Amazon adds a new reason to get and keep Prime: member discounts on health-care services

Published Wed, Nov 8 20233:15 PM EST

Amazon (AMZN) said on Wednesday that it's offering Prime members a discount on its new health-care service — another perk that should help bring more people into the online retailer's ecosystem. The One Medical service, which typically costs $199 annually, will be available to Prime subscribers for $9 a month or $99 per year. It provides members unlimited 24/7 access to virtual care as well as in-person, and remote primary care services. Prime members can add up to five people from their family to the One Medical plan for an additional $6 a month. Amazon bought One Medical in July 2022. "Anything that boosts the value of a Prime subscription – which is already one of the great bang for your buck services out there – should be positive Amazon over the long run," said Jeff Marks, the Club's director of portfolio analysts. "The One Medical addition won't move the needle today, but Amazon's business model is built on attracting people into its Prime ecosystem and offering quality products and services at competitive prices, making today's announcement incremental," he explained. To be sure, we are not highly focused on the company's health-care initiatives just yet. Rather, the Club is more concerned with Amazon's cloud revenue growth stabilization and how management is unlocking efficiencies in its retail fulfillment network. It's also still early days for Amazon in health care. Before acquiring One Medical, the e-commerce and cloud giant bought medtech startup Health Navigator in October 2019 and online pharmacy Pillpack in September 2018. This is a "step in the right direction" for Amazon advancing its efforts in health care, said Tom Forte, analyst at D.A. Davidson. Although Forte mentioned, it might be more difficult to penetrate because the industry is highly regulated. From a company strategy standpoint, Amazon CEO Andy Jassy is "focusing Amazon as a service," Forte explained, rather than just a first-party retail play, given the higher services margin profile. A growth part of the company's services business, the Amazon Web Services (AWS) cloud, has slowed recently but "that's somewhat a reflection of the economy," the D.A. Davidson said. "Amazon already has a substantial business in health care today and it also shows its strategic priority for Amazon under Jassy," Forte said, pointing to Amazon Pharmacy, One Medical, and the cloud computing customers it has in the health care space. "Health care has the potential to be very meaningful for Amazon given it's a large total addressable market." In a D.A. Davidson August 2023 white paper, analysts said there's "a greater than 10% chance Amazon can generate an incremental 100 basis points of revenue growth in 2026 by exploiting health care" through Amazon Pharmacy and AWS sales it generates from health care companies. Amazon offering a discounted subscription to One Medical's services is part of the company's efforts to expand the broader Prime flywheel by leveraging its 167 million Prime members. The goal of the Amazon Prime membership is to provide people with "one simple membership, something that provides shopping, savings, streaming and now positive health outcomes, said Jamil Ghani, SVP of Amazon Prime in a CNBC interview Wednesday. (Jim Cramer's Charitable Trust is long AMZN. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

John Love, Vice President of Amazon Pharmacy, talks about healthcare delivery by drone during Amazon's "Delivering the Future" event at the company's BFI1 Fulfillment Center, Robotics Research and Development Hub in Sumner, Washington on October 18, 2023.

Jason Redmond | AFP | Getty Images

Amazon (AMZN) said on Wednesday that it's offering Prime members a discount on its new health-care service — another perk that should help bring more people into the online retailer's ecosystem.