Walmart-Humana is the health care deal to watch
The big picture: If a Walmart-Humana deal comes to fruition, which is still a big "if," Walmart would catapult from being the most recognizable American retailer into an even bigger corporate powerhouse with a tight grip on billions of federal health care dollars.
The details: Walmart could buy Humana, the Wall Street Journal reported, or the two companies could expand their current relationship.
Walmart and Humana already have a co-branded Medicare Part D plan, which covers prescription costs for people in the traditional Medicare program. More than 5.3 million people have a Humana drug plan, and membership has been growing like crazy as more Walmart shoppers sign up, the company said in its annual filing.
The impact: Many more major health care services would fall under Walmart and Humana's combined roof, including:
- 3.5 million seniors and disabled people with private Humana Medicare Advantage plans.
- Humana's pharmacy benefit manager, the fourth-largest in the country by filled prescriptions.
- Home health services, thanks to Humana's pending acquisition of Kindred Healthcare.
- Humana's Conviva health clinics.
- 4,400 Walmart pharmacies.
- PillPack would add more mail-order prescriptions if Walmart follows through on that rumored acquisition.
The bottom line: Seniors and low-income shoppers already are Walmart's core demographics. With Humana, Walmart could easily snag a piece of their their health care spending (which is heavily subsidized by taxpayers through Medicare and Medicaid), and boost food and retail sales in the process.
Keep in mind: Some of the most valuable retail customers are the people who pick up prescriptions.
- Pharmacy customers spend almost four times more than people who only shop for groceries, according to investor documents posted by Albertsons, which is acquiring Rite Aid pharmacies.
- Pharmacy customers visit a store 2.3 times per week compared with less than once a week for regular shoppers.
- A Walmart-Humana deal would "preserve the pharmacy volume (and subsequent incremental spend inside the store)," according to financial analysts with Barclays.