Last year Kroger teamed up with Walgreens to let shoppers pick up their online orders at some of the drug chain's stores. (Photo: Shutterstock)
Kroger Co. is talking to potential partners in the health-care industry about developing a new line of business.
Chief Executive Officer Rodney McMullen said the grocer is “doing a lot of exploratory work” to identify an area of health care that it could enter and benefit customers — and perhaps lower their medical costs. Such a venture would also represent a fresh revenue stream for Kroger and complement the advertising and personal-finance businesses that it's counting on to help generate $400 million in additional operating profit by next year.
“Health care is an area where we see a lot of opportunity,” McMullen said in an interview Thursday. “We're talking to several potential partners at the moment,” which he declined to name.
Kroger's not alone in seeing an opportunity in health care. Walmart Inc. has stepped up its ambitions in the wellness space in recent years, offering free health screenings for shoppers and using its clout to buy health care for some of its workers directly from providers. Amazon.com Inc. has aligned with Berkshire Hathaway Inc. and JPMorgan Chase & Co. on a wellness venture that will be called Haven. It aims to improve access to primary care and simplify insurance.
Kroger has also been active in this area. Last year it teamed up with Walgreens to let shoppers pick up their online orders at some of the drug chain's stores, which would also carry a selection of Kroger's Simple Truth natural and organic foods. The test began in one store in Northern Kentucky and is now in 13. The supermarket also operates a specialty pharmacy business that posted “strong” sales growth last year, McMullen told analysts Thursday. The company derives about 9 percent of its sales from pharmacy operations, according to filings.
Any incremental revenue from health care would be welcomed by Kroger's investors, who punished the shares Thursday after the company provided a lackluster full-year profit forecast and said fourth-quarter margins contracted nearly a full percentage point.
Read more:
- Bucking merger trend, Walgreens doubles down on partnerships
- How broker consolidation and industry alliances are changing the industry
- Amazon has just entered the drug-distribution business
Copyright 2019 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
Complete your profile to continue reading and get FREE access to BenefitsPRO, part of your ALM digital membership.
Your access to unlimited BenefitsPRO content isn’t changing.
Once you are an ALM digital member, you’ll receive:
- Breaking benefits news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical converage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
