With Halo Shutdown, Amazon Has Now Closed 3 of Its Healthcare Divisions Since 2021

With Halo Shutdown, Amazon Has Now Closed 3 of Its Healthcare Divisions Since 2021 Katie Adams

If there’s one thing about Amazon, it’s that the company isn’t afraid to try something new and toss it out if the project doesn’t go as planned.

This week, Amazon announced that it is shuttering its Halo division. This is not the first time Amazon has shuttered one of its healthcare divisions. In fact, it’s the third time in about two years — but more on that later.

The Halo division, which launched in 2020, is a line of wearable health and fitness devices. The devices tracked things like users’ sleep and body fat percentage, working in tandem with a subscription service and smartphone app.

Beginning August 1, all Amazon Halo devices and the app that goes along with them will no longer function. The company will delete any remaining data from Halo devices as well.

Amazon said it will fully refund all customers who bought Halo devices in the 12 months preceding its announcement. Customers with unused prepaid Halo subscription fees will also receive refunds.

Competition appears to be the reason for Halo’s capitulation.

“While sales in the smartwatch category surged during the pandemic, that stimulus is fading, and Apple has emerged from several years of competition as the unquestioned market leader,” Michael Abrams, managing partner at healthcare consultancy firm Numerof & Associates, wrote in an email on Friday. “Recognizing the investment that would be required to compete with Apple’s wearable portfolio, Amazon has decided to cut its losses and save resources for an opportunity that offers more sustained growth.”

Linda Finkel, CEO of healthcare technology consulting company Avia, agreed with Abrams. In any noisy market, such as wearables, “there is a natural evolution as it goes from emerging to saturated,” she pointed out.

“The market votes with its feet — there will be winners and losers, and we expect to see more crowded digital health categories thin out, especially under challenging financial conditions,” Finkel declared in an email.

Amazon has not disclosed how many employees will be laid off as a result of the division’s shutdown, but the company said that it “notified impacted employees in the U.S. and Canada” on Wednesday. Affected employees will receive separation payment, transitional health insurance benefits and job placement support, the company said in its announcement.

The last time Amazon closed a healthcare division was just four months ago. On December 31, the company stopped all Amazon Care operations.

Amazon Care was an employer-sponsored hybrid primary and urgent care business. The division launched in 2019, when it began offering employees 24/7 virtual clinics. Amazon later expanded the business to offer in-person and telehealth visits to employers and workers in all 50 states.

The business shut down because it could not meet the expectations of its customers — which included Whole Foods, Hilton and Precor — according to a memo that Neil Lindsay, senior vice president of Amazon Health Services sent to the company’s health services team.

“What Amazon tried to do with Amazon Care is really challenging work, and there was likely recognition that companies like One Medical have already made impressive inroads in primary care that it would be difficult to replicate,” Finkel wrote. And now that Amazon owns One Medical, there isn’t really a point in competing with an internal business.

Adding to the list of failed Amazon health projects, the company shut down Haven — its joint venture with JPMorgan Chase and Berkshire Hathaway — in 2021, just three years after inception.

The three partners launched Haven to lower healthcare costs for their 1.2 million workers. Throughout the company’s short life span, the three corporate giants were pretty hush on details of what exactly their company was doing to lower costs and improve the primary care experience.

The final straw that caused Haven’s shutdown is unclear, but people familiar with the situation told CNBC that it was difficult for the partner companies to collaborate because they all had their own separate healthcare projects that needed attention.

Amazon now has three failed health businesses to show for itself since 2021. Amid harsher economic conditions, it remains to be seen whether it will moderate its ambitions in healthcare and wait for its investments in the space to pan out before launching new ones.

Photo: Flickr, Cerillion Skyline