Discover more from Healthcare Andy by Andy Mychkovsky
What's next for Amazon Healthcare?
3 potential M&A predictions to expand their presence
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Over the years, novels have been written about Amazon’s potential to disrupt healthcare. Only time will tell if those stories become fact or fiction.
The $4.2 trillion healthcare industry is speculated to become the fourth pillar of Amazon (along with Prime, AWS Cloud, and Marketplace). At close to 20% of GDP, it seems like the industry is just too big for them to avoid. Most pure tech company have avoided lower margin care delivery. But Amazon is built different.
Before we step into the potential future, it’s important to study the past. Let’s take a walk down memory lane regarding Amazon and the healthcare industry:
2017: Amazon launches a secret healthcare team (team “1492”) to explore areas for Amazon to enter (i.e., EMRs, telemedicine, apps like Alexa). (link)
2019: Amazon unveils Amazon Care, a telemedicine platform. It is set to go-live next year for Seattle-based employees. (link)
2020: Amazon launches a wearable on-wrist health device called “Halo” that measures activity, temperature, and heart rate. Goal is to ingest live metrics and provide actionable recommendations. (link)
2021: Amazon, Berkshire Hathaway, and Chase shut down Haven. Instead, Amazon expands Amazon Care and launches a $19/mo subscription for Alexa Together, a 24/7 emergency helpline for seniors. (link)
2022: Amazon shuts down Amazon Care, but acquires One Medical for $3.9B, fails to acquire Signify Health, and launches Amazon Clinic to tackle mail-order pharmacy for cash pay generic drugs. (link, link, link, link)
As you know, experimentation is in the DNA of Amazon. Healthcare insiders might groan, but there's no denying they have the cash and patience to continuously invest until they eventually crack the code. Read this excerpt about experimenting from Jeff Bezos’ 2018 letter to shareholders (link):
As a company grows, everything needs to scale, including the size of your failed experiments. If the size of your failures isn’t growing, you’re not going to be inventing at a size that can actually move the needle. Amazon will be experimenting at the right scale for a company of our size if we occasionally have multibillion-dollar failures. Of course, we won’t undertake such experiments cavalierly. We will work hard to make them good bets, but not all good bets will ultimately pay out.
So… now that we know the history, let’s make some predictions (these are pure speculation). Here’s 3 healthcare companies that Amazon could acquire next:
Everly Health: Companies like Everly Health (formerly Everlywell) have helped democratize cash pay, at-home lab testing. Having raised $325 million, the company was most recently valued at $2.9 billion. That’s certainly a big experiment. But whether homegrown or through acquisition, lab testing is a natural extension for Amazon Clinic's online pharmacy. It is important to mention that Amazon launched their own covid-19 testing lab in Kentucky, processing millions of covid-19 tests since 2020, but shut down in 2022. So maybe they've crossed it off the list. Or they might've saw covid-19 dwindling and non-covid-19 testing was too difficult to scale quickly. (link)
Matrix Health Network: Amazon attempted to acquire Signify Health and their reported 10,000+ clinician network (eventually bought by CVS for $8 billion). And since Signify Health announced shutting down their episode of care like Medicare bundled payment program, the home health assessment business is the focus. That’s where Matrix Health Network comes into play. Matrix reports having 5,000 clinicians in their network and recently partnered with Crossover Health to offer joint primary care and occupational health. If Amazon doesn't buy them, eventually someone else will. (link)
DocGo: We know Amazon likes logistics. We also know Amazon already owns assets for telemedicine, pharmacy, brick and mortar primary care. What's the opposite of primary care? Mobile emergency care. That's where DocGo comes into play. They just announced a small pilot with Dollar General and have a few hospital partnerships. Mobile clinics feel like a natural extension to One Medical brick and mortar strategy. The market cap hovers around $950 million, so it could be a $1-2 billion acquisition price tag. And although not the same model as Signify Health, it aligns with a future home-based strategy.
There you have it. I’m all out of ideas. Just remember that you can always find this site by typing in: www.HealthcareAndy.com.