Charles Holley, Wal-Mart's executive vice president and CFO, has said higher-than-expected healthcare costs are having a negative effect on the company's profits, according to a report from The Hill.
The company recently lowered its guidance estimate for earnings per share from a range of $5.10 to $5.45 to a range of $4.90 to $5.15, according to the report. A rise in enrollment by U.S. associates and families, in addition to enrollment cost inflation, have driven Wal-Mart's healthcare costs up by $180 million compared with the previous fiscal year. In 2014 overall, the company has predicted its healthcare costs will total $500 million. Wal-Mart is making an effort to use innovative approaches to reduce healthcare costs: The company plans to open a dozen primary care clinics within a small number of its stores by the end of this year, and its roughly 1 million employees will receive treatment at these new clinics for just $4 per visit.
During a conference call with investors, Mr. Holley also said the annual effective tax rate — dependent on pending Congressional actions concerning the extension of tax legislation, among other factors — will impact the company's 2014 earnings, according to the report.