Walmart revealed earlier this year that it would exit the consumer health care space, where it had started both telehealth and physical clinic operations.

The story began on April 30, when Walmart announced it would close all 51 of its health centers in five states and its telehealth service. That announcement sparked interest from others, who are now picking up the pieces, while Walmart has instead expanded its reach in the pet health care space.

Walmart’s decision to sell its telehealth business

The first major sale will be Walmart’s telehealth business, MeMD. Health care technology company Fabric agreed to acquire MeMD for an undisclosed amount, the venture-backed startup announced on June 28. The deal is part of a year of upheaval in retail health care.

MeMD was established in 2010 and acquired by Walmart in 2021. The service offers virtual care, providing on-demand medical and behavioral health services to millions of members nationwide.

Fabric touted the acquisition of MeMD as complementary to the startup’s existing offerings.

“The MeMD team built a leading virtual care offering, and we are excited to welcome them to Fabric,” said Aniq Rahman, founder and CEO of Fabric. “This acquisition aligns with our strategic vision to transform health care delivery through innovative technology and exceptional patient care. The combination of our teams, technology, and clinicians strategically positions Fabric to expand across payers, employers, and provider organizations quickly.”

Walmart ecommerce sales by year

Walmart is No. 2 in the Top 1000, Digital Commerce 360’s ranking of North America’s online retailers by web sales. It is also No. 9 in the Global Online Marketplaces Database, Digital Commerce 360’s ranking of top such marketplaces by third-party gross merchandise value (GMV). Digital Commerce 360 projects total ecommerce sales for Walmart in 2024 will be $125.13 billion.

Other retailers facing problems in health care

Greg Zakowicz, an ecommerce expert at Omnisend, says acquiring Walmart’s telehealth business makes sense. Given that Walmart is shuttering its in-store health care clinics, this move is appropriate.

“Walmart will continue focusing on other forms of personal health care such as pharmacies and vision care, which will be good for the company and many of its customers,” Zakowicz said. But the retail aspect of dispensing health care wasn’t workable, he added.

Walgreens and CVS have also announced plans to shut thousands of in-store retail health clinics.

“The sad reality is that the financial structure of operating health care clinics makes it difficult to generate profits, hurting consumers,” Zakowicz stated. “When companies like Walmart, Walgreens and CVS have difficulty succeeding, it should be considered a red flag.”

Issues with telehealth

Zakowiscz added that when Walmart exited the retail clinic business, hanging on to telehealth made little sense.

“Without clinics, continuing to operate a telehealth practice makes little sense for Walmart, and selling it was the obvious choice,” Zakowiscz said.

However, Walmart’s loss is Fabric’s gain.

“For Fabric, it fits right into its wheelhouse,” Zakowiscz explained. “The acquisition bolsters its capabilities for its established business model and should give it more room to grow.”

According to press releases, Fabric will continue to service Walmart and Sam’s Club customers seamlessly.

Fabric’s current customers include Luminis Health, OSF HealthCare, Highmark Health and Intermountain Health.

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