Surprise Amazon Care Shutter Results in Competitor Stock Surge

In a surprise move by Amazon, the company has reported it will shut down Amazon Care, its primary healthcare services, at the end of 2022. The decision was reported in an internal memo from Neil Lindsay, Amazon Health Services senior vice president, after determining that it wasn’t “the right long-term solution for our enterprise customers.”

“This decision wasn’t made lightly and only became clear after many months of careful consideration,” Lindsay wrote. “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.” 

Amazon Care launched in 2019 as a pilot program for its employees located at the Seattle, WA headquarters and last year expanded to non-Amazon employees across the United States. The service is a hybrid of virtual, in-home primary care and urgent care without brick-and-mortar clinics and physical locations.

Before the news, it seemed Amazon Care was successfully moving forward. In February of this year, the company said in-person Amazon Care services were expanding to 20 new cities, with companies including Hilton, TrueBlue, Silicon Labs using it as a benefit for employees. Additionally, earlier this month it was reported that Amazon Care was set to add behavioral health support, teaming up with mental health company Ginger. Earlier this year, Amazon reported the service had a patient satisfaction rating of 4.7 out of 5. The app at the time of the shutdown announcement had a 4.9 rating on Apple’s App Store and a 4.8 on Google Play.

The company detailed that patients of Amazon Care can request copies of their medical records by emailing [email protected] or calling 1-855-594-6478. Amazon did not disclose the number of its employees who will be affected by the shutdown but noted that many will have the opportunity to join other parts of the health services organization or other Amazon teams, according to the memo.

“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,” Lindsay wrote.

Despite the announcement, Amazon will continue to have a presence in the healthcare market. The e-commerce giant is positioned to move forward with the acquisition of primary care company, One Medical, pending regulatory approval, for $3.9 billion. Its Amazon Pharmacy service was launched in Nov. 2022 after the $753 million acquisition of prescription-by-mail company PillPack in 2018. Additionally, the company is reportedly among the bidders to acquire home health services company, Signify Health, for $8 million.

“Our work building Amazon Care has deepened our understanding of what’s needed long-term to deliver meaningful healthcare solutions for enterprise and individual customers,” he wrote in the memo. “You’ve heard me say it before, but I believe the healthcare space is ripe for reinvention, and our efforts to help improve the healthcare experience can have an immensely positive impact on our quality of life and health outcomes. However, none of these reasons make this decision any easier for the teams that have helped to build Amazon Care, or for the customers our Care team serves.”

While the shutdown announcement is catching many by surprise, some cracks may have been seen earlier this month when Kristen Helton, who was general manager in charge of Amazon Care, was reported to be taking an “extended break.” Additionally, last week The Washington Post detailed potential tension between Amazon and medical staffers who questioned the company’s ability to balance growth and efficiency with traditional medical safeguards. The article also noted that the national nurse shortage has curbed the company’s expansion.

Notably, Amazon’s loss seems to be a major win for other telehealth companies. The day of the announcement, shares in Teladoc Health (TDOC) jumped 5.5% in premarket trading, Hims & Hers Health (HIMS) saw an increase of 1%, and American Well (AMWL) jumped 4.5%. All three of the companies offer telemedicine or other remote healthcare services, including healthcare analytics, platforms, and sell prescriptions or over-the-counter drugs online.