News broke late Thursday that Walmart is in preliminary talks to buy the insurer Humana: Sources told The Wall Street Journal that the two companies are discussing a “range of options” that includes an acquisition. Although no details of the deal are known at the moment, it would be Walmart’s biggest acquisition on record. Humana’s market value is $37.1 billion.
There have been no shortage of health-care mergers and acquisitions of late, including CVS Health’s planned acquisition of insurer Aetna and Rite Aid’s merger with privately held grocer Albertson’s, as players scramble to get ahead of Amazon.com’s rumored entry into the health-care market. Any Walmart-Humana deal would likely only accelerate the pace of consolidation in health care, given worries about Amazon as well as pricing pressures that have hit the group.
Humana has one of the best-known brands among health insurers offering Medicare Advantage plans, a fast-growing form of coverage popular among seniors. In addition, Humana has been acquiring an array of doctor practices and outpatient assets in fast-growing retirement markets in the southern U.S. like Florida and Texas where Walmart is strong and seniors abound.
A purchase of Humana would allow Walmart to tap into the health insurance and drug benefit business while at the same time acquiring a company that is growing a brand of doctor practices and outpatient facilities. Humana is particularly strong in offering health insurance and services to seniors. There are more than 10,000 Americans turning 65 and becoming eligible for Medicare every day.