In 2018 healthcare has been moving so quickly it may have lowered its risk of heart disease.
Walmart has apparently been in acquisition talks for both Humana and Pillpack (the latter of which we actually predicted might happen).
We analyzed earnings calls to see if there were any clues to this, and while Walmart hadn’t really said anything, Humana may have dropped some hints. The chart below highlights the number of times Humana mentioned “Walmart” on its earnings calls – you can see why it spiked in the full analysis.
Why Does Walmart (Medi)care About This?
My guess is that Walmart-Humana is as much about healthcare as it is about Walmart’s retail war against Amazon.
One of the big differentiating factors between Walmart and Amazon is that Walmart tends to skew older and lower income. About a fifth of its shoppers are 65+, and another 18% are within 10 years of that.
I believe Walmart is essentially trying to become a lifestyle manager and brand for the 65+ category, where it has a stronger presence than Amazon. With Humana, Walmart is able to monetize its relationship with this demographic through Humana’s Medicare Advantage plan and has direct access to homes through Humana-owned Kindred Health, which provides elderly and rehab support. And considering the fact that Medicare Advantage just got a pay increase the timing is great.
With incentive to help manage the lifestyles of this large and growing demographic, Walmart now has great channels to also sell more goods/services too. Home health worker sees you need new lights? Walmart has you. Having trouble getting groceries? Consider Walmart meal kits, which could be specialized based on your health + diet data. Need to get your Humana-covered flu shot or blood tests done? Go to a Walmart Care Clinic, where you’ll probably get the best deal and might buy some stuff on the way out!
If Walmart did decide to go this route, looking at Humana’s earnings calls might give us clues to where its next plays might be. CFO Brian Kane said this last quarter:
“From an M&A perspective, we continue to look at strategic acquisitions to build out our capabilities, particularly in the primary care arena, but we also continually look for any other assets that could enhance our Healthcare Services segments. Additionally, we would also have interest in Medicare Advantage assets that increase our presence in underpenetrated markets.” Pharma-see who gets acquired next
On the pharmacy side, Walmart and Humana would make sense by combining one of the largest retail pharmacies with one of the largest remaining pharmacy benefits managers + mail order pharmacies (Humana).
This is definitely going to put pressure on the remaining pharmacies that aren’t owned by an insurer. I expect Walgreens and Albertson’s/Rite Aid to start getting approached by Optum and Anthem soon.
Walmart has barely made any plays, investments, or acquisitions in the health space compared to other pharmacies, but with this acquisition we might see the retail giant start getting busy. You can see where the other pharmacies are investing here.
Whoever told me healthcare changes slowly is a $&!@in’ liar.