U.S. drugstore owner, Walgreens Boots Alliance Inc. is reportedly in talks with health insurer Humana Inc. as the two companies are contemplating to take over each other’s equity stakes. The deal comes at a time when health-industry players are collaborating to compete in a rapidly evolving market.
Sources familiar with the matter cite that both Walgreens and Humana, that already has a partnership focused on serving two Walgreens stores, are engaged in wide-ranging discussion which includes the possibility of expanding their operations.
Reportedly, drugstore owners and other healthcare providers are constantly seeking ways to expand, develop and protect themselves against external threats from e-commerce firms such as Amazon.com Inc. For instance, Walgreens rival CVS Health Corp. recently announced a $69 billion deal to acquire health insurer Aetna Inc., in a bid to secure new avenues for growth for the pharmacy company and capture more of what consumers spend on health care products.
Sources suggest that the proposed move would offer Walgreens a closer connection with Humana which could replicate expected benefits of the CVS-Aetna deal at a much lower cost than a complete takeover, especially due to the strong performance of Humana stocks in the recent years. Moreover, introducing cross shareholdings could significantly increase incentives for both the companies whilst working together and making their partnership a success.
As per official reports, Humana’s current market value stands at about $42 billion, while Walgreens is valued at nearly $78 billion.
According to CNBC, Walgreens intends to position itself as a wide-ranging health-care company transforming patient experience and offering lower costs medications. In a bid to fulfill this vision Walgreens has been signing deals with several health-care firms including Humana and clinical lab testing company LabCorp.
The company has reportedly pursued several alternatives, including a potential deal with wholesale drug distributor, AmerisourceBergen Corp. which ended without an agreement in 2017.
For the record, pharmacy sales account for almost 70% of Walgreens’ U.S. revenue. Whereas in the less competitive international retail market, Walgreens garners about 35% of its sales from its pharmacy.