Walmart shutting down health centers and telehealth service

By Eleanor Laise

Exit comes as other retailers also face headwinds in healthcare

Walmart Inc. said Tuesday that it is shutting down Walmart Health, which offered primary-care, lab and other services across 51 locations, as well as its telehealth service, Walmart Health Virtual Care, as some major retailers continue to struggle with their ventures into healthcare services.

The health centers and telehealth service don't have "a sustainable business model for us to continue," Walmart said in a release Tuesday, adding that a difficult reimbursement environment and rising operating costs eroded profitability.

Walmart's move underscores the headwinds that some retailers have faced as they try to offer primary-care and other health services. Walgreens Boots Alliance Inc. (WBA) late last month reported a second-quarter net loss that included a $5.8 billion charge related to VillageMD, the primary-care business in which it owns a controlling stake. E-commerce giant Amazon.com Inc. (AMZN) has also had hiccups as it pushes into the healthcare business, including its 2022 decision to shut down Amazon Care, a primary-care service.

The closure of Walmart Health represents a sharp reversal of Walmart's plan, announced just over a year ago, to aggressively expand the reach of the health centers. In a March 2023 statement, David Carmouche, Walmart's senior vice president of omnichannel care, said that in 2024, "we will be growing in a big way, opening 28 new Walmart Health center locations" with the aim of having 75 centers nationwide by the end of 2024.

The retail giant opened its first Walmart Health center in 2019.

Walmart has lots of potential in the clinic business, but success requires commitment to an economically sound model, said Craig Garthwaite, a professor and director of the healthcare program at Northwestern University's Kellogg School of Management.

Walmart said in its statement Tuesday that its optical business, which includes more than 3,000 vision centers, continues to grow, and that it has expanded the clinical capabilities in its nearly 4,600 pharmacies.

Healthcare center employees are eligible to transfer to other Walmart or Sam's Club locations, the company said.

Walmart shares (WMT) fell 1.5% Tuesday and have gained 12.8% in the year to date, while the S&P 500 SPX is up 6.4%.

-Eleanor Laise

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04-30-24 1245ET

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