Amazon says it will expand Amazon Care, a telehealth service piloted on its employees in Seattle, to other companies and the rest of its US employees this year (Matt Day/Bloomberg)

advertisement Inc. is expanding digital medical consultations to its employees across the U.S. and says it will start offering the service to other companies.

Together with the launch of an online pharmacy in December, the initiative marks Amazon’s entry into the gargantuan U.S. health care industry. Medical services have long been seen as a target for Amazon, both to reduce the costs of caring for the e-commerce giant’s fast-growing workforce and as a potential source of revenue in an area that some say is ripe for digital transformation.

Amazon Care started in 2019 as a pilot for employees in and around the company’s Seattle headquarters, offering virtual and, in some cases, in-person medical services. As of Wednesday, Amazon started offering the program to other Washington-based companies, Amazon said in a blog post. Beginning this summer, the company will expand Amazon Care to the rest of its workers in the U.S., as well as other companies.

“Extending care to other companies as a workplace benefit is a necessary part of Amazon’s quest to expand in health care, and it may be an early sign that it intends to develop related services over time,” Bloomberg Intelligence analyst Poonam Goyal said in a note. “It will also help Amazon compete indirectly against retail clinics, where rivals like Walmart, Target, Kroger, CVS and Walgreens are expanding.”

Amazon has various health care initiatives under way. Late last year, the company launched online pharmacy services in the U.S. under its own brand, building on PillPack, a mail-distribution pharmacy Amazon had acquired. The company also sells office equipment and some medical supplies to hospitals and clinics through its Amazon Business commercial sales program.

The company’s interest in health care often tanks the share prices of industry incumbents as investors try to assess the impact of a big new competitor. The latest announcement was no exception. Shares of Teladoc Health Inc. and American Well Corp. both fell about 7% Wednesday. Amazon was mostly unchanged.

Amazon is known for launching experiments, only to abandon them later. That’s what happened with its first big health care endeavor, a joint venture with Berkshire Hathaway Inc. and JPMorgan Chase & Co. to explore novel ways to reduce health care costs. In January, the trio said they were shutting down the operation and would distribute its expertise among the venture’s backers.

And there is reason to be skeptical of Amazon’s ability to lure other companies to Amazon Care.

In December, Insider reported that the company had pitched the service to other companies, including Zillow Group Inc. A Zillow spokesperson at the time confirmed Amazon’s outreach but said the Seattle-based real estate company had no plans to use the service. An Amazon spokesperson didn’t immediately say Wednesday whether Amazon Care had signed up any corporate customers.

Amazon Care offers consultations, facilitated through a smartphone app, 24 hours a day. The company provides access to a range of urgent and primary care services, from Covid-19 testing to flu shots and prescription requests. The service, which is provided for Amazon by Care Medical, an office that exclusively works with Amazon, already includes the option of in-person visits to patients’ homes in the Seattle area.

It’s unclear how widely Amazon will offer physical visits. In Wednesday’s blog post, Amazon said in-person service would expand to Washington D.C., Baltimore, “and other cities in the coming months.”

(Updates with analyst quote in third paragraph, context)

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