Why Amazon's three biggest deals ever were for a grocery chain, movie studio, and health care provider

Amazon still makes most of its revenue from orders placed through its online stores, and most of its profit from its cloud computing arm. Both of those businesses were built almost entirely in house.

But Amazon's largest acquisitions show the company is willing to buy growth in markets that are adjacent to its core competencies.

On Thursday, Amazon said it will buy One Medical for $3.9 billion, marking a major expansion of the company's move into health care. The primary care provider will join other Amazon health care offerings like its online pharmacy, telehealth services, and nascent diagnostics business.

Before One Medical, Amazon's two largest acquisitions ever were its $13.7 billion purchase of grocery chain Whole Foods in 2017 and its $8.45 billion purchase of film and television distributor MGM Studios last year.

These deals underscore how Amazon and other Silicon Valley giants like Google, Facebook, and Apple have transformed into "modern day conglomerates" in pursuit of continued growth from their already enormous bases, according to Emilie Feldman, a management professor at the University of Pennsylvania's Wharton School.

"What they're doing is a strategy in search of growth in adjacencies to this core area that might be a bit constrained in and of itself," said Feldman. "So e-commerce is e-commerce, but can we kind of search for niches that might be faster growing like health care, or can we accelerate our ability to get before people's eyeballs through ads or something like that through MGM."

"They need to get into new areas where they can find growth, and health care is ripe," agreed Lisa Phillips, a principal digital health analyst at Insider Intelligence. "With this acquisition here, they're saying we're in this to win it now."

Amazon also can't make acquisitions in its core markets, lest it risk angering regulators who are already eager to scrutinize its market power. Instead, the company has to buy big in areas where it has less of a presence, like healthcare or autonomous driving.

MGM and Whole Foods deals also tie back to the company's Prime subscription offering, which gives it a steady stream of recurring revenue from millions of consumers and encourages loyalty.

One Medical could follow that same template. Amazon has already added pharmacy benefits to Prime.

"They can offer discounted health care to Prime members, which creates more loyalty around Prime," said Brian Yarbrough, a senior analyst at Edward Jones. "It's another feather in their cap."

Amazon didn't indicate Thursday whether the acquisition would lead to an expansion of health-related Prime benefits. Neil Lindsay, the senior vice president of Amazon Health Services, who previously led Amazon's Prime business, said the company believes "health care is high on the list of experiences that need reinvention."

All three acquisitions came about after Amazon made a serious effort to build those business areas on its own.

Beginning in the mid-2000s, Amazon dedicated money and top talent toward making inroads in grocery delivery with services like Amazon Fresh and Prime Now. But roughly a decade later, it had made little progress beyond a grocery delivery service, and acquired Whole Foods, which gave it industry knowhow and a large footprint of brick-and-mortar retail locations.

Amazon's Prime Video remains a serious competitor to the likes of Netflix, Disney and other streaming services, and the company spends billions of dollars each year to create original content for members of its Prime loyalty club. By scooping up MGM, it provided Amazon an immediate boost to its content library, giving it access to storied titles like the James Bond catalog and premium cable network Epix, among other assets.

Similarly, Amazon has dabbled in healthcare for several years. Amazon bought PillPack in 2018 for $750 million, then rolled out its own online pharmacy. It also launched Amazon Care, a service that has both telehealth and in-person offerings, first for its own employees before opening it up to other employers last year. The offering competes with One Medical.

Amazon has certainly had success diversifying with businesses it's built in house. Amazon Web Services started in 2006 and grew into the market-leading cloud computing platform, making Amazon a major player in enterprise software and generating $18.5 billion of the company's total $24.9 billion in operating income last years. Amazon has also become a formidable competitor in online advertising, recently revealing the business booked $31.2 billion in revenue in 2021, exceeding Microsoft, Snap and Pinterest's ad revenue.

But the company has also shown that if it can't build fast enough, it's willing to buy.

WATCH: Amazon to acquire One Medical for roughly $3.9 billion