Jul 27, 2022
Titan’s Takeaway: Amazon’s recent acquisition speaks to a growing interest in a healthcare sector worth nearly 20% of GDP. In our eyes, the move could accelerate Amazon’s ambitions of disrupting the healthcare industry and building a digital-health ecosystem.
Jack, from your Investor Relations team, discusses Amazon's recent acquisition of One Medical and the potential downstream impacts.
Amazon announced plans to buy health tech provider, One Medical, last week in an all cash deal for $3.9 billion. A technology-enabled primary care service, One Medical operates a collection of medical practices in 29 markets with over 750,000 members.
Amazon’s foray into healthcare is years in the making- they acquired Pharmaceutical startup Pillpack in 2018 and have increased investment in pharma and telehealth.
For Amazon, the acquisition is a considerable step toward their ambitions of a digital healthcare ecosystem. The deal also speaks to a growing emphasis on customer retention as they build robust offerings for their prime members.
Studies show that Prime members spend 2X more on an annual basis compared to non-prime customers. With over 140 million Prime members around the globe, adding affordable healthcare offerings isn’t a mission confined by borders and may widen their moat.
However, for a company that controls roughly 13% of the U.S. online advertising market, the deal may raise ethical questions on medical and privacy data as well. My Alexa already knows when I order my paper towels, will she remind me to take my pills now? Are there guardrails in place to protect personal health data?
With this said, we believe the current healthcare system is ripe for innovation and Amazon’s track record and balance sheet in partnership with a well-established community of paying members may be the combination capable of breaking the status quo.
Given Amazon's durability, true moat, and robust balance sheet, if Amazon wants something…it usually can get it. We haven’t underwritten the impacts in our base case and view this as a nice call option for future growth - for the time being we are more than happy with Dr. Amazon putting on their scrubs.
Cash Management
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