On Tuesday, Walmart announced that it will close all of its health-care clinics across the United States, marking a significant reversal of its efforts to extend its low-cost reputation from groceries to healthcare services.
The retail giant also stated that it will shut down its telehealth provider, which it acquired for an undisclosed sum in 2021.
Walmart will close 51 clinic locations across Arkansas, Florida, Georgia, Illinois, and Texas. This decision will not affect the company’s 4,600 pharmacies and more than 3,000 vision centers.
The closures are expected to occur over the next 45 to 90 days, according to sources familiar with the matter.
Walmart cited a broken business model as the reason for the clinic closures. The company described the decision as “a difficult choice,” explaining that it could not sustain a profitable operation due to “the challenging reimbursement environment and escalating operating costs.”
The shortage of healthcare workers in the U.S. has also increased the company’s labor costs, according to the sources.
This announcement comes just a month after Walmart revealed plans to expand its clinic footprint by opening 22 new locations this year and additional sites in 2025.
The move underscores the difficulties in disrupting and improving the American healthcare system, which is complex, costly, and deeply entrenched, with annual expenditures exceeding $4 trillion.
Walmart opened its first Walmart Health clinic in Georgia in 2019, gradually adding more locations adjacent to its big-box stores.
Customers, who typically visited Walmart for groceries or household items, could also access medical and dental services, including doctor appointments, therapy sessions, flu tests, X-rays, and stitches.
The clinics were known for their low prices, such as $30 for an annual check-up for adults, $45 for a 45-minute counseling session, and as low as $25 for an adult teeth cleaning.
In a 2019 conference, then-Walmart CFO Brett Biggs highlighted the company’s ambitions to use its size to reduce healthcare costs, similar to its approach with generic drugs.
“It’s more than test and learn because we know that this is a place we can have a massive difference on how people live,” he told investors.
“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 going forward in what happens in healthcare.”
However, in the following years, Walmart faced challenges, including slow clinic expansion, high executive turnover, and competition from CVS Health, Walgreens Boots Alliance, and Amazon, all of which announced their own plans to enter the healthcare space.
Amazon acquired primary-care provider One Medical for $3.9 billion last year.
Walmart’s CEO Doug McMillon and other company leaders have since focused on other emerging and higher-margin businesses, such as advertising and its third-party marketplace.
Moving forward, Walmart will return to its previous health services model, continuing to operate its pharmacies and vision centers.
The company stated that its clinics will continue to see patients with scheduled appointments until they close. Walmart will also assist patients in finding high-quality providers within their insurance networks to ensure ongoing care.
The closure of Walmart Health represents the latest setback for high-profile companies attempting to enter the healthcare market, following the dissolution of a joint venture between JPMorgan Chase, Berkshire Hathaway, and Amazon in 2021.
Before announcing the closures, Walmart was part of a group of retail giants expanding their primary-care presence in response to rising demand for convenient and affordable medical care.
Walmart expanded its clinic business more slowly than its competitors, some of whom have struggled with balancing rapid expansion and patient network growth.
In March, Walgreens announced the closure of 140 VillageMD primary-care clinics and plans to close 20 more to enhance the profitability of its healthcare division.
Walgreens also recorded a nearly $6 billion charge in the first quarter related to the decline in value of VillageMD, which has generated disappointing returns since the company became a majority owner in 2021.
Meanwhile, Amazon’s health clinic operator One Medical now has over 125 locations nationwide.
Walmart has made several other moves in the healthcare space, including partnering with an insurer and health system for care coordination in Florida.
However, Walmart will no longer see patients under that partnership moving forward, according to sources familiar with the matter.
In 2020, Walmart acquired CareZone, a chronic condition management platform, for an undisclosed amount.
