Why Cathie Wood's Ark Invest Is Skeptical Amazon Can Disrupt Healthcare Beyond Its Own Organization

Amazon, Inc. AMZN announced last week it has agreed to acquire 1Life Healthcare Inc. ONEM in an all-cash deal valued at just under $4 billion.

How Amazon's Purchase Will Likely Unfold: The proposed acquisition could help Amazon control healthcare costs for its 1.6 million employees, Ark Invest analyst Simon Barnett said in the Ark Disrupt newsletter.

“We are skeptical that Amazon will be able to integrate, scale or disrupt healthcare beyond its own organization,” the analyst added.

Amazon will likely operate One Medical as an independently branded brick-and-mortar subsidiary, hoping to bundle healthcare services with its Prime offering, the Cathie Wood-run firm said. Alternatively, the e-commerce giant could create unique, in-person experiences by integrating One Medical, Whole Foods, and pharmacy services, it added.

Related Link: Amazon Bumps Up Prime Membership Prices In Europe Just Ahead Of Q2 Earnings

The Positives: In all likelihood, Barnett expects the company to scale the service first across its own employee base and then potentially ramp up into healthcare services. The analyst also noted that the e-commerce giant’s previous attempts to foray into healthcare did not meet with much success.

“Because it is acquiring healthcare expertise this time around, Amazon could have more success this time, given One Medical’s stellar track record, strong consumer brand, and thousands of well-compensated clinicians,” the analyst said.

The Pushbacks: Despite potentially powerful synergies, cultural differences could limit the odds of success, Barnett said.

“Unlike many other healthcare providers, One Medical eschews the volume-based fee-for-service system, centralizes administration, and guarantees its providers a stable salary, seemingly delighting clinicians and patients,” the analyst said.

Meanwhile, Amazon’s success in “delighting consumers” has come at the expense of the trust and well-being of its workforce, the analyst noted. This risk, according to the analyst, could limit the scaling of One Medical’s operations.

Amazon stock was seen trading down 3.47% at $116.94 in premarket trading on Tuesday, according to Benzinga Pro data