Walmart Could be Eying a Deal to Acquire Humana

Mergers and Acquisitions

Another major healthcare buyout may be on the horizon. According to reports, Walmart may be in talks to buy health insurer Humana.

Citing “people familiar with the matter” The Wall Street Journal and Reuters reported on a possible deal. The Journal noted that it is possible no deal will materialize at all, CNBC said. Reuters said Walmart approached Humana earlier this month about a possible deal. Neither Walmart nor Humana provided comment to Reuters or CNBC.

While the talks are still in the early stages, there is a question as to whether or not a deal would be an outright acquisition of Humana or a possible partnership. News of a possible deal sent shares of Human up more than 13 percent on Thursday, CNBC reported.  

Walmart has an existing relationship with Humana. Reuters said the company has a “co-branded Medicare drug plan” with Humana that drives patients to Walmart stores. Patients who participate in the co-branded plan can save up to 20 percent off their medications, Reuters said.

If a deal arises, Reuters said it would allow Walmart to “tap into Humana’s patient population” and expand “low-level medical services in its pharmacies to avoid ER visits.” Additionally, a deal could provide better management of prescription drug use through access to medical records, Reuters said.

Larry Levitt, senior vice president at the Kaiser Family Foundation, told CNN that an acquisition of Humana could “jump-start” Walmart’s efforts to increase its pharmacy business as well as its in-house primary care clinics. A deal with Humana would give Walmart greater clout in the healthcare industry, Levitt told CNN.

The possible deal between the retailer with the large pharmacy business and Humana is part of a shifting landscape in the healthcare industry. There have been several significant deals over the past few months that are creating a paradigm shift resulting in a consolidation of the healthcare industry. Deals include the recent $79 billion acquisition of Aetna by CVS Health, CIGNA Corp’s $67 billion deal to buy Express Scripts Holding Co. and UnitedHealth Group’s acquisition of DaVita Inc.’s medical group.

Humana had sought to merge with Aetna, but a federal judge brought that to an end over antitrust concerns.

Last year BioSpace reported that Amazon began to form a business plan to move the company into the pharmaceutical market as part of its consumables business. In January Amazon, Berkshire Hathaway and J.P. Morgan announced the formation of a company that has a goal of providing high-quality healthcare at an affordable price. The three companies will create a fourth independent company that will be “free from profit-making incentives and constraints.”

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