Walmart slides amid reports it’s in talks to buy health insurer Humana

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Markets Insider

Walmart stock price

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Markets Insider

  • Walmart’s stock was down on Monday following reports that the company is considering an acquisition of health insurer Humana.
  • The potential tie-up would represent the latest in a string of mergers and acquisitions in the healthcare services industry as retailers are pressured to deliver lower cost drugs to consumers and counter Amazon‘s encroachment in the space.
  • You can view Walmart’s stock price in real time here.

Shares of Walmart were down 3.86% on Monday morning following a Wall Street Journal report that the global retailer is in early-stage talks to acquire health insurer Humana.

The potential tie-up would strengthen Walmart’s position as one of the largest retail pharmacies in the US amid increasing pressure for companies to deliver lower cost drugs in a market that is slowly turning toward online orders and deliveries. It would also represent the latest shakeup in a healthcare services industry that has witnessed a wave of so-called vertical integration deals in the past few months.

The move by Walmart follows in the footsteps of CVS striking a $69 billion deal to acquire Aetna in December, and Cigna‘s $54 billion acquisition of Express Scripts Holding in March. Moreover, large grocery chains have also entered the mix with Albertsons agreeing to buy the remaining parts of Rite Aid not sold off to Walgreens in February.

The changes in the healthcare services industry have also been precipitated by the emergence of Amazon in the pharmaceutical delivery space. In February, Amazon announced it would sell an exclusive line of over-the-counter generic medications called “Basic Care.”

Some analysts believe Walmart’s possible acquisition would help counter the Amazon threat.

“The combination could create stickier customer relationships, leverage locations to better coordinate care delivery (potentially by deploying enhanced pharmacy, small clinic or primary care activities), while also reducing costs, and positioning WMT more offensively for changes in both the healthcare and retail sectors,” Seth Sigman, a Credit Suisse analyst, wrote in a note to clients on Monday.

Walmart has already worked with Humana on several different initiatives in the past, including a cobranded Medicare drug plan and healthy-food credits.

Walmart’s stock was trading at $85.54 a share. It was down 13.16% for the year.

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