New York (AFP) – US retail behemoth Walmart is in preliminary talks to acquire health insurer Humana, the Wall Street Journal reported, the latest in the recent wave of health care mergers.
The terms of the possible deal were not clear and there is no guarantee an agreement would be reached, the newspaper reported late Thursday.
The transaction would link the world’s biggest retailer with one of the largest US health insurers, and based on Humana’s market capitalization of $37 billion, a takeover would be Walmart’s biggest ever.
Walmart, already a giant in pharmacy sales and with health care clinics in some stores, reported revenues of $500.3 billion last year.
Humana, which a big presence in US Medicare program, had revenues of $53.8 billion last year.
The talks come amid a wave of consolidation in US health care driven by runaway costs and disruption from online retailers, as well as growing signs Walmart’s archrival Amazon plans to expand into the business.
Earlier this month, health insurer Cigna announced a $67 billion purchase of pharmacy benefits manager Express Scripts.
That came on the heels of the December announcement that retail pharmacy chain CVS Health would buy insurer Aetna for $69 billion.
In January, Amazon, along with Warren Buffett’s Berkshire Hathaway and JP Morgan Chase, announced the creation of a nonprofit to address skyrocketing costs that Buffett said have become a “hungry tapeworm on the American economy.”
GlobalData Retail noted the “considerable” risks for Walmart of becoming too enmeshed in health care, including myriad challenges of integrating an insurer into a retailer.
At the same time, a transaction would broaden the retailer’s relationship with consumers, deepen its trove of consumer data, give Walmart a bigger presence in a growing part of the US economy and offer a strong foundation to counter Amazon, GlobalData said in a research note.