One Medical is making a $2.1 billion bet on a rival that upended medical care for seniors

• Primary care company One Medical plans to acquire competitor Iora Health in a $2.1 billion deal.
• The deal would set One Medical up to expand beyond the commercially insured market into caring for seniors 65 and up.
• It’s the latest example of primary care companies chasing seniors.
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Primary care company One Medical plans to acquire competitor Iora Health for about $2.1 billion in a bid to reach a growing senior population, the company said on Monday. 

One Medical, which went public in 2020, offers in-person and telehealth visits primarily to commercially insured patients who pay a membership fee. Iora Health is focused on senior patients in risk-sharing health plans, including through Medicare Advantage and Medicare direct contracting. Health plans typically pay Iora a flat fee per patient, whose care is overseen by doctors, nurses and health coaches. 

The all-stock transaction is expected to close in the third or fourth quarter of this year. One Medical’s stock was up by about 1% by midday on Monday. 

Still, Iora Health is a small company that’s losing money. In an investor presentation published Monday, Iora projected it’ll lose $90 million in 2021 on an adjusted-EBITDA basis, and its margin on that basis is expected to be negative 30%. The roughly 600-person company generated about $213 million in revenue in 2020 and expects to make $299 million in revenue in 2021.

Extending into senior populations

The merger sets One Medical up to expand into more stages of patients’ health, including elder care, CEO Amir Dan Rubin said in a blog post Monday morning. The Boston-based Iora Health serves about 38,000 Medicare patients and has 47 physical locations across the country. 

“Together we would be better positioned to serve more people nationwide and across every stage of life–from pediatrics through the golden years,” Rubin wrote. 

The deal would also mean that One Medical could continue treating patients aging into Medicare eligibility, and draw in the family members of Iora Health patients. 

Combining physical locations and digital health offerings could give One Medical access to up to 120 million patients across 28 markets, the company estimated. 

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