Amazon is stepping boldly onto the telehealth stage with its latest offering aimed squarely at Prime members: fixed-price treatments available through its One Medical telehealth service. This shift not only enhances the options available for consumers but also sends waves throughout the telehealth market, particularly unsettling direct competitors like Hims & Hers.
Originally launched as Amazon Clinic back in November 2022, the service has since morphed and rebranded as Amazon One Medical as of June 2024. This transformation reflects Amazon's growing ambitions within the healthcare sector. Steering away from the traditional models of healthcare delivery, Amazon is positioning itself as not just another provider but as a game-changer by offering on-demand services for various common health concerns.
The pricing structure for Amazon One Medical is noteworthy. Customers can access telehealth consultations for over 30 conditions, including everyday ailments like sinus infections, pink eye, and even men’s health issues ranging from hair loss to erectile dysfunction. For $29, customers can have messaging visits, and video consultations come at $49. But for Prime members, there’s more — they can now enjoy the convenience of these services at transparent, upfront prices. There are no hidden fees or subscription charges beyond the already established Amazon Prime membership.
Prime members can manage the entire process easily, viewing total costs and specific per-use prices for virtual visits and medications before starting any treatment. If they choose Amazon Pharmacy, they’ll benefit from fast and free delivery of their prescriptions, enhancing the convenience factor. Their total costs might be startlingly low, with hair loss treatment priced at around $16 per month and erectile dysfunction medications at about $19 per month. All this makes for one smooth, hassle-free process, mimicking the ease of buying toothpaste online.
“We’re committed to giving customers convenient, affordable care options,” said Bergen Penhart, General Manager for Amazon One Medical Pay-per-visit. “This new offering makes it easy for Prime members to get expert clinical advice and prescribed treatments for common health, beauty, and lifestyle needs, all from the comfort of home.”
But what does this mean for existing players like Hims & Hers? Disturbingly for them, news of Amazon’s foray sent their shares reeling, plunging by at least 24% at one point—the steepest drop the company has experienced. Analysts at Bank of America saw signs of trouble for Hims & Hers, downgrading their stock rating from “buy” to “underperform.” This change was no small matter; it was fueled by the stark realization of Amazon's significant pricing edge. For example, the pricing advantage for hair loss treatments stands at 29%, with erectile dysfunction treatments coming in at 42% lower than Hims & Hers offerings.
Following the announcement, Bank of America slashed Hims & Hers revenue predictions by ten percentage points for the years 2025-2027. It’s getting serious for Hims & Hers, which had previously enjoyed strong growth. They posted impressive third-quarter results, with revenue climbing 77% to $401.6 million and subscriber numbers soaring 44% to more than 2 million. Much of their success hinged on their expansion within the weight-loss drug market, where they claimed revenue of $63-$70 million, taking advantage of the increasing demand for those treatments.
Still, with much of Hims & Hers' business relying on hair loss and erectile dysfunction medications, Amazon’s encroachment presents not just competition but price pressures they may find difficult to withstand. For perspective, Amazon’s pricing for specialized treatments such as hair loss medications can undercut Hims & Hers by almost $28 monthly.
For Hims & Hers, leveraging its market position might be their best bet moving forward since they are already preparing to launch their generic version of Novo Nordisk's popular diabetes and weight-loss medication, liraglutide, anticipated to hit the market by 2025. This could potentially diversify the company’s revenue sources away from the increasingly competitive telehealth market.
Amazon isn't new to healthcare but has seen its share of ups and downs. It launched its online pharmacy service back in 2020 with the acquisition of PillPack and has been on this health-related rollercoaster since. While some of its earlier initiatives, like Amazon Care, have come to abrupt halts, the enhanced service through One Medical could be the successful foray it desperately needs.
Gaining access to the Amazon One Medical service doesn't involve traditional insurance. Rather, the patients will pay directly for the telehealth consultations and prescribed medications. Amazon Pharmacy does accept multiple insurance plans; yet for the cost-saving benefits associated with Prime Rx—Amazon’s program for prescription discounts—customers will have to opt out of insurance.
Analysts are watching closely how Hims & Hers responds to this significant shift in the telehealth market. Some industry reports suggest Amazon's expansive reach, boasting around 150 million Prime members, places it on prime ground (pun intended!) to effectively disrupt this market. Banking on convenience, Amazon is creating services so appealing it becomes hard to resist, especially for the tech-savvy consumers who are already accustomed to shopping for nearly everything online.
Worryingly for Hims & Hers, with analysts noting Amazon's service mirrors and may even surpass existing offerings, they may need to double down on their unique selling propositions if they wish to maintain their market position. Customers and investors alike are left with one burning question: will Hims & Hers innovate swiftly enough to stave off what may be the fiercest competition they've ever seen?
Amazon is certainly making its mark. The impact of their deep pockets and technological prowess within telehealth and pharmacy sectors is shaping up to be nothing short of revolutionary, providing not only competitive pricing but also products and services delivered directly to consumers’ doors. With rapidly changing dynamics and fierce rivals aiming to figure out how to stay relevant, it seems we are on the cusp of different definitions of healthcare accessibility.
Into this new narrative of accessibility, cost, and convenience, customers can look forward to Amazon's promise of transformed healthcare experiences. Whether existing companies can adapt remains to be seen, but one this is clear: the telehealth and pharmacy markets are entering uncharted territories, and it’s anyone's guess where this will lead.
