One Medical shares up 70% on Thursday: explained here

One Medical (NASDAQ: ONEM) shares shot up nearly 70% on Thursday after Amazon.com Inc (NASDAQ: AMZN) said it will buy the tech-driven primary health care provider for $3.9 billion in cash, including debt.

Mark Mahaney reacts to the news on CNBC

Amazon is willing to pay $18 a share for the San Francisco-headquartered company that operates under 1Life Healthcare Inc. Reacting to the news on CNBC’s “TechCheck”, Mark Mahaney – Head of Internet Research at Evercore ISI said:

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Amazon has been making forays into health care. They could either do it organically or through acquisitions. If acquisition, they needed a differentiated offering with a decent consumer brand. That’s where One Medical comes in.

In 2018, Amazon brought PillPack under its umbrella – a $750 million acquisition that helped the juggernaut to eventually launch its own online pharmacy. “AMZN” is not responding very notably this morning.

Amazon is set to report its Q2 financial results next week.

Amir Dan Rubin to remain the CEO of One Medical

One Medical has 767,000 members and 188 medical offices across 25 markets. The definitive agreement is yet to receive approval from its shareholders and is also subject to other customary closing conditions. Mahaney added:

I like the strategically sensible set up. I’d consider this an option package of Amazon. You don’t buy Amazon because of this deal, but you consider it a part of the option value of the company.

Upon completion of the transaction, Amir Dan Rubin will continue to serve as the Chief Executive of the Nasdaq-listed firm. One Medical had $90.9 million of net loss in its latest reported quarter.