Amazon's One Medical Purchase Is The Genius Move Shareholders Have Been Hoping For

On July 21, Amazon (NASDAQ: AMZN) announced that it would buy One Medical in a deal valued at $3.9 billion. Its purchase of a tech-powered healthcare company is a step in a direction that many investors have been calling for Amazon to take.

Healthcare services promise to be more profitable than Amazon's e-commerce segment, which has been weighing on the company's profit margins. In contrast, its web services segment has carried the load. Let's look at how this move combines with a few more recent changes to tell a story of an Amazon that's emphasizing profitability.

E-commerce sales have always been a thin-margin business for Amazon. That could explain why its operating profit margin has stayed below 10% for the past 10 years. To make matters worse, it's becoming even more expensive to sustain that segment. As inflation has taken hold, Amazon's labor, fuel, and fulfillment input costs have increased substantially in the last year.

Source Fool.com