Amazon (AMZN 0.64%) is set to add another piece to its rapidly growing healthcare unit. Specifically, the e-commerce giant has reportedly offered to buy membership-based primary care provider 1Life Healthcare (ONEM), which operates under the name One Medical, for a total of $3.9 billion (when including One Medical's outstanding debt), or $18 a share. This all-cash tender offer is subject to approval by regulators and One Medical's shareholders.
In response, One Medical's shares were up by a healthy 69% to $17.20 as of 10:04 a.m. ET Thursday.
Prior to this announcement, One Medical's shares were down by more than 54% for the year. Despite a novel business model that appears to be a big hit with customers, Wall Street simply wasn't a fan of this cash-flow-negative healthcare company.
Amazon, however, seems to be getting a tremendous deal. One Medical's customer base has been growing by leaps and bounds of late. Moreover, the company's innovative approach to streamlining the primary care segment has been generating enormous levels of revenue growth over the past few quarters.
Amazon, with its strong history of innovation, will more than likely figure out a way to capitalize -- and perhaps improve -- on One Medical's already strong business model.
One Medical is the latest in a string of beaten-down healthcare companies to get acquired this year. With scores of small to mid-cap healthcare stocks trading below their cash on hand, larger entities like Amazon will probably continue to shop for bargains in the sector.