Amazon (AMZN -1.52%) may be best known for its e-commerce and cloud computing business. However, the tech company has recently expanded into another major market: healthcare. The company has become a player in the pharmacy, telemedicine, and primary care sectors.
Recently, however, Amazon announced that it is taking a step back from one of these areas. The company has decided to shut down its telemedicine and in-person healthcare business, Amazon Care. Is this a sign of weakness in Amazon’s broader plans for growth in the healthcare world?
Amazon Healthcare Photo
It’s important to consider the Amazon Healthcare big picture. The company entered the business in 2018 with the acquisition of his PillPack, a mail-order pharmacy. We rebranded that practice to create Amazon Pharmacy. Amazon Prime subscribers enjoy benefits such as the lowest prices, free prescription drug delivery, and 24/7 pharmacist access.
Amazon Care was launched in 2019. Initially, Amazon offered this service only to its own employees, but it has since expanded beyond the company. Now it’s shutting it down. Management said Amazon Care isn’t a “complete enough” offer for large enterprise customers, so the business won’t work in the long term.In a virtual-only marketplace, Amazon faced his leader in the market Teladoc, among other smaller players. Teladoc already serves more than half of the Fortune 500 companies, and he is expected to bring in $2.5 billion in revenue this year.
But Amazon recently announced another big move in healthcare.is set to get one medical — Provider of in-person and virtual primary care nationwide
So has Amazon’s move to shut down its healthcare business created signs of weakness? Especially given Amazon Care’s focus on telemedicine. And it is one of the high growth markets in healthcare. According to a Polaris Market Research report, the US telemedicine market is expected to reach nearly $26 billion from now until 2027, growing at a compound annual rate of more than 15%.
right decision
Amazon’s move to suspend Amazon Care is not a sign of weakness. It is a sign of wisdom. Amazon made the right decision to step back and focus on a more profitable strategy. Over 8,000 companies already use One Medical’s services for their employees, and the One Medical network includes more than 125 locations nationwide.
The One Medical acquisition also helps Amazon differentiate from pure telemedicine companies. By acquiring a strong player in this new business model that combines in-person and telemedicine, Amazon has a better chance of success. And that service could appeal to her three audiences: those who prefer telemedicine, those who prefer in-person consultations, and those who like a little bit of both.
With both pharmacy and primary care businesses, Amazon has certainly been able to make a name for itself in the world of healthcare. Also keep in mind that healthcare doesn’t have to be a huge growth business for Amazon. Already a leader in e-commerce and cloud computing. Amazon Web Services (AWS), the cloud computing business, is the company’s main profit driver, contributing more than 70% of his total operating profit last year.
Healthcare will be a great addition to Amazon’s business portfolio. It may add to the growth of the company over time. And it’s okay if he doesn’t emerge as one of Amazon’s biggest players. The long-term performance of the two main businesses is a positive reason for this stock.
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Adria Cimino has a position at Amazon. The Motley Fool invests in and recommends Amazon and Teladoc Health. The Motley Fool’s U.S. headquarters has a disclosure policy.
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