Amazon announced a deal to acquire publicly traded primary care company One Medical for $3.9 billion, further fueling the Seattle-based tech giant’s ambitions in healthcare.

The all-cash deal would be the third-largest acquisition in Amazon’s history, behind its $13.7 billion purchase of Whole Foods in 2017, and its $8.5 billion purchase of Hollywood studio MGM this year.

One Medical was founded in 2007 by Tom Lee, a medical doctor who grew up in the Seattle area and received his MD from the University of Washington School of Medicine. The company’s IPO was in January 2020.

Based in San Francisco, One Medical had 767,000 members and 188 medical offices with more than 8,500 corporate clients in the U.S. at the end of March. It posted $623 million in net revenue in 2021, with a net loss of $255 million.

One Medical, which operates under the parent company 1Life Healthcare, also attracted acquisition interest from healthcare and pharmacy giant CVS Health, according to a July 5 Bloomberg News report.

More about the deal:

• Amazon’s offer to acquire One Medical for $18/share represents a 77% premium over the company’s closing price on Wednesday.
• The deal requires approval by regulators and One Medical shareholders. The companies did not give a projected timeline for completing the deal.
• Amazon’s offer includes the assumption of One Medical’s net debt. One Medical reported a balance of $310 million in convertible senior notes at the end of March.
• Amir Dan Rubin, One Medical’s CEO for the past five years, will remain in the role after the completion of the deal, the companies said.
• The Carlyle Group, which announced its intent to invest up to $350 million in One Medical in 2018, is expected to divest its stake in the company as part of Amazon’s acquisition.

Amazon has established a foothold in primary care through its Amazon Care initiative. The company said in February that it was expanding Amazon Care’s virtual care services nationwide and rolling out in-person services to more than 20 new cities this year. It debuted in 2019 as a pilot program for Amazon employees in the Seattle area.

The company launched its Amazon Pharmacy service in November 2020, following its $753 million acquisition of prescription-by-mail company PillPack in 2018.

Amazon has already experienced a high-profile failure in this area. The company and its partners Berkshire Hathaway and JP Morgan Chase shut down their Haven healthcare joint venture last year.

Still, the marketing opportunity is huge, with national health spending projected to reach $6.2 trillion by 2028.

Healthcare is “high on the list of experiences that need reinvention,” said Neil Lindsay, senior vice president of Amazon Health Services, in the news release announcing the deal. He cited long wait times for appointments, cumbersome logistics, and rushed visits with doctors, among other challenges commonly encountered by patients.

Lindsay, who was a key figure in businesses including Amazon Prime and Kindle, was named to lead the company’s combined healthcare initiatives last year. With the One Medical deal, he said, Amazon wants to be “one of the companies that helps dramatically improve the healthcare experience over the next several years.”