Walmart buys medication management technology from startup CareZone

Walmart is upping its digital health and wellness tools by snapping up a prescription management app from startup CareZone.

The world's largest retailer announced Monday it had acquired specific assets—the technology platform, patents and key intellectual property—of San Francisco-based CareZone.

CareZone developed a mobile app that helps individuals and families manage medicine and chronic illness for each member of the household. Families can use the app to scan labels or insurance cards to speed and simplify the process, Walmart said in a blog post from Lori Flees, Sam's Club's senior vice president of health and wellness, and Sean Slovenski, Walmart's senior vice president of health and wellness.

The company launched in 2012, and the app has more than 3 million registered users with more than 5 million downloads to date, according to its website. CareZone manages more than 15 million medications. The venture-backed company has raised $168 million to date, according to Crunchbase.

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CNBC health technology reporter Christina Farr reported that a person familiar with the deal said Walmart paid about $200 million for the CareZone technology.

As part of the deal, Walmart said it is bringing on CareZone's product and technology team that built the medication management app.

"The technology and team members joining Walmart will augment our current Health and Wellness capabilities and support our focus on digital health care solutions. CareZone will remain a separate company unrelated to Walmart," Slovenski and Flees said in the blog post.

“The goal of any technology startup is to build a product or experience that touches the lives of as many people as possible,” said Walter Smith, co-founder and chief technology officer of CareZone, in a statement. “Adding our technology platform to Walmart’s existing digital capabilities and physical reach creates a unique opportunity to redefine what the future of digital health and wellness can look like. The CareZone team members joining Walmart are excited to bring our knowledge and apply it to such a broad canvas.”

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Walmart, which operates hundreds of pharmacies, is stepping up its digital health capabilities as it competes in the $500 billion prescription drug space that includes CVS Health—which owns Caremark—and Walgreens Boots Alliance.

The market got more competitive in 2018 when Amazon purchased online pharmacy PillPack in a $753 million deal. And the tech giant may be looking to expand its prescription drug delivery business outside the U.S. based on trademark applications for Amazon Pharmacy in more than a dozen international markets.

Walmart’s blog said a recent survey of U.S. customers found cost is the top barrier to healthcare for 43% of Walmart shoppers, followed by convenience and access. Additionally, 40% of those surveyed have delayed medical care.

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Walmart said it's focused on delivering innovative solutions to increase access to affordable and convenient healthcare across its business, including the introduction of a $4 prescription program years ago.

The retailer also recently launched Walmart Health in Georgia to offer healthcare services at affordable prices.

Farr reported that Walmart is not buying the CareZone pharmacy, which sorts customers’ medications into pill packs and delivers them to patients via mail. The pharmacy side of the business is still embroiled in litigation with Cigna-owned pharmacy benefit manager Express Scripts, which booted CareZone from its network over a contract dispute, CNBC said.