Tech giant Amazon (AMZN -2.92%) was in the bidding for home health company Signify Health but ended up losing out to CVS Health. It may have been a disappointment for investors who were hoping Amazon would deepen its footprint in healthcare.
However, there are three other companies that could be even better targets for Amazon to pursue: GoodRx Holdings (GDRX -1.78%), Doximity (DOCS -1.27%), and Hims & Hers Health (HIMS -3.65%). Let's take a look at each one.
1. GoodRx
GoodRx sits atop this list because it could be the best fit for Amazon. Its focus on offering prescription medication at a cheap price for customers makes sense for two reasons. First, it would complement Amazon's existing online pharmacy, PillPack, which it acquired back in 2018.
Second, its focus on offering coupons and helping consumers save money would fit into Amazon's business model of being a low-cost online retailer. It would give consumers more of a reason to choose Amazon for their purchases.
GoodRx's market cap is just $2.6 billion, meaning Amazon would need to pay just a fraction of the $8 billion that CVS spent on Signify. With more than $800 million in revenue over the trailing 12 months, GoodRx's business could add some meaningful sales to Amazon's operations.
2. Doximity
Doximity is the next-best option for Amazon because this acquisition could also serve multiple needs. Doximity's business centers around offering medical professionals a network where they can collaborate and stay on top of trends in the healthcare industry. Doctors can also use the company's Dialer software to contact patients, not unlike the telehealth business that Amazon recently scrapped.
The company reported $90.6 million in revenue in its most recent quarter (ended June 30), which marks a 25% year-over-year increase. Doximity's net income was $22.4 million, a solid 25% of revenue. Between its strong margins and potential for growth, the business could make a strong addition for Amazon. The networking platform could potentially integrate and connect PillPack with primary care operator 1Life Healthcare, which Amazon recently announced plans to acquire. Plus, the deal would give Amazon a social media platform that it could invest into and expand.
At $6.5 billion, Doximity's valuation is lower than Signify's right now, although in an acquisition, stocks normally command a premium, so it could end up going higher. Doximity's stock has fallen 67% over the past 12 months due to a slowing growth rate and an inflated valuation. But overall, its fundamentals look strong and it could complement Amazon's healthcare businesses.
3. Hims & Hers
Hims & Hers is another exciting growth stock Amazon could fit into its business. The company also is a telehealth provider and it helps patients with sensitive issues, including hair loss and erectile dysfunction. Customers can obtain prescription medication online that the company delivers straight to their doors, using discreet packaging.
It sounds similar to Amazon's PillPack, but focused on a specific niche. It's a strategy that could work well for Amazon as with its deep pockets, it could expand that business to offer more products. Rather than focusing on all pharmacy products, concentrating on a few niches that it could quickly dominate could be a great way for Amazon grow in the healthcare industry.
Hims is the smallest company of the three listed here, with a market cap of just $1.4 billion. It would be a drop in the bucket for Amazon to buy up this healthcare stock. And Hims offers good value, generating $374 million in revenue over the trailing 12 months. The downside is that it remains unprofitable. But with Amazon's resources and efficiencies, its financials could significantly improve.
