Genetic testing company 23andMe Inc. today announced that it has inked a $400 million deal to acquire Lemonaid Health Inc., a provider of telehealth and online pharmacy services.

Publicly traded 23andMe said it will finance the deal with a combination of cash and stock. A quarter of the $400 million price tag will be paid in cash, while the remaining 75% is set to be financed with shares of 23andMe’s Class A common stock.

The acquisition is the first for 23andMe since its debut on the Nasdaq stock exchange earlier this year. The company plans to leverage Lemonaid Health’s platform to expand its presence in the primary care segment, where its goal is to provide personalized healthcare services for consumers.

Lemonaid Health launched in 2013 and is backed by more than $50 million in venture funding. The San Francisco-based company operates a telemedicine platform through which consumers can access medical care, including consultations and treatment, from a licensed doctor or nurse practitioner. Lemonaid Health also provides pharmacy services, offering to deliver prescription medications to patients for free. 

“We believe that by combining Lemonaid Health’s telemedicine platform, including its online team of medical professionals and its pharmacy services, with our consumer business, we are taking an important step in transforming the traditional primary care experience and making personalized healthcare a reality,” said 23andMe co-founder and Chief Executive Officer Anne Wojcicki.

After the deal closes, Lemonaid Health co-founder and CEO Paul Johnson will become the general manager of 23andMe’s consumer business. In that capacity, the executive will continue to oversee Lemonaid Health’s services.

The deal represents the latest of several initiatives by 23andMe to expand into more segments of the healthcare sector. Previously, it teamed up with pharmaceutical company GlaxoSmithKline plc on a multiyear collaboration to jointly develop new medicines. GlaxoSmithKline purchased a $300 million stake in 23andMe as part of the transaction.

As of June, 23andMe was working on 40 therapeutic programs as part of its medical research initiative.

The company’s efforts received a boost earlier this year after it listed on the Nasdaq through a merger with a special-purpose acquisition company. The deal raised $600 million and valued 23andMe at $3.5 billion. Prior to going public, the company said it will use some of the proceeds from the deal to accelerate growth initiatives across its therapeutics and consumer health units, a plan that the acquisition of Lemonaid Health will advance.

The healthcare sector has in recent years also become a bigger focus for some of the tech industry’s leading players. In 2018, Amazon.com Inc. acquired online pharmacy PillPack for $750 million. Google LLC parent Alphabet Inc., in turn, last December invested $700 million into its Verily life sciences division along with a number of other investors. 

Image: 23andMe