Walmart eyes healthcare sector expansion with potential ChenMed acquisition

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Walmart eyes healthcare sector expansion with potential ChenMed acquisition
Credit: © Reuters.

Retail behemoth Walmart (NYSE: NYSE: WMT ) is reportedly contemplating a significant foray into the healthcare industry, with a possible acquisition of a majority stake in ChenMed, a primary care provider for seniors, according to Bloomberg. The deal, which could potentially be worth billions of dollars, is expected to materialize in the coming weeks.

ChenMed operates over 100 health centers across 15 states in the U.S., primarily serving southeastern states such as Georgia, Florida, and Texas. These regions are already familiar with Walmart's healthcare initiative, Walmart Health. The proposed acquisition could substantially boost Walmart's expansion plans in the healthcare sector and accelerate its growth.

Walmart Health, aimed at providing affordable healthcare options to Americans, offers a range of services including medical appointments, dental services and counseling with licensed therapists. Some locations also offer psychiatric services. As of the end of 2022, there were 32 Walmart Health locations. The company aims to increase this number to at least 75 by the end of next year.

The company's potential entry into the healthcare sector aligns with its larger strategy of leveraging its extensive retail network. Approximately 90% of the U.S. population resides within ten miles of a Walmart store. This positioning could provide Walmart with a considerable growth opportunity as the country spends over 18% of its GDP on healthcare - amounting to $4.3 trillion in 2021.

Walmart has maintained financial stability with profits exceeding $11 billion consistently over the last four fiscal years. This financial strength could enable the company to invest substantially in expanding its role in the healthcare industry.

The potential acquisition of ChenMed and Walmart's ambitious plans for its healthcare sector highlight the retail giant's strategic diversification efforts. As these developments unfold, Walmart could emerge as a significant player in the U.S. healthcare industry in the near future.

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