Amazon is planning to shut down its primary care delivery business Amazon Care by the end of this year in a surprise pivot for the tech giant’s healthcare ambitions.
Amazon eliminated the business because corporate customers weren’t seeing the value of the product, according to an internal memo sent Wednesday and shared with Healthcare Dive.
The tech giant has invested aggressively in its flagship care delivery product and health offerings, even announcing plans in July to acquire primary care network One Medical for $3.9 billion. But the company could have faced duplicative services running both Amazon Care and One Medical, or difficulties integrating the two, analysts said, suggesting it makes more sense for Amazon to buy healthcare services instead of building them in-house.
Amazon Care launched in 2019 as a pilot program for employees in Seattle, where Amazon is headquartered. Last year, it expanded the product — a hybrid of virtual and in-person primary care services, without physical locations — to employers nationwide, citing rising demand.
But Amazon has now determined it isn’t “the right long-term solutions for our enterprise customers,” Neil Lindsay, senior vice president of Amazon Health Services, wrote in the memo to Amazon Health Services employees.
“This decision wasn’t made lightly and only became clear after many months of careful consideration. Although our enrolled members have loved many aspects of Amazon Care, it is not a complete enough offering for the large enterprise customers we have been targeting, and wasn’t going to work long-term,” Lindsay said.
Amazon did not disclose the number of employees affected. But Lindsay said in the memo that “many Care employees will have an opportunity to join other parts of the Health Services organization or other teams at Amazon — which we’ll be discussing with many of you shortly — and we’ll also support employees looking for roles outside of the company.”
The news sent shares up for publicly traded telehealth companies. Teladoc and Amwell were up 5% and 4% in premarket trading Thursday, while other peers in the digital health space, including GoodRx and Hims & Hers, also gained in reaction.
The decision to shutter Amazon Care follows a number of recent expansion initiatives for the program.
In February, Amazon said the product’s in-person services were expanding to 20 additional U.S. cities this year, and that six companies including Hilton and Amazon-owned Whole Foods were using Amazon Care as a benefit for employees.
Amazon was also preparing to bolster Amazon Care’s behavioral health offerings through a partnership with mental health company Ginger.
But last week, The Washington Post reported there was growing tension between Amazon and its medical staff, who questioned how the tech giant was balancing medical safeguards with its drive for growth.
Amazon has also faced struggles scaling Amazon Care’s in-person benefit amid a national nurse shortage and proving the product’s value proposition to potential new customers.
The dissolution of Amazon Care mirrors the fate of Haven, another high-profile effort by large employers, including Amazon, to lower healthcare costs for their employees that flamed out in 2021 after a few years.
But it doesn’t mark the end of Amazon’s ambitions in healthcare, analysts said. Getting rid of Amazon Care is “more like just the beginning,” Citi analysts wrote in a Wednesday note.