Amazon is reseting its healthcare strategy through layoffs and other cost cutting moves at One Medical.
One of the ideas put on the table recently included a spinoff of One Medical’s senior healthcare business, according to a person with direct knowledge of the discussions.
One Medical expanded its presence in the senior healthcare space when it acquired Medicare-focused provider Iora Health for $2.1 billion in 2021. Amazon then acquired One Medical for $3.9 billion. Last year, it rebranded Iora’s senior care clinics as One Medical Seniors.
Given the complexity of the market and high upfront costs, One Medical has discussed potentially spinning off that part of the business, this person said. The company is also planning to reduce senior healthcare support roles and related initiatives as part of an effort to save $52 million, according to people familiar with the matter. They asked not to be identified talking about private matters.
The discussions were part of One Medical’s broader cost-cutting plan. The business is forecasting an operating loss of $341.7 million this year, as Business Insider previously reported. One Medical had projected an even larger loss for 2024, but Amazon’s leadership balked and ordered the company to drastically reduce these losses.
When One Medical was an independent public company, it shared the challenges of integrating with Iora Health and getting into the senior healthcare market in its 2022 annual report. In a section detailing risks related to the Iora acquisition, One Medical said it expected to “devote significant management attention and resources” to the integration process and “continue to incur substantial expenses.”
In an email to BI, Amazon’s spokesperson Samantha Kruse said the company will “continue to invest in One Medical Seniors.”
“We are shifting resources to increase efficiencies across the business and provide our care teams with the resources they need to focus on relationship-driven, human-centered care,” Kruse added. “We will continue to further invest in providing high-quality care across all ages through One Medical and One Medical Seniors.”
Last week, Amazon laid off hundreds of employees across its One Medical and Pharmacy units, as BI first reported. As part of the change, One Medical shut down some corporate offices, across New York, Minneapolis, and St. Petersburg, Florida, and downsized its San Francisco location. It also restructured its finance, legal, and tech teams to more closely integrate with Amazon’s other healthcare businesses, while cutting its marketing spend.
Additionally, One Medical’s CFO took on a new role that reports directly to SVP of Amazon Health Services Neil Lindsay. The company is also redesigning its compensation package to align with Amazon’s approach.
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