Walmart Contemplates Multi-billion Dollar Majority Stake In ChenMed

Walmart Inc. WMT is reportedly contemplating the acquisition of a controlling interest in ChenMed, a provider of primary care clinics tailored for senior citizens, according to Bloomberg. 

The potential deal could lead to a whopping valuation of ChenMed at several billion dollars. The transaction would be one of Walmart's most significant investments in the healthcare sector.

The companies are in the initial phase of discussions, and terms have yet to be finalized, Bloomberg reported, citing insiders.

Focus On Affordable Care

Walmart's pursuit of ChenMed, an affordable care provider to underserved aging patients, is a strategic leap into senior healthcare, seizing a slice of the aging population's needs at affordable costs.

ChenMed, founded by physician Jen-Ling James Chen and run by the Chen family, operates on a value-based care model, offering to cover the cost of medical care for older people while taking a financial risk. 

The latest deal seems in line with Walmart's overall strategy, as, last year, amid the announcement of a 10-year collaboration with UnitedHealth Group Incorporated UNH, Walmart Chief Executive Doug McMillon said in a statement, "We're on a journey to transform health care, connecting more people to the right care at the right time — at a cost that makes sense." 

Apart from Walmart, Bloomberg highlighted that giants in the healthcare industry, such as UnitedHealth and CVS Health Corporation CVS, are adopting a similar strategy, tapping into the billions of dollars moving through private Medicare Advantage.

The acquisition of ChenMed would add significant value to Walmart's healthcare portfolio, where spending increased by 2.7% in 2021 to $4.3 trillion. 

Walmart Lowering Wages, Saving Costs

In other news, Walmart recently adjusted its pay structure for new store workers, potentially resulting in lower wages compared to a few months ago. 

This development reflects a trend among employers looking to trim labor costs amid a cooling job market for hourly staff. The retail giant has also pursued cost-saving measures recently, including expanding store self-checkout options and automating or semi-automating its warehouses.

Also Read: Walmart Alters New Hire Wages: A Move to Cut Labor Costs?

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Price Action: WMT shares closed higher by 0.18% to $163.77 on Friday. 

Photo: Shutterstock