Walmart Tuesday said it will close all of its health care clinics nationwide, a stunning reversal of its plans to bring its low-priced reputation to the dentist's and doctor's office, along with the grocery aisle.
The big-box retailer said it would also close its telehealth provider, which it acquired for an undisclosed sum in 2021.
Walmart will close 51 clinic locations in Arkansas, Florida, Georgia, Illinois and Texas, plans that will not affect the company's 4,600 pharmacies and more than 3,000 vision centers, the company said in a news release. The clinics will close over the next 45 to 90 days, two people familiar with the matter who asked not to be named told CNBC.
Walmart blames its plans to close clinics on a broken business model. In the press release, it described the move as “a difficult decision” but said it could not operate a profitable business due to “the challenging repayment environment and escalating operating costs.”
The shortage of healthcare workers in the U.S. has also pushed up the company's labor costs, according to sources familiar with the matter.
The announcement comes just a month after Walmart said it planned to double the size of its clinics by opening 22 new locations this year and more in 2025.
Walmart's announcement is also a sign of how challenging it is to disrupt and radically improve America's health care system — an expensive, complicated and entrenched system of doctors, insurers, drug makers and other players that costs the nation more than $4 trillion a year. costs.
Walmart opened its first Walmart Health clinic in Georgia in 2019 and then gradually opened more clinics next to its major stores. Customers, who typically shopped in Walmart aisles for groceries or household items, could also stop in for a doctor or dentist appointment or for a therapy session. The clinics also offered other services such as flu testing, x-rays and stitches.
These health care services came with a low price tag, such as $30 for an annual checkup for adults, $45 for a 45-minute consultation session, or as little as $25 for an adult dental cleaning.
At a conference in the fall of 2019, then-Walmart CFO Brett Biggs praised the company's ambitions to investors. He referred to how Walmart had used its large size to reduce the price of many common generic drugs in its pharmacies to as little as $4, and planned to do the same for other parts of the health care industry.
“It's more than testing and learning, because we know this is a place where we can make a huge difference in the way people live,” he told investors at the time. “When we think about 'Save money, live better,' we can do both with what we can do in healthcare. And so we plan to be a big player in the future in what happens in healthcare.”
But in the ensuing years, Walmart opened new clinics at a slow pace and faced new challenges and competitive dynamics — including keeping store shelves stocked and locations staffed during the Covid-19 pandemic. Walmart struggled with high employee turnover and passed over numerous Walmart Health leaders. And CVS Health, Walgreens Boots Alliance and Amazon all announced their own ambitions to open or acquire doctors' offices. Amazon closed a $3.9 billion deal last year to acquire primary care provider One Medical.
Meanwhile, on earnings calls and at investor meetings, Walmart CEO Doug McMillon and other company executives spoke instead highlighted other higher-margin emerging businesses such as the growing advertising business and the third-party marketplace.
Going forward, Walmart will return to the healthcare services it offered before the Walmart Health push: it will continue to operate its thousands of pharmacies and vision centers.
Walmart said its clinics will continue to see patients with scheduled appointments until their doors close, the people familiar with the matter told CNBC. The company will also help patients find high-quality providers in their insurance networks to ensure they continue to receive care, the people said.
Walmart Health marks the latest failed move into healthcare by a high-profile company, following the dissolution of a joint venture between JPMorgan Chase, Berkshire Hathaway And Amazon in 2021.
Before Walmart announced the closures, it was among a series of retail giants rushing to build their presence in primary care as demand for convenient and affordable medical care grows. Walmart grew its clinic business at a slower pace than its competitors, but some companies struggled to balance their expansion plans with their growing patient networks.
Wal vegetables said in March that it had closed 140 of its VillageMD primary care clinics and plans to close another 20 to boost the profitability of its broader health care division. Walgreens also took a nearly $6 billion charge in the first quarter related to the decline in the value of VillageMD, which has delivered disappointing returns since the company became the company's majority owner in 2021.
In the meantime, AmazonHealth clinic operator One Medical now has more than 125 locations across the country.
Walmart has taken several other healthcare initiatives, including working with an insurer and a healthcare system on care coordination in Florida. But Walmart will no longer see patients progress under that partnership, according to the two sources familiar with the matter.
Walmart bought a chronic condition management platform called CareZone in 2020 for an undisclosed amount.