Humana, Walgreens Rumored to be Considering Equity Stakes in Each Other

Humana (NYSE: HUM) and Walgreens Boots Alliance (NYSE: WBA) are in talks to expand their business relationship, which could include taking equity stakes in each other, according to a report published Tuesday by The Wall Street Journal.

The negotiations are in early stages, WSJ reported, citing unnamed sources who are familiar with the matter. Neither Humana nor Walgreens immediately responded to requests for comment from Home Health Care News.

Louisville, Kentucky-based Humana has been pursuing a strategy of gaining more ownership over various parts of the health care continuum. Earlier this year, the insurance giant completed separate deals giving it equity stakes in Kindred at Home and Curo Health Services, two of the largest U.S. providers of home health and hospice services, respectively.

Additionally, Humana this year launched a collaboration with Walgreens. This involves providing primary care — with a focus on seniors — in two Walgreens locations in the Kansas City, Missouri, area. Ultimately, Kindred at Home could play a role in this Walgreens initiative as well, Humana CFO Brian Kane said in September.

In making these moves, a major goal for Humana is to better manage care services for its large number of Medicare Advantage beneficiaries, helping these seniors maintain wellness while keeping costs down.

Humana and Walgreens are also facing competitive pressures.

Walgreens rival CVS is reportedly close to finalizing a $69 billion acquisition of Humana competitor Aetna. These companies are looking to further drive the ongoing trend of moving health care out of expensive inpatient settings and more toward home- and community-based settings — including CVS pharmacies.

In addition to the back-and-forth chess moves from Walgreens and CVS, e-commerce behemoth Amazon has also been making moves to enter the pharmacy space, creating even more incentive for established players to protect their market positions.

Currently, Humana and Walgreens are talking about expanding their existing partnership beyond Kansas City, perhaps even nationwide, according to the Wall Street Journal.

The talks are “wide-ranging,” however, and could include cross shareholdings. Such a move could lead to similar benefits as a merger but at a lower cost, and provide more incentive for the two companies to “make their partnership work,” the WSJ reported.

Earlier this year, there were rumors that Walmart — which is a major pharmacy operator in addition to being a retail powerhouse — was in talks to acquire Humana. Those negotiations appear to have fizzled.

Written by Tim Mullaney

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Tim Mullaney on Email
Tim Mullaney
If he’s not in the newsroom, Tim likes to be on the tennis court or traveling to a new destination. Recent highlights include Sri Lanka and Iceland.

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