Walmart could be the next retail chain to fuse with a major health insurer, according to a report.
The Arkansas-headquartered corporation discussed a possible deal with Humana earlier this month, according to the Wall Street Journal, citing sources familiar with the situation. A possible merger is still in its early stages and no price for the insurance company has been agreed upon. It would be Walmart's largest acquisition by far, as Humana is currently valued at about $37 billion.
The two companies already offer a co-branded prescription drug plan that steers members towards Walmart's pharmacy. Late last year, Humana raised speculation about a potential takeover following a financial filing that updated the company's "change-in-control" policy.
Following news of the possible merger, Humana shares soared nearly 12 percentage points in the Thursday night after-hours. Walmart's shares, however, fell about 1 percentage point. The U.S. stock market is closed Friday, March 30.
The preliminary talks follow recent mergers across the healthcare industry that have been both plentiful and controversial. Humana, itself, is in the midst of acquiring the long-term care provider Kindred Healthcare.
Health insurer Cigna announced earlier this month it plans to purchase Express Scripts, the country's largest pharmacy benefit management firm, for $67 billion.
Shareholders at both CVS and Aetna also recently voted to approve the drugstore chain's acquisition of the health insurer. Critics have said the mergers will hurt competition and consolidate the market, ultimately hurting consumers.
If the mergers move forward, the massive "insurer systems that would dominate the markets would have weak, if any, incentives to compete," the American Antitrust Institute said in a March 26 letter to the Department of the Justice. The agency is currently reviewing the proposed CVS-Aetna merger.
The companies, and their CEOs, have repeatedly pushed back on concerns that the $69 billion deal would hurt competition and have said it would increase community-based care. Aetna CEO Mark Bertolini recently said the merger with CVS would allow the company to invest more heavily in health resources at the community level.
An industry source, however, said the Walmart acquisition would be different, and more dangerous for the healthcare industry.
"The CVS-Aetna merger was a watershed moment in healthcare, but Walmart-Humana signifies the beginning of the avalanche that will cause the entire healthcare system to converge," David Friend, chief transformation officer of the BDO Center for Healthcare Excellence & Innovation, told FierceHealthcare. "By next year, the traditional PBM model could be extinct. Everyone is going to get in everyone’s business, traditional healthcare, retail and technology companies will unite behind a singular goal: survival."
Similarly, Amazon, Walmart's chief competitor in the retail space, has announced plans to form a healthcare venture with JPMorgan and Berkshire Hathaway, although details of that effort remain scarce.