Walmart issues $5 billion in new debt; partners with UnitedHealth Group

Walmart seeks to raise $5 billion in operating capital through four separate bond issues ahead of expected Federal Reserve interest rate hike. Also, the Bentonville-based retailer announced Wednesday (Sept. 7) a partnership with UnitedHealth Group.

A filing with the U.S. Securities and Exchange Commission showed the bonds include $1.75 billion at 3.9% due in 2025, $1 billion at 3.95% due in 2027, $1.25 billion at 4.15% due 2032 and $1 billion at 4.5% due 2052. Walmart should net roughly $4.971 billion from the bonds. Walmart debt is rated AA by Standard & Poor’s and Aa2 by Moody’s, each seen as Prime credit level quality.

Other retailers have also issued debt to raise capital ahead of higher interest rates many think are coming when the Federal Open Market Committee meets Sept 20. Wall Street expects the Fed to raise rates 0.75% following the meeting. Target recently issued $1 billion in bonds due in 2032, and McDonald’s announced bond issues totaling $1.5 billion due in 2032 and 2052. In April, Amazon sold $12.75 billion of investment-grade bonds for general corporate purposes.

HEALTH CARE PARTNERSHIP
The 10-year collaborative effort between Walmart and UnitedHealth was created to improve health outcomes, affordability and improve patient experiences for Medicare beneficiaries, according to the companies.

The collaboration will start in 2023 with 15 Walmart Health locations in Florida and Georgia and expand into new geographies, ultimately serving seniors and Medicare recipients in value-based arrangements through multiple Medicare Advantage plans.

“We’re on a journey to transform health care, connecting more people to the right care at the right time – at a cost that makes sense,” said Walmart CEO Doug McMillon. “This collaboration puts the patient at the center of health care by leveraging the strength and complementary skill sets of our two companies to accelerate access to quality care.”

Beginning in January 2023, the collaboration will include a co-branded Medicare Advantage plan in Georgia, dubbed UnitedHealthcare Medicare Advantage Walmart Flex plan. Also in January 2023, Walmart Health Virtual Care will be in network for commercial members in UnitedHealthcare’s Choice Plus PPO plan, giving consumers another option to access care when and where they want it.

Eventually, the collaboration aims to include more people using commercial and Medicaid plans by providing access to fresh food and enhancing current initiatives to address social determinants of health, over-the-counter and prescription medications, and dental and vision services.

Stephens Inc. Analyst Scott Fidel, applauded the partnership between the two corporate titans saying “the organizations each have the ability to vastly scale whatever seems to work well.”

Walmart is not the only retailer pursuing medical care. Amazon is acquiring the primary care startup One Medical for $3.9 billion, a deal now undergoing regulatory scrutiny. Amazon also said it has sustained interest in the primary care market, including providing home health care for seniors given the rising number of Medicare recipients across the country.