Walmart to shut all health centers in US over lack of profitability

(Reuters) -Walmart plans to close all 51 of its health centers across five states in the U.S. as well as its telehealth operations, the company said on Tuesday, citing lack of profitability in those businesses.

The big-box retailer said that reimbursement from insurers and other payers has been challenging, which along with escalating operating costs made the businesses unsustainable.

Walmart (NYSE:)’s move comes at a time when the healthcare sector has seen stiff competition, with players such as Walgreens Boots Alliance (NASDAQ:), CVS Health Corp (NYSE:) and even Amazon.com (NASDAQ:) trying to get a share in the market.

These companies had expanded their presence especially after the pandemic, as they hoped to get a boost from increased public focus on healthcare, but losses have been mounting.

“We determined there is not a sustainable business model for us to continue,” Walmart said in a blog post on Tuesday.

Walmart launched its health centers in 2019, offering primary care, dental care, behavioral health, labs and X-ray, audiology and telehealth.

Last year, it had announced plans to expand its presence to more than 75 locations by opening 28 new health centers in Texas, Arizona and Missouri.

The company on Tuesday did not disclose a specific date for the closure of each center. It said all its employees at these centers would be eligible for a transfer to any other Walmart or Sam’s Club locations.

Amazon in February said it would cut a few hundred jobs across its healthcare units, including clinic operator One Medical which it acquired for $3.5 billion last year, while Walgreens in March recorded a $5.8 billion impairment charge on its investment in clinic operator VillageMD.