You may have noticed something of a rise lately in the popularity of stores that specialize in things, but there is still a market to be found for the all-in-one shopping experience.
That is something that Walmart (WMT, Financial) is banking on as it continues to roll out its Care Clinics, almost exclusively in rural areas so far. Walmart, which has expanded its offerings to include groceries in recent years, entered the health care business last spring and has opened about a dozen clinics so far; it intends to open 17 by the end of 2014 in its bid to provide health care services at reduced rates to its customers.
Walmart tentatively stuck its toe in the health care pond about eight years ago when it introduced generic prescription drugs for as little as $4. Now it seems to be diving into the pond. Not all Walmart customers do – or will – seek professional health care at the same place they get their household supplies, of course, but those who do will find that a doctor’s visit is priced at $40.
If a customer wants a pregnancy test, it costs $3. A cholesterol test costs $5 more. And, while the typical clinic will treat only severe ailments, a Walmart Care Clinic will treat chronic conditions as well.
A decision about whether to introduce the clinics nationally has not been made. To date, Walmart has focused on markets where potential customers are either uninsured or underinsured and/or there are many health issues but not enough accessible medical facilities.
If Walmart does decide to go national with its clinics, it could affect the nature of its competition with Target (TGT, Financial), which offers some health-related services, and drug store stalwarts CVS (CVS, Financial) and Walgreen (WAG, Financial), which offer flu shots and blood pressure readings along with drugs and other health products.
Insurance is a hurdle that Walmart will have to clear at some point. Currently, the only insurance plans it accepts, other than its own, are Medicare and Medicaid.
Walmart is not scheduled to release its next quarterly earnings report until November. In its most recent earnings statement for its second quarter, Walmart reported diluted earnings per share from continuing operations (EPS) of $1.21, compared to last year's $1.23. Sales were flat for the period ended August 1.
Clearly, Walmart hopes its Care Clinics will be the prescription for profitability it seeks.
Thirteen of the gurus we follow at GuruFocus actively traded in Walmart stock as of June 30. Eight of them – James Barrow (Trades, Portfolio), Bill Nygren (Trades, Portfolio), Jim Simons (Trades, Portfolio), John Rogers (Trades, Portfolio), Richard Snow (Trades, Portfolio), David Dreman (Trades, Portfolio), Ken Fisher (Trades, Portfolio) and Dodge & Cox – bought stock in the company. The acquisition was new in the portfolios of Dreman and Snow.
Five – Steven Romick (Trades, Portfolio), Jeremy Grantham (Trades, Portfolio), John Hussman (Trades, Portfolio), Louis Moore Bacon (Trades, Portfolio) and First Pacific Advisors (Trades, Portfolio) – reduced their holdings. Romick, Bacon and First Pacific sold their stake in the company.
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