Retail giant Walmart is reportedly exploring buying a majority stake in primary care clinic operator ChenMed to expand its healthcare business.
Bloomberg reported Friday evening that the companies are in talks for a deal that would value ChenMed at several billion dollars, citing people familiar with the matter who asked not to be identified because the matter is private. A deal could still be weeks away, Bloomberg reported.
ChenMed is a family-owned company that operates 125 primary care clinics in 15 states. It is a physician-led, full-risk primary care company focused on providing services to moderate-to-low-income seniors with complex chronic conditions. ChenMed's roots go back to the 1970s when Jen-Ling James Chen, M.D., opened his first primary care practice in Miami Gardens, Florida, with the aim to offer affordable, human-centered care to medically underserved communities.
The company recently tapped UnitedHealthcare veteran Steve Nelson as president to lead the day-to-day management and operations.
Business Insider reported in July that Chris Chen, M.D., will step back from running the company to provide support, guidance and board governance, citing an audio of a companywide meeting last week. He said the family decided to step away because of "increasing pressure within the healthcare ecosystem and specific changes that have affected value-based care organizations like us," Insider reported.
Any potential move by Walmart to get a bigger share of the primary care market would come as other retailers also are expanding their ambitions to offer medical services. Amazon bought primary care company One Medical for $3.9 billion while CVS Health acquired Oak Street Health for $10.6 billion.
Walgreens-backed VillageMD also bought medical practice Summit Health, the parent company of urgent care clinic chain CityMD, for nearly $9 billion. That deal expanded Walgreens' reach into primary, specialty and urgent care. The transaction creates one of the largest independent provider groups in the U.S., the organizations said, operating more than 680 provider locations in 26 markets.
Walmart has been building out its network of primary care clinics. First launched in 2019, Walmart Health offers primary and urgent care, labs, X-ray and diagnostics, behavioral health, dental and hearing services all in one facility located next door to a Walmart Supercenter. The company has more than 30 locations in Arkansas, Florida, Georgia, Illinois and Texas. The retail giant plans to open four new health centers in the Oklahoma City area. This is in addition to already announced plans to move into Missouri and Arizona in 2024.
Two years ago, Walmart bought MeMD, a multispecialty telehealth provider, in an effort to significantly expand its telehealth capabilities. The telehealth platform sits within the retailer's Walmart Health arm, which operates a slate of health clinics as well as other services.
Last year, the retailer inked a 10-year deal with UnitedHealth Group that aims to drive value-based care adoption for Walmart's clinicians as well as launch a new Medicare Advantage plan. The initiative will roll out in 2023 at Walmart Health locations in Florida and Georgia, with plans to continue expanding into new regions.
The partners expect to reach hundreds of thousands of MA members through the partnership, according to an announcement.