Amazon (AMZN) will expand its virtual health care pilot program to all of its U.S. employees and their families as well as other firms this summer, the company announced Wednesday, in a move that hit several stocks in the health care services sector. Amazon stock climbed.
The program, called Amazon Care, was launched at its Seattle headquarters 18 months ago. It enables workers to connect with medical professionals via chat or video conference. and connect patients to medical professionals. In addition, Amazon Care can dispatch a medical professional to a patient's home for additional care.
Amazon said it's now expanding Amazon Care's virtual services from only Washington state employees and their families to those in all 50 states starting this summer. At that time, Amazon Care will expand its virtual care to include other companies nationwide.
Investors apparently fretted as Amazon now has its eye on targeting markets outside its employee base. The news hit shares of Teledoc Health (TDOC), American Well (AMWL), Rite Aid (RAD), CVS Health (CVS) and Walgreens Boots Alliance (WBA).
Shares of virtual health care company Teledoc lost 4.4%, closing at 190.10 on the stock market today. In addition, telemedicine company American Well dropped 4.5%, to 21.04. Drugstore chain Rite Aid fell 1.5% 26.97, while CVS Health slid 1.4% to 74.01. Walgreens skidded by 1.1% to 54.10. Meanwhile, Amazon stock climbed 1.4%, closing at 3,135.73.
A Growth Engine For Amazon Stock
If Amazon can deliver more efficient health care services, the potential is enormous for fueling its growth engine — and by extension Amazon stock. Health care now comprises nearly a fifth of the U.S. economy.
Amazon's last major health care move was its acquisition of PillPack in mid-2018. Amazon paid about $753 million for the online pharmacy, which delivers prescriptions presorted by the dose.
Amazon faces a health care industry that's primed for disruption once the coronavirus passes. Patients are weary of skyrocketing health care costs, while insurers balk at shelling out countless dollars for treatments.
Medical Care Within 60 Seconds
"Amazon Care enables employers to provide access to high quality medical care within 60 seconds for employees, including options for care around the clock through messaging or video," Amazon said in a blog post.
The service includes Covid-19 and flu testing, vaccinations, treatment of illnesses and injuries. Also, it includes preventive care, sexual health, prescription requests, refills, and delivery, it said.
Amazon has made many forays into the health care field over several years. The big unknown is just how far and deep the company will venture into the health care market and how much fuel that will bring to Amazon stock.
Late Tuesday, Baird analyst Colin Sebastian named Amazon a "Fresh Pick," saying it was "significantly undervalued, with a medium-term path to $5,000, based on robust fundamental trends in e-commerce, marketplace services and cloud."
He also estimates Amazon is quickly approaching 200 million subscribers to its Amazon Prime customer rewards program, "which means there are likely 400 million to 600 million people shopping with Amazon regularly and driving about 80% of the company's e-commerce volumes," he wrote in a note to clients.
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