Retail giant Walmart (NYSE: WMT ) is contemplating a significant expansion into the healthcare sector through a potential acquisition of ChenMed, a primary care provider for seniors, according to reports on Thursday. The deal, which could be worth billions, would mark Walmart's most ambitious venture into the healthcare industry so far.
ChenMed operates over 100 centers across 15 states, predominantly in the southeastern U.S., including Georgia, Florida, and Texas. These areas align with regions where Walmart has already established its health facilities. As a private company, the precise financial impact of this acquisition on Walmart's balance sheet remains undisclosed.
Walmart has been gradually increasing its presence in the healthcare landscape with its Walmart Health locations. These facilities provide Americans with affordable healthcare services such as medical appointments, dental services, and consultations with licensed therapists. Some centers also offer psychiatric services.
By the end of 2022, Walmart had grown its health business to 32 locations and plans to expand to at least 75 by the end of next year. If the acquisition of ChenMed proceeds, it could significantly accelerate this expansion.
The potential move into healthcare is strategically poised to leverage Walmart's extensive network of stores that are within 10 miles of 90% of the U.S. population. With healthcare accounting for more than 18% of the country's gross domestic product and totaling $4.3 trillion in 2021, this sector presents a substantial opportunity for Walmart to extend its reach.
Over its last four fiscal years, Walmart has consistently generated profits exceeding $11 billion each year, providing it with ample resources to invest heavily in healthcare expansion. This strategy could position Walmart as a significant player in the American healthcare industry in the near future. However, it remains uncertain how this potential acquisition might impact Walmart's financial performance in both the short and long term.
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