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Walmart Trims Pharmacy Jobs as Company Mulls Health Strategy

Walmart Eliminating Some Pharmacy Jobs as Retailer Streamlines

(Bloomberg) -- Walmart Inc. is eliminating some jobs inside its U.S. pharmacy business as the world’s largest retailer seeks to reduce costs and plot a new course in an evolving health-care landscape.

The company is “aligning our staffing with the demands of the business,” said spokeswoman Marilee McInnis, who declined to specify the number of jobs being cut.

A person familiar with the decision said the pharmacy cuts will represent less than 3% of all health and wellness staffers in the U.S. According to posts on LinkedIn and independent message boards frequented by Walmart employees, that could include as many as 40% of senior pharmacists, along with cuts for some new hires and reductions in part-time staffers.

The move illustrates how Walmart is trying to balance its need to reduce expenses while expanding its business in key categories. Walmart, one of the largest pharmacists in the nation, has pharmacies in almost all of its 4,700 U.S. locations, and health and wellness accounts for 11% of its nearly $332 billion in U.S. revenue.

‘Share of Wallet’

But health care’s share of Walmart’s U.S. sales has been stuck at about 11% for four straight years, as earlier bets, like opening in-store medical clinics, didn’t pan out as expected. At a gathering of investors in October, Chief Executive Officer Doug McMillon said the company wants to find ways to increase its “share of wallet” in the $3.5 trillion market for health spending in the U.S.

“We can do more to help our customers when it comes to their health,” McMillon said at the meeting. “We see a lot of opportunities.”

While it hasn’t made a splashy move yet -- such as acquiring a health insurer like rival CVS Health Corp. has done -- Walmart hired a new chief for the business last year and has made a series of smaller forays that show it’s interested in much more than the mundane, and increasingly profit-challenged, business of filling prescriptions.

Health Ambitions

Walmart has provided more than 2.5 million free health screenings over the past five years, giving the retailer a window into ailments its shoppers grapple with, like diabetes. Earlier this month in a store in Rogers, Arkansas, Walmart executives displayed improvements to the pharmacy area like bigger waiting areas and an automated kiosk for customers to pick up prescriptions at times when the pharmacy counter is closed.

Walmart Trims Pharmacy Jobs as Company Mulls Health Strategy

Combined, the moves signal a desire by Walmart to harness its greatest assets -- the 140 million people coming through its stores each week, plus its 1.5 million U.S. employees and a vaunted logistics network -- to create low-cost health and wellness services that reinforce its corporate mantra to “save money, live better.”

Walmart shares were down about 0.6% in New York Thursday.

The retailer’s new health and wellness chief, Sean Slovenski, is a veteran of insurer Humana, which has partnered with the retailer since 2010. There, Slovenski rose to become vice president of innovation, and more recently ran a unit of digital health company Sharecare, which has separately worked with Walmart on employee wellness programs. But he’s said nothing publicly since coming on board last August, leaving investors in the dark about his priorities.

Industry Reshaping

“My sense is that he’s very interested in wellness and using medical services to make people healthier for less money,” said Craig Garthwaite, a professor of strategy at Northwestern University’s Kellogg School of Management.

Walmart’s rivals won’t sit around as Slovenski mulls his options. The industry is quickly reshaping itself through blockbuster deals like CVS’s acquisition of insurer Aetna, which will make it easier for Aetna policy holders to get prescriptions and visit clinics in CVS stores. Insurers are also pitting big pharmacy chains against each other to lower prices. Earlier this year, Walmart pulled out of the network of pharmacies that consumers with CVS drug plans can use to fill their prescriptions in a spat over reimbursements. The two sides have settled the dispute.

Walmart’s not the only drug retailer that’s cutting costs amid pressure from traditional rivals and digitally-focused competitors. Walgreens Boots Alliance Inc. is closing 750 U.S. stores, while Rite Aid Corp. plans to shed about 400 corporate jobs. Walgreens Chief Executive Officer Stefano Pessina said in April that industry conditions are the toughest he’s seen in his tenure.

The rising costs of health care are also getting more attention in Washington, evidenced by Wednesday night’s debate where Democratic presidential candidates squabbled over whether to replace private health insurance with a government-run system known as Medicare for All. So any big moves Walmart makes could invite scrutiny from regulators or President Donald Trump. Doing nothing, though, could prove hazardous to Walmart’s health.

“At some point,” said Brian Owens, an analyst at Kantar Consulting, “Walmart will have to make some statement about what they want to be about.”

To contact the reporter on this story: Matthew Boyle in New York at mboyle20@bloomberg.net

To contact the editors responsible for this story: Crayton Harrison at tharrison5@bloomberg.net, Anne Riley Moffat, Timothy Annett

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