Walmart eyes Humana in potential merger
The industry merger train keeps on chugging as Walmart and Humana engage in early-stage talks about strengthening their existing partnership. The firms have held preliminary talks exploring a possible combination, including a potential merger.
Walmart may may be looking to not be left out in the cold as CVS Health’s $69 billion deal to acquire insurer Aetna, and health Cigna’s $54 billion proposed merger with pharmacy benefits manager Express Scripts move forward. Additionally, there is a threat of online retailer Amazon’s potential entry into the pharmacy business. The key key to success for all of these potential mergers is whether they can provide consumers with a more affordable and effective new health care model, not an easy task.
A Walmart-Humana combination has the potential to be even more transformative than the other mergers. With its own pharmacy benefits unit and nearly 200 standalone clinics to help manage chronic conditions for its Medicare members, Humana, combining with over 4,700 Walmart and Sam’s Club could help the retailer become a major provider of health care.
Three years ago, when four of the major health insurers rushed to partner on large-scale mergers, the deals were blocked by the Department of Justice, and ultimately rejected by the courts on anti-trust grounds. Analysts say the CVS-Aetna and Cigna-Express Scripts deals are different, because they are not mergers of rivals but rather vertical deals which would not result in fewer competitors in the medical or
Even if regulators sign off on the deals, there are risks to execution for both Walmart and CVS, as they try to integrate health insurance, pharmacy, and primary care services at such a large scale.