Walgreens and Humana Expanding Their Partnership?

Drugstore owner Walgreens Boots Alliance Inc. and health insurer Humana Inc. are in preliminary discussions to take equity stakes in each other, according to people familiar with the matter, as health-industry players scramble for tie-ups that will help them compete in a rapidly evolving environment.

The companies, which already have a partnership focused on serving seniors from two Walgreens locations, are having wide-ranging talks that also include the possibility of expanding that venture, the people said. Details of the talks couldn’t be learned and there’s no guarantee there will be any new deal between the companies.

The discussions are a sign of the disruption facing pharmacies and health insurance companies, as both industries face new pressures. Consumers can now get their household goods online and in convenience stores. The health-care industry is undergoing dramatic transformation amid regulatory scrutiny over rising costs.

Some competitors have already made their move. Amazon recently acquired online pharmacy PillPack. CVS Health year announced its $69 billion acquisition of Aetna, which will combine CVS’ pharmacy and pharmacy benefits manager platform with Aetna’s insurance business.

Walgreens has been hoping to position itself as more of a broader health-care company helping to transform patient experience, while lowering costs. To this end Walgreen has been signing deals with a number of health-care companies including Humana and diagnostics company LabCorp.

It has also explored a number of options, including a potential deal with AmerisourceBergen. Talks with the wholesale drug distributor ended without an agreement last year. Pharmacy sales account for almost 70 percent of Walgreens’ U.S. revenue. In the less competitive international retail environment, Walgreens garners about 35 percent of its sales from its pharmacy.

 

Todd “Bubba” Horwitz