business news in context, analysis with attitude

The Federal Trade Commission (FTC) has decided not to challenge Amazon's proposed $3.49 billion acquisition of 1Life Healthcare, parent company to One Medical, which provides membership-based primary healthcare services to employees for more than 8,000 companies in a dozen major US markets.  This is Amazon's third largest acquisition, after Whole Foods ($13.7 billion in 2017) and MGM ($8.5 billion last year).

According to the story, "The agency plans to issue a letter to the companies warning them that the investigation remains open despite the expiration of the statutory deadline for the antitrust review, the people said, speaking anonymously to discuss a pending deal. The FTC also issued a so-called pre-consummation warning letter when the online retail giant purchased film studio Metro-Goldwyn-Mayer last year. 

"The One Medical merger marks the second time that the FTC under progressive Chair Lina Khan has declined to block a major deal by Amazon, though the agency’s long-running probe into the retailer continues … The agency intends to continue probing whether Amazon uses its market power to gain advantages over rivals in the concierge medicine industry, and ensure that the online retailer gains full consent from consumers for any new uses of health information."

Bloomberg notes that "the FTC has been investigating Amazon since 2019 over concerns about the company’s control over its online marketplace. The agency is preparing a monopolization suit against the e-commerce giant that could be filed this spring."

KC's View:

The approval of the deal just continues to raise the stakes for a number of companies that, like Amazon, see the health care sector as fertile ground in which to grow their sales, profits, and connection to the consumer.  I've said it here before - the likes of Walmart, Kroger, Target, CVS, Walgreen and Apple all have to be consider partnering with or even acquiring companies that will keep them in the healthcare game to a greater degree.

The Wall Street Journal this week had a story that illustrated this point, reporting on how Walgreens Boots Alliance CEO Rosalind Brewer is firmly convinced "that the nation’s second-largest drugstore chain is in a business that … no longer works," and that an expansion into healthcare is the preferred "antidote to Walgreens’ slowing growth."  Which is why Walgreens has invested billions of dollars in "a string of acquisitions aimed at putting physicians on Walgreens’ payroll and offering a range of medical services to draw more business from patients covered by Medicare."

I'm still not sold on the ability of companies like CVS and Walgreens to deliver on this promise - I think that one of the reasons the sector's growth has stalled is that these companies' stores often aren't particularly inspiring, and adding healthcare to their portfolios seems less than philosophically additive and more focused on developing new revenue streams.

Supermarkets have a unique opportunity by embracing the food-as-medicine movement, and doing what they need to do to help their customers make those connections.  I've made the point that technology platforms like Sifter - which, full disclosure, is an MNB sponsor, but I'd write this about Sifter even if it weren't - that allow customers to focus on the products that are relevant to their health needs, can help food retailers play a vital role in the continuum.