Big-box retailer Walmart is in early discussions with health insurer Humana “about developing closer ties,” including new partnerships and a possible acquisition of Humana, according to a report from Reuters.
This news comes shortly after other U.S. retailers and health insurers announced similar acquisitions. In the last few months, CVS Health Corp. purchased Aetna Inc. for $69 billion and Cigna Corp. bought Express Scripts Holding Co. for $54 billion, Reuters reports.
Walmart approached Humana in March regarding new opportunities together, two sources shared with Reuters. Walmart purchasing Humana would represent “a significant strategic shift” for the company, which is the world’s biggest retailer and has been focused on competing online against Amazon.
But Amazon itself has been weighing potential partnerships with health insurers, too. Earlier this year, Amazon, Berkshire Hathaway Inc. and JPMorgan Chase & Co. announced plans to form a company dedicated to cutting healthcare costs for their U.S. employees, Reuters reports.
Currently, Walmart has a co-branded Medicare drug plan with Humana that directs patients to Walmart stores to get their prescriptions filled and saves its customers up to 20 percent on their prescriptions, the article states.
Walmart acquiring Humana would put the big-box retailer in the complicated web of U.S. health insurance, according to a separate article from The Wall Street Journal.
The article notes that Walmart’s profits have been limited as more customers shift to shopping online from companies like Amazon. Acquiring insurer Humana would quickly install Walmart in the “highly regulated and fast-changing” health insurance marketplace and introduce a slew of new compliance issues and management challenges for the company.
Walmart’s fiscal year earnings could also have an effect on a potential acquisition, the Journal reports. The big-box retailer ended its fiscal year “with $7 billion in cash and short-term investments, meaning that the retailer likely would need to borrow tens of billions of dollars, or issue millions of shares, to pay for any potential deal.”