Amazon strikes deal to buy primary care provider One Medical

A sign is displayed outside a One Medical practice on July 21, 2022 in San Rafael, California.

Justin Sullivan | Getty Images

Amazon announced on Wednesday that it has closed its $3.9 billion deal with primary care provider One Medical.

Amazon agreed last July to acquire One Medical to deepen its presence in healthcare and “significantly improve” the experience of obtaining medical care. Amazon has long had ambitions to expand into healthcare, buying online pharmacy PillPack in 2018 for $750 million, then launching its own virtual clinic for chronic conditions and prescription benefits for members. Prime.

The deal gives Amazon access to more than 200 One Medical physical practices in 26 markets and approximately 815,000 members.

The purchase was the first major deal announced since CEO Andy Jassy took over as CEO from founder Jeff Bezos in July 2021, and Jassy said he sees healthcare as a major area for expansion. In a statement, he said health care was ripe for disruption, citing the long appointment times and complexity of primary care.

“Customers want and deserve better, and that’s what One Medical has been working on and innovating for over a decade,” Jassy said in a statement. “Together, we believe we can make the healthcare experience easier, faster, more personal and more convenient for everyone.”

Amazon said it would cut One Medical subscriptions for US users to $144 from $199 for the first year, whether or not they are a Prime subscriber.

The closing comes after a deadline for the Federal Trade Commission to challenge the deal expired. The acquisition had been under intense scrutiny at the FTC for several months. Last September, the agency sent Amazon and One Medical a so-called second request for more information about the deal, according to securities filings.

While Amazon has waited the period required to close the deal, the FTC could still decide to bring an action to undo the merger at a later time — a right it reserves in any deal it reviews. The FTC, under Chairman Lina Khan, has sent letters to some parties seeking to merge saying that while they cannot delay the merger any longer because the deadline has passed, they are still investigating and may file suit. in court at a later date. Yet breaking up a merger is often more difficult in practice once two companies are formally merged.

“The FTC’s investigation into Amazon’s acquisition of One Medical continues,” FTC spokesman Douglas Farrar said. “The commission will continue to consider the potential harm to competition created by this merger as well as the potential harm to consumers that may result from Amazon’s control and use of sensitive consumer health information held by One Medical.”

The FTC sent a letter to the companies warning them that the parties were entering into the agreement at their own risk and that it still had specific concerns about the deal, an agency official confirmed.

Amazon’s $8.5 billion deal for movie studio MGM also cleared regulatory hurdles last March. The company is still facing an ongoing FTC investigation into its Prime program, as well as its online marketplace. The agency is also looking into Amazon’s $1.65 billion purchase of iRobot, which it announced last year.

Khan is one of Amazon’s biggest critics. She first entered antitrust circles with her 2017 Yale Law Journal article, “Amazon’s Antitrust Paradox.” The article, which she wrote while still a law student, argued that the popular antitrust framework focused on consumer welfare was inadequate to assess digital giants like Amazon.

—CNBC lauren feiner And Marie-Catherine Wellons contributed to this report.

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