Walmart is reportedly in early-stage talks to acquire Humana, the insurance company, in a deal that could mark Walmart’s largest acquisition ever.
Citing people familiar with the matter, The Wall Street Journal reported that it’s not clear what the deal terms being negotiated are or if a deal will end up happening. But if something is reached, it would likely be on the large side — given Humana has a market value of around $37 billion. It would also be Walmart’s biggest purchase, blowing past its $10.8 billion acquisition of Asda in 1999. Walmart has a market value of $260 billion, noted the Wall Street Journal.
According to the paper, the two sides are talking about a lot of options, including an acquisition by Walmart. If it does get inked and gets past regulators, Walmart would become one of the country’s biggest health insurance companies.
Walmart currently operates pharmacies in close to 4,700 stores in the U.S. as well as in a lot of its Sam’s Club warehouse stores and has primary care clinics. It has been pushing further into the healthcare market — it recently announced it was gearing up to work with a big lab company to provide lab testing services.
An acquisition of Humana could deepen Walmart’s offerings to seniors, given that Humana is an insurer focused on Medicare. According to The Wall Street Journal, it is the second largest provider of Medicare Advantage plans and controls around 17 percent of that market, with 3.5 million insured. Humana also has a pharmacy benefits manager business, and the two partnered on Medicare drug plans. Humana has also been expanding its offerings into providing health care as it aims to cut the costs of its members. In 2017, it said it would acquire a stake in a home health and hospice care provider, noted the paper.
The talks between Walmart and Humana come as a lot of deal-making is going on in the healthcare market, largely because of Amazon’s move into that market. Late last year, CVS announced it was acquiring Aetna — the Humana rival — for $69 billion, while in March, Cigna said it would buy Express Scripts — the administer of medicine — for $54 billion. Amazon has already announced it is teaming up with JPMorgan Chase and Berkshire Hathaway to create a new kind of healthcare company and is expected to enter the market in a big way. It also recently expanded its Prime program to Medicaid recipients, who are a key demographic for Walmart, noted the report.