The Big Story
Last week, while the current resident of the White House was tweeting negative comments about the retail behemoth Amazon, the Wall Street Journal reported that Walmart, the Amazon of the 80s and 90s, is in discussions to buy health insurer Humana. A transaction involving Humana, with a market cap of $38 billion, would be the largest in Walmart’s history, but still smaller than other recently announced transactions in the space, including the proposed acquisitions of Aetna by CVS for $69 billion and of Express Scripts by Cigna for $67 billion.
As big as Walmart is with $500 billion in total sales, according to a 2016 report, it is only the fourth largest retail pharmacy, with CVS, Walgreens and Express Scripts each generating more than twice the pharmacy revenue as Walmart. Combining forces with health insurer Humana, which has over 14 million policyholders, could help drive traffic and additional pharmacy (and other) business to the 4,700 Walmart stores with pharmacies and to Walmart’s online business. Further, aligning with a health insurer would have the added benefit of helping to control healthcare costs and benefits for Walmart’s 1.5 million U.S. employees.