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Analysis

Walmart-Humana 'Signifies the Beginning of the Avalanche' in Healthcare

By Gregory A. Freeman  
   April 11, 2018

PBMs, retailers, and providers are getting together to integrate health plans, with Walmart-Humana taking mergers to another level of complexity and transformation, says one healthcare consultant. 

The Walmart merger with Humana is another strong sign that the healthcare industry is rapidly merging with disparate parts of the retail world, intermingling so much and so quickly that some traditional parts of healthcare may be absorbed and cease to exist as we now know them.

The Wall Street Journal recently reported that Walmart plans to purchase Humana in a deal that resembles the CVS Health move to buy Aetna for $69 billion. Humana is worth $37 billion.

The purchase would be the biggest acquisition so far for Walmart and marks an aggressive push into the health insurance market. A major component of both deals is combining retail pharmacies with a pharmacy benefit manager (PBM), which promises benefits all around from improved access to customer networks and economies of scale.

Humana is making acquisitions of its own while waiting for its deal with Walmart to be completed.

Humana purchased Kindred Healthcare, a healthcare services company based in Louisville, Kentucky, with annual consolidated revenues of approximately $6 billion in 2017. Kindred Healthcare shareholders recently approved a sale to Humana and two private equity firms.

Humana will take a 40% stake in Kindred Healthcare's home division for about $800 million, as part of a larger deal by private equity firms TPG Capital and Welsh, Carson, Anderson & Stowe to buy Kindred Healthcare for $4 billion.

Gregory A. Freeman is a contributing writer for HealthLeaders.


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