Walmart is holding preliminary talks with Humana, the health insurer based in Louisville, Kentucky, on possibly purchasing the insurer, says a report in the news.
No terms on a deal have been released by either of the two parties. However, when news of a possible acquisition surfaced, shares of Humana soared by 10% in trading after hours on Thursday while Walmart shares fell 1%.
A spokesperson at Humana was not responsive to a request to give a comment, while Walmart in a prepared statement said that it does not make comments on items it considers rumors or speculation.
A report in the Wall Street Journal cautioned there was not any guarantee a deal would even materialize, but a move of this kind would make good sense as retailers are moving more and more into the country’s healthcare space.
Much speculation has surfaced about insurance companies as well as retailers tying-up with Humana. Aetna was one suitor, although the merger proposal with Humana was ended after the ruling by a federal judge said it would hurt competition.
Last December, an analyst said that a retailer or rival insurer such as Walgreens or Walmart may try to acquire Humana after CVS, the drug store chain, released its plans to acquire Aetna in a cash and stock deal for $69 billion.
In Walmart’s case, acquiring Humana would be one more volley in its continuing battle with Amazon, the online e-commerce giant, which reportedly is considering entering sales of prescription drugs.
Although, Amazon would be required to pass several regulatory roadblocks, the idea alone that the online giant could enter the pharmacy arena was looked at as one of the contributing factors that pushed CVS into merging with Aetna.
Some of the most well-known U.S. executives are tackling healthcare. Amazon, JPMorgan Chase and Berkshire Hathaway announced in January they had joined forces to explore different ways of improving healthcare and lowering its cost for employees across the U.S.
In competing against Amazon, Walmart bought several websites, of which one is Jet.com, to help improve as well as expand its presence online. However, acquiring Humana, which has a current estimated market value of $37 billion, would be the biggest acquisition by the retailer.
Since 2010, Humana and Walmart have worked together to offer prescription plans that are low-cost currently at less than $20 per month, to customers on Medicare.