Amazon’s One Medical Acquisition – Analysts Are Missing The Boat

Amazon’s One Medical Acquisition – Analysts Are Missing The Boat

Amazon (ticker: AMZN), announced that it plans to acquire healthcare provider One Medical (ticker: ONEM), for approximately $3.9 billion. Some of the analysis we have seen misses the big picture.

  • One Medical has approximately 180 clinics: Amazon could incorporate additional clinics into its Whole Foods and Amazon Fresh locations, thereby growing the number of consumer touch points. Walmart (ticker: WMT), follows a similar strategy.
  • Leverage automation: Proprietary Amazon technology such as cashierless checkout (“just walk out“, see YouTube video below), could remove friction from the on-premise patient experience. We wish to see Amazon build technology integrations with the large health insurance providers such that patient on-boarding and healthcare transactions could leverage automation, thereby improving the patient experience. Amazon would obviously leverage its payments technology as part of the customer experience.
  • Health Tech: One must imagine that Amazon would leverage its NLP-powered Amazon Comprehend Medical text extraction and analysis capability to glean insight from patient medical records.
  • Amazon Prime: It would make sense for Amazon to incorporate Amazon Prime benefits to the One Medical customer experience. Perhaps Prime members would get a discount on services provided including pharmacy-related benefits (Recall that Amazon acquired online pharmacy PillPack in 2018 for approximately $750 million).

Amazon’s scale enables it to build out a vertically-integrated healthcare services provider which puts power in the hands of the consumer/patient. Apple (ticker: AAPL) and Alphabet (ticker: GOOG), are similarly capable, although Apple is smartly leveraging the iPhone as the preferred Healthcare access point. Oracle (ticker: ORCL), will also be a Healthcare Tech player after it fully integrates its acquisition of Cerner (ticker: CERN).

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