NEW YORK — Walmart and Humana are discussing ways to forge a closer health care partnership, including a possible acquisition of the health insurer. The potential deal, which was first reported by The Wall Street Journal, comes on the heels of other brewing mega-mergers, including CVS Health’s planned acquisition of Aetna Inc., as well as the looming possibility of Amazon.com entering the nation’s health care fray.
If an acquisition is in the works, it would be the largest ever for Walmart, which paid $10.8 billion for Asda Group PLC, the United Kingdom retailer, in 1999. Humana presently has a market value of approximately $37 billion, and analysts estimate that an acquisition would cost the retailer around $50 billion.
According to the original WSJ report, Walmart and Humana are considering a range of possible tie-ups. The two companies already are partners on co-branded prescription drug plans for Medicare beneficiaries, who can purchase some drugs for as little as $1 if they pick up their scripts at a Walmart, Sam’s Club or Neighborhood Market.
Bloomberg News, citing “a person familiar with the matter,” contended that the companies are mainly considering a closer partnership in order to provide health care to consumers either in or near their homes and help them to prevent or manage illness.
Both companies bring complementary strengths that could create a powerful combination if they strike a pact.
Walmart is already one of the largest pharmacy operators in the country, with pharmacies in most of its 4,700 U.S. locations. For its part, Humana, which had revenues of $53.8 billion last year, is the second-largest provider of private Medicare plans, known as Medicare Advantage, with an estimated share of about 17% of the Medicare Advantage market. It is also the third-largest provider of Medicare Part D prescription drug plans, with about 4.9 million enrollees. And it owns its own pharmacy benefits management firm.
The insurer has also been opening medical clinics, with nearly 200 sites in operation, staffed by around 1,500 physicians. It also operates Humana at Home, a program to provide members health care at home and thus avoid the expense of hospital stays.
That focus dovetails neatly with Walmart’s customer base, which averages 50 years of age. Moreover, a close partnership could attract Humana’s millions of members to Walmart outlets — if they are not already customers — while Walmart stores could provide Humana with thousands of locations with ample space in which to offer new, low-cost health care services.