Walmart Could Disrupt Health Care the Same Way It Did Retail
Walmart is opening its first stand-alone health clinic, in Georgia. Morgan Stanley says the move could be the start of a major shift in the health-care marketplace.
Walmart is opening its first stand-alone health clinic, in Georgia. The move could be the start of a major shift in the health-care marketplace.
Analysts at Morgan Stanley praised Walmart’s plans to open its first stand-alone health clinic, saying it could be “the beginning of the road towards greater access to medical care and lower costs for consumers.”
The announced clinic, which will be in Georgia, will offer primary care and dental care, among a number of other services. Morgan Stanley’s Simeon Gutman writes that it is a logical step for Walmart (ticker: WMT). The clinic could drive traffic to its stores and could be the start of a major shift in the health-care marketplace, the analyst adds.
“Might WMT disrupt Healthcare the same way it disrupted Retail?” Gutman wrote. “It seems possible, but only time will tell.”
Morgan Stanley rates Walmart stock Overweight, with a price target of $115. Shares of Walmart opened at $113.68 on Tuesday.
The back story. CVS Health (CVS) made waves earlier this year when it rolled out its HealthHubs, which offer health-care services inside its retail stores. Now Walmart appears to be following suit. Shares of Walmart are up 23.2% so far this year, while CVS stock is down 7.8%.
What’s new. In the Tuesday report, Morgan Stanley’s Gutman wrote that Walmart’s Georgia clinic could be a significant development in the “integration of Retail and Healthcare.”
“For WMT, the push into Health is a means to reduce expenses and drive traffic,” Gutman wrote.
The Georgia clinic will be Walmart’s first stand-alone health clinic; the company already has three clinics inside of its stores in Texas, South Carolina, and Georgia.
The report notes, in a section attributed to Morgan Stanley’s Healthcare Services & Technology team, that Walmart’s clinics echo similar efforts by CVS and Walgreens (WBA). The analysts ask whether CVS’s ownership of the health plan Aetna could give it an advantage, and said to watch for a partnership between Walmart and a health plan.
Looking forward. The clinic is set to open in mid-September. It remains to be seen whether the move is the start of a broader strategy for Walmart.
“From this starting point, we think expansion into stand-alone health clinics offering an array of services makes sense and should not be surprising,” Gutman wrote.
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