Worker health costs drag down Walmart profits even as retailer makes play to be shoppers' health care source
Published on August 16, 2014 at 6:44 AM
Walmart plans to open a dozen clinics by the end of this fiscal year that will provide a broad range of primary care services.
The Washington Post's Wonkblog: Wal-Mart Wants To Be Your Doctor
Wal-Mart's newest effort to make a play in the booming health clinic space comes after the big-box retailer has fallen far behind its rivals. And this time, Wal-Mart is shaking up its approach with a new model that's getting some attention in the health-care world. Wal-Mart this year has opened six clinic locations across South Carolina and Texas in which the retailer is providing a broad range of primary care services, as described in a recent New York Times story. The company plans to have a dozen of these clinics open by the end of this fiscal year, executives said on a Thursday earnings call (Millman, 8/14).
The Hill: Wal-Mart: Health Costs Drag Down Profits
Wal-Mart on Thursday blamed a recent profit slump on rising U.S. healthcare costs. The company lowered its guidance estimate for earnings per share from a range between $5.10 and $5.45 to a new range of $4.90 to $5.15 during a conference call with investors. Charles Holley, Wal-Mart's executive vice president and chief financial officer, said that's because of "headwinds from higher healthcare costs in the U.S. than previously estimated" (Cirilli, 8/14).
The Wall Street Journal: Health Costs, Weak Store Traffic Hinder Wal-Mart
One unexpected headwind came from health care, where costs are rising quickly as more employees sign up for coverage. The company said it now expects to shell out an additional $500 million in health-care expenses related to increased employee enrollment and higher costs, up from the $330 million in increases it originally expected. "Health-care costs increased approximately $180 million versus last year and were well above our initial estimates," said Wal-Mart U.S. CEO Greg Foran, who stepped into the role this week following the departure of Mr. Simon (Banjo and Calia, 8/14).
In other marketplace news -
The Associated Press: U.S. Stocks Perk Up In Sleepy August Trading
Better corporate earnings helped nudge the stock market up on Thursday in one of the quietest sessions this year. Health-care companies led the major indexes to slight gains, while Berkshire Hathaway crossed another milestone, trading above $200,000 a share for the first time. With many who work in the markets on vacation, trading volume on the New York Stock Exchange thinned out: just 2.6 billion shares on Thursday. An average day this year is nearly 1 billion higher (8/14).
This article was reprinted from kaiserhealthnews.org with permission from the Henry J. Kaiser Family Foundation. Kaiser Health News, an editorially independent news service, is a program of the Kaiser Family Foundation, a nonpartisan health care policy research organization unaffiliated with Kaiser Permanente.