Walmart announced on Tuesday its decision to close numerous health centers and discontinue its telehealth business because of significant operating and reimbursement costs. The closure affects 51 one-stop health centers that were opened since 2019 across five states.

Initially, Walmart had ambitious plans to establish over 75 clinics offering a range of services, including dental, medical, and behavioral health. These clinics, conveniently located adjacent to Walmart Supercenter locations, aimed to provide comprehensive care to patients, including X-rays and deep teeth cleanings.

In a blog post, Walmart cited the challenging reimbursement environment and rising operating costs as primary factors contributing to the decision. The company expressed regret over the hard choice but stated that the lack of profitability made the healthcare business unsustainable. However, Walmart did not disclose the exact amount of investment made in building the clinics, nor did it reveal the revenue generated by these facilities.

Regarding the impact on employment, Walmart did not specify the number of jobs that would be eliminated because of the closures. However, affected associates will transfer to other Walmart or Sam’s Club locations, according to the company’s statement.

Despite this setback, Walmart assured that it would continue to operate its thousands of pharmacies and vision centers across the country. The move to shutter the health centers represents a strategic shift for the retail giant, marking an end to its foray into primary care.

Walmart’s venture into the healthcare sector was driven by intense competition within the industry, characterized by significant expansion efforts from rivals such as CVS and Walgreens. These competitors have also been bolstering their presence in the healthcare market, reflecting the attractiveness of the multi-trillion dollar health industry. However, the picture does not seem to be as rosy as it once was as Walmart is worried about the operating costs of running these in-store clinics but the fact that they are also closing the telehealth business means that there is something we don’t know yet.

In a blog post, the company said that “This is a difficult decision, and like others, the challenging reimbursement environment and escalating operating costs create a lack of profitability that make the care business unsustainable for us at this time,”