- $3.9 billion One Medical deal Amazon’s third biggest ever
- E-commerce giant wants to make healthcare journey easier for millions
- Inflation putting pressure on household budgets and online shopping revenues
As investors gear up for mega tech earnings, set to kick-off with Microsoft (MSFT:NASDAQ) and Alphabet (GOOG:NASDAQ) tonight (26 Jul), investors have a third reason to tune in to Amazon’s (AMZN:NASDAQ) second quarter report on 28 July, after Wall Street closes at around 9pm UK time.
Investors have long tracked the ups and downs of the e-commerce business, with its single digit profit margins under pressure as household budgets buckle.
For years Amazon’s Cloud arm, AWS, has propped up overall profits, but investor scrutiny will also fall on its healthcare ambitions, which ramped up last week.
Last week (21 Jul), Amazon announced its third largest ever deal, which will see it acquire primary care firm One Medical for $3.9 billion.
One Medical, whose parent company is the San Francisco firm 1Life Healthcare (ONEM:NASDAQ), is a membership-based service that offers virtual care as well as in-person visits. It also works with more than 8,000 companies to provide its health benefits to employees.
As of March, One Medical had about 767,000 members and 188 medical offices in 25 markets, according to its first-quarter earnings report, which also showed the company had incurred a net loss of $90.9 million after pulling in $254.1 million in revenue.
REINVENTING HEALTHCARE DELIVERY
The deal is geared towards reinventing the healthcare ‘experience’ for things like booking an appointment and taking trips to the pharmacy, said Neil Lindsay, the senior vice president of Amazon Health Services.
‘We love inventing to make what should be easy easier and we want to be one of the companies that helps dramatically improve the healthcare experience over the next several years,’ Lindsay said.
As investors digest the news, TechCrunch’s Walter Thompson said the acquisition is a ‘bright, blinking sign that the world’s largest retailer is not afraid of regulatory oversight or intervention’.
Citi analyst Daniel Grosslight told Reuters the deal makes sense as ‘blending virtual and in-person care is core to both One Medical and Amazon Care’s strategy’.
Amazon shares remain one of the most popular overseas stocks with UK retail investors thanks to its sheer scale as much as its growth potential.
As the fourth-largest US company by market value and one of the world’s biggest, Amazon is in all sorts of large active and tracker funds owned by million of ordinary savers.
Amazon is forecast to report $1.28 earnings per share on $119.2 billion revenues, according to Investing.com consensus data.
