – we see lots of opportunity to both improve the quality of the experience and give people back valuable time in their days.”

As part of their “reinvention” of health care, Amazon announced the launch of Amazon Pharmacy in November 2020 and followed with the nationwide rollout and scaling of Amazon Care, which pairs virtual care with the option for an in-home nurse’s visit, in February 2022. The acquisition of One Medical quickly expands the number of offices and markets in which Amazon Care will now offer services.

The acquisition follows the recently increased competition for both primary care and specialty physician practices from private equity and strategic operators. Walgreens and partner VillageMD have opened hundreds of physician-staffed clinics; Walmart Health is rapidly expanding into new markets; and CVS Health, which operates more than 1,100 in-store clinics with nurse practitioners, announced last year that it was converting 900 of its retail pharmacy locations into primary care offices staffed by physicians. CVS may have been the impetus for One Medical to partner with Amazon as it was rumored to be interested in the company two weeks ago. CVS investors continue to be focused on plans to build out care delivery capabilities, which is a key aspect of their long-term strategic plan to transform value based care.

The increased competition for physician practices will likely act to support robust valuations for physician practices in the near term. At Founders Advisors, we have successfully advised a number of physician practices in their search for a partner or acquisition. Please reach out to the health care team here Founders to learn more about valuation, positioning your practice for an exit and what investors are looking for when they reach out to you.  We have recently developed an online assessment tool to help you best prepare your business or practice for an exit at the appropriate time. Our team can provide you with access to this tool and review the results with you so that you better understand the qualitative and quantitative value drivers.