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    Walmart: Pharmacies weighing down corporate profits

    Walmart is blaming lower margins in its pharmacy business for holding down overall corporate profits, but the world’s largest retailer said it is still profitable has no plans to drastically alter its pharmacy business.

    Walmart officials said the smaller margins can be attributed to lower reimbursement rates from pharmacy benefit managers (PBMs), and because the Affordable Care Act has increased the number of Americans with health insurance. Typically, cash purchases have a higher profit margin than prescriptions purchased through insurance.

    Still, a Walmart spokesperson said the company has no plans to follow the lead of Target Corp., which recently agreed to sell its pharmacy division to CVS Health.

    Please see: CVS buying Target’s pharmacies, clinics

    “We feel the decision we’ve made to run our own pharmacies is right for our business and shareholders,” Walmart spokesman Randy Hargrove told Reuters.

    Walmart lowered its earnings forecast to between $4.40 and $4.70 per-share. The earnings forecast had originally been from $4.70 to $5.05 per-share. 

    The retailer said the decline in the forecast was due to both lower pharmacy margins and increased in-store theft.

    Mark Lowery, Editor
    Mark Lowery an Editor for Drug Topics magazine.

    3 Comments

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    • Anonymous
      Seriously? Walmart theft loss is 1 billion plus! This in addition to lousy inventory management, and countless other money wasting procedures which need to be tightened would solve Walmart profit situations greatly. Now, thanks to ObamaCare less than 10% of the population is without healthcare....so there goes the need for the $4.00 Rx program. Sams has already dropped it. SO WHY Walmart do you continue the program. Raise the price from 4 bucks to 5 and ....wow....you make another dollar per RX!!!!. AS far as PBM..if they offer a bad deal simply don't take it! Should not take a rocket scientist to understand if you agree to a deal which yields low profit you will GET low profit. Right? Walmart has become to large to manage effectively...just like the good ol USA...those in charge cannot see the forest for the trees. No one wants to take charge, admit mistakes, change policy, possibly upset a few customers (Americans) do what needs to be done and move on in a positive direction. So Walmart, if unchanged will continue to reap the benefits of horrible management HUGE theft issues, and as far as the pharmacy part of the business goes, deal with decreasing profits. It is strange to me that CVS, Walgreens, and the like are not having the issues with their business Walmart is having (seen CVS stock price lately?). And for those two companies pharmacy is responsible for 50% or more of the store profits. Strange that they are doing well? Hmmmm? What could the difference be? Could it be that CVS refuses to give away the profession and takes the high road as far as a fair price for a professional product. Hmmmm. DO they have a 4 dollar list....just asking? Unreal. This statement from Walmart is saturated with crap and is the product of a management who knows, as always, it's easier to blame something/someone else other than take the required serious look internally for the source of their problems. The pharmacy is NOT the source of Walmart profit loss. Buying a product for 10 dollars and selling it every day for 9 dollars IS the problem!!! The upper management of those pharmacies is where the hard questions need to be asked.
    • Mr. SLefkow
      D'ya hear that noise? It's my heart breaking for Walmart. They knew from the get-go that the pharmacy department would not be a profit-maker but that it would suck customers in to buy their cheap Chinese merchandise. They lose a buck on an Rx and quadruple their money on a lawn chair. Suggestion for poor Walmart: close the pharmacies, let the independents you forced out of business re-open so Mom-and-Pop can send their kids to college.
    • Anonymous
      The walmarts and places like them serve a purpose - some people can only afford cheap Chinese goods. Efficiently run independent pharmacies are doing just fine. There will always be a market for businesses who provide a level of service (or niche services) that the chains never will. Anyone who owns an independent pharmacy that can't send their kids to college on the average 250K per year they make in net profit has bigger problems than Walmart.
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