Amazon.com (AMZN -1.69%) is always looking for ways to innovate and achieve incremental growth, and the company has shown it isn't afraid to disrupt other industries to do so.
Focusing on sectors outside e-commerce not only adds diversification but makes the stock a safer long-term buy. Healthcare, in particular, is a significant opportunity for technological advancements, and it's one area where Amazon could become a significant player in the years to come.
Transcribe Medical is Amazon's latest foray into healthcare
Amazon made a big splash last year when it announced it was purchasing online pharmacy PillPack for $753 million. That's chump change for Amazon, a company with more than $23 billion in cash and cash equivalents on its books, as of its most recent earnings. But it's an investment that could unlock significant opportunities. With an aging U.S. population, more patients are looking for convenient ways to access their medication. PillPack will sort medication for patients and put them into individual packets. The company also assists with refills and will deliver the medication every month, right to a patient's door.
However, Amazon is looking beyond just prescriptions, as it launched Transcribe Medical earlier this month at an Amazon Web Services (AWS) conference, which could change the way patients interact with their doctors. Transcribe Medical can automatically and immediately convert conversations between patients and doctors into written text, and then store that into an electronic medical record. Through AWS, developers can access the medical information through an application program interface (API) and integrate it into their apps. Transcribe Medical is currently available to AWS customers and it offers users a pay-as-you-go pricing model that is based on how much audio is transcribed during a month.
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Amazon isn't the only company offering this type of service. Microsoft has also been working on developing a similar tool, partnering with Nuance Communications. Nuance already has Dragon Medical, which is a transcribing service and together with Microsft Azure could produce a similar technology to Transcribe Medical. Nuance and Microsoft expect to have a technology available for physicians to test by early next year. Alphabet-owned Google is also looking at developing a digital scribe service, although that still looks to be further away. Late in 2017, the company announced it would be working with Stanford Medicine on a pilot study, although there is yet to be a further update on that.
Will consumers trust Amazon with their sensitive information?
The important question is whether patients will feel comfortable with Amazon saving their sensitive medical information online. With breaches being more and more common and Facebook's data practices shining a light on just how bad companies have been with protecting user information, consumers are reluctant to share anything private online.
While Amazon itself hasn't been involved with any high-profile breaches, concerns surrounding privacy are on the rise, and that could prove to be the biggest impediment to Transcribe Medical's success. However, Amazon says that there has been significant demand for the service from existing AWS customers, including healthcare tech company Cerner, which is one of Transcribe Medical's early users. Cerner also assisted with the development of the software. Amazon did not provide details on if the software will have any controls or safeguards to protect patient information, but it day confirm that Transcribe Medical is eligible with the Health Insurance Portability and Accountability Act (HIPAA).
The company's growth strategy continues to broaden
Overall, getting deeper into healthcare is a good move for Amazon as it further diversifies the company's products and services. Although the tech giant still saw solid sales growth of 23% in its most recent quarter, having more avenues to grow its top line will be crucial in not only maintaining that growth but increasing it as well.
By getting into the grocery business and expanding into healthcare, Amazon is strengthening its offerings in two industries that can provide the company with a lot of long-term stability and that have many growth opportunities, especially when it comes to technological advancements and auotmation.This gives Amazon the versatility to pivot its focus from one sector to the other, depending on which one may offer the more exciting opportunities at the time.
Is Amazon a buy?
Transcribe Medical isn't going to revolutionize the way that patients and doctors interact, at least not yet. The important takeaway for investors is that Amazon is focusing more on healthcare and using its competencies to help add value in that sector.
With fears of economic conditions worsening in future quarters, the more Amazon can minimize its dependence on online retail while expanding into more recession-proof industries, the stronger the stock will be should consumers scale back their spending. E-commerce will still be a large part of the company's business for the foreseeable future, but the key is that Amazon is taking significant steps today toward more diversification. With strong profits and many potential opportunities for future growth, Amazon is one of the top tech stocks that investors can buy today.
