- Walmart on Friday opened up its first Walmart Health center in Dallas, Georgia.
- The new clinic is the start of Walmart's ambitions to get more embedded in the healthcare industry. Walmart plans to open another center in Calhoun, Georgia.
- Wall Street analysts went to Friday's grand opening. They said the event shows Walmart is ready to disrupt the healthcare industry.
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For the Wall Street analysts who made their way to rural Georgia to visit a Walmart and hear about the company's health ambitions, it appears to have been love at first sight.
The analysts who attended the Friday opening of the first Walmart Health center in Dallas, Georgia came back with high expectations of what the retail giant might be able to do in healthcare.
"We believe its goal is to change the face of healthcare in America, resulting in a clear positive for consumers and another avenue of growth for Walmart," Morgan Stanley analyst Simeon Gutman wrote in a note Monday.
Analysts from Barclays, Morgan Stanley and Jefferies all traveled to Georgia for the grand opening. In research notes, they called the strategy "revolutionary," said it's potentially disruptive to the entire industry, and laid out why they think Walmart will be a winner as more retailers look to bulk up their work in healthcare.
Read more: Walmart is opening health clinics, but that's just the start. We got the full story from the exec leading its push into the $3.5 trillion US healthcare industry.
Doing to healthcare what Walmart did to retail
The new centers will provide primary care, counseling, eye and hearing exams, and dentistry. Walmart also plans to offer home care and telemedicine.
The goal is to do for healthcare what Walmart's supercenter stores did for retail: offer a breadth of services conveniently and at a much cheaper price point than rivals, Sean Slovenski, Walmart's president of health and wellness, told Business Insider last week.
For instance, a primary care visit costs $40, while a dental visit costs $25. Walmart is starting by opening "prototype" health centers in northern Georgia that could quickly make Walmart into the largest provider of basic healthcare in the region, Slovenski said.
In particular, Gutman and his team at Morgan Stanley said that the healthcare initiatives from Walmart could have the potential to impact roughly $800 billion of wasted healthcare spend, between giving better and more coordinated care, avoiding over-treatment, cutting down on administrative complexity, and bringing down the price of treatments.
"If successful, years from now we may look back and realize we attended an event that helped shape change in healthcare delivery in America," Gutman said.
How Walmart Health could boost Walmart's earnings
Walmart, with more than 5,000 retail locations in the US, has historically had a presence in healthcare. It's one of the biggest operators of pharmacies in the US. Even so, Walmart's revenues from its health and wellness businesses are nowhere near as big as its general merchandise sales and groceries. Analysts see the new healthcare clinic as a strategy to make healthcare the next big driver of growth for Walmart.
"We believe Walmart's approach to the healthcare conundrum is unique and revolutionary, will clearly be disruptive, and, in our view, will be the next driver of WMT share gains in the US, given the fact that 90% of the population lives within 10 miles of a Walmart," Barclays analyst Karen Short wrote in a note Monday.
Short and the team at Barclays pointed to how Walmart was able to grow its grocery business from $23.2 billion in sales in 2001 to $184.2 billion in sales in 2019.
The move into healthcare could also help Walmart retain and potentially grow traffic, the Morgan Stanley analysts noted.
"All signs point to healthcare being an incremental traffic driver for Walmart as it adds more Health Centers next to a portion of its 3,500+ Supercenters," the analysts said.
To be sure, this isn't the first time Walmart's built out health clinics. While past attempts haven't panned out, Sean Slovenski, Walmart's president of health and wellness, told Business Insider that the current push was a top priority for the company's senior leadership.
"We finally got to the point this past year with the right strategy, the right team, and the right timing," Slovenski said.
One extra perk of the new centers that caught the attention of analysts at Jefferies: the addition of veterinary services to the supercenter location in Dallas, Georgia.
"Care also extends to pets, further ingraining Walmart into U.S. families and, in our view, fortifying its position as a long-term winner," the analysts wrote.
