On May 6, Walmart announced they acquired telehealth company MeMD – sending a shockwave through the telehealth world. By expanding its virtual care offerings, Walmart is taking another step to dominate the retail clinic health space.
Walmart’s takeover of retail healthcare
Walmart has already set out to spend billions of dollars to be competitive in healthcare. In the past year and a half Walmart has been steadily making its presence felt. It launched standalone physical clinics to offer everyday low prices on primary care starting in the state of Georgia. Their Sam’s Club partnered with DoctorOnDemand to provide telehealth benefits to employees. They launched their Walmart Insurance Services to sell Medicare plans.
This purchase of telehealth company MeMD puts them squarely in competition with its mortal enemy Amazon, which announced a nationwide rollout of its Amazon Care virtual care offerings in March. Walmart is also up against CVS and Walgreens who have each announced that it would spend a billion dollars to transfer into digital health companies.
MeMD a fire sale?
Walmart did not disclose the MeMD purchase price. However, I attended the CorumGroup’s healthcare M&A webinar on July 2, and they listed the purchase price at $6M. I was shocked. If this is true, it means this was a fire sale. Telehealth companies have been recently enjoying enterprise values of 3 to 12 times their revenue. MeMD is an established telehealth company founded in 2010 by John Shufeldt, an accomplished executive who also founded NextCare Urgent Care that operates 56 clinics in six states. From the number of MeMD employees, I’d guess their revenue is in the 5M to 10M range. However, since MeMD is more a physician network service provider, rather than a core technology company, the multiple should be in the 3 to 6 times range. If the listed price was a typo, my guess is that the purchase price was $60M.
Walmart’s next move to up Amazon
The race is on to see whether Amazon with its online reach or Walmart with its bricks and mortar reach will win over the post-COVID health world. However, this Walmart acquisition suggests that it has not yet decided on a grand digital health strategy to challenge Amazon – but is still experimenting to see what sticks. It clearly did not purchase MeMD for its technology engine. The MeMD platform is just web wrapped around webRTC for video and does not have powerful core technology to compete with Amazon. Also, the MeMD provider network is too small to serve the Walmart consumer base. I would have expected Walmart to buy DoctorOnDemand, GrandRounds, or This American Doc – who have doctor networks large enough to handle Walmart from day one.
What do you think Walmart should do next to challenge Amazon Care?
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