Big-box retailer Walmart (NYSE:WMT) and healthcare and insurance specialist UnitedHealth (NYSE:UNH) announced a partnership to provide preventative care for people 65 years and older, leading to a conspicuous rise in WMT stock. Additionally, the deal will facilitate virtual healthcare services for all age groups. UNH stock increased modestly, up about 0.9% at the time of writing.
Evercore ISI analysts Mike Newshel and Elizabeth Anderson essentially painted the announcement as a mutually beneficial partnership. According to Reuters’ summation, “Walmart’s clinics could get a boost of new customers from UnitedHealth’s Medicare Advantage members, while UnitedHealth gains access to the largest U.S. retailer’s footprint and a venue to enroll more people.”
Further, the partnership — which lasts for 10 years — represents Walmart’s ongoing healthcare ambitions. Particularly, the deal could help the big-box retailer better compete with CVS Health (NYSE:CVS) and Walgreens Boots Alliance (NASDAQ:WBA). Notably, last October, Walgreens invested $5.2 billion in primary-care provider VillageMD, which has more than 200 locations across 15 markets.
Walmart’s collaborative effort with UnitedHealth will target common ailments among aging Americans, such as heart disease and diabetes, per Reuters.
The partnership will start January of next year. Initially, 15 Walmart Health locations in Georgia and Florida will start the program. Per the press release, the program will “expand into new geographies over time, ultimately serving hundreds of thousands of seniors and Medicare beneficiaries in value-based arrangements through multiple Medicare Advantage plans.”
WMT Stock Receives a Much-Needed Jumpstart
Though Walmart weathered the storms of 2022 better than many of its core competitors, WMT stock remains challenged. On a year-to-date basis, the security is down 6%, although the 2% pop on Wednesday helped improve this figure. On the other end of the scale, UNH stock is up 4% for the year.
However, Walmart’s partnership with UnitedHealth could provide the kickstart to WMT stock that management has been seeking. “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,” said Walmart CEO Doug McMillon.
The cost structure for the collaboration could expand Walmart’s broader footprint. “Unlike traditional fee-for-service models, in which health insurers pay doctors a fee for each service provided, value-based health-care payments are tied to measures of a patient’s health,” noted Reuters. “The model typically includes dietary guides, cancer screenings and frequent doctor visits.”
“We expect that through this partnership, we would grow to serve hundreds of thousands of seniors,” said Dan Schumacher, UnitedHealth Group chief strategy and growth officer.
Interestingly, Walmart and UnitedHealth partnered in January to offer free, at-home coronavirus-testing kits. Therefore, the deal also represents a continued progression of their business relationship.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
