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Walmart Buys Medication Management Tech From Startup CareZone

Jun 23, 2020

Dive Brief:

  • Walmart has acquired the technology platform of CareZone, a venture-backed startup that develops apps to help people manage medications and chronic illnesses.

  • CareZone, founded in 2012, has also built technology allowing users to scan prescription drug labels and insurance cards to check what's covered by their health plan, organize at at-home drug delivery and share the information with medical teams. Walmart will take possession of those technologies, though CareZone will retain its pharmacy business and remain a separate company.

  • Financial terms of the deal were not disclosed, but CNBC, which broke the news, pegged the deal at $200 million. Walmart stock was up slightly in early Tuesday morning trading.

Dive Insight:

Digital health has seen expanding opportunities amid the COVID-19 pandemic as consumers look for ways to see their doctor, get their medications and monitor symptoms at home. But even before the novel coronavirus, the sector saw a surge of interest from technology and retail giants.

With the purchase of CareZone's technology, patents and intellectual property, Walmart is once again building up its digital health capabilities.

Roughly 3.5 million people use CareZone's apps, per CNBC, and 25 to 30 product and development employees from the San Francisco-based firm will join Walmart.

Bentonville, Arkansas-based Walmart is not purchasing CareZone's pharmacy business, which sorts consumers medications into packs and delivers them via mail. The pharmacy, which manages about 15 million medications, is currently embroiled in litigation after Cigna-owned pharmacy benefit manager Express Scripts booted it from its network in 2018 over a contract dispute.

Though Walmart isn't adding the pharmacy, the massive retailer has been interested in moving deeper into the $500 billion prescription drug space. It tried to snap up online pharmacy PillPack in 2018, but was outbid by rival e-commerce giant Amazon.

In a press release on the buy, the chain said a significant chunk of its 160 million weekly shoppers reported delaying medical care.

Walmart currently sells a list of medicines for $4 or less through its generic prescription program and recently opened its first Health Center in its Dallas, Georgia, with services like dental, mental and health counseling, X-rays and audiology.

Recent Walmart initiatives aimed at lowering healthcare costs include lists of cost-effective "featured providers" and its Center for Excellence network, which looks to reduce unnecessary joint surgeries.

CareZone is backed by a smattering of high-profile investors including Salesforce CEO Marc Benioff, and has scooped up $168 million in funding over three rounds.