WBA, Humana, reportedly pursuing greater ties

NEW YORK — Walgreens Boots Alliance and health insurer Humana Inc. are in preliminary talks to take equity stakes in each other, according to the Wall Street Journal.

The companies, which already have a joint venture focused on serving seniors out that is run out of two Walgreens stores, are having broad discussions that also include the potential of expanding that partnership, the sources said. Details of the talks couldn’t be learned, the newspaper said.

The discussion comes nearly a year after CVS Health. announced a $69 billion deal to buy insurer Aetna Inc. That acquisition is expected to close after Thanksgiving.

For Walgreens, a closer link to Humana could match the benefits of the CVS-Aetna merger at a much lower cost than an acquisition, particularly in light of the strength of Humana stock in recent years. Humana’s market value is about $42 billion, while Walgreens’ is almost twice that. Cross shareholdings could boost incentives for the companies to collaborate and make their alliance effective, the Journal said.

Humana, had $53.8 billion in revenue in 2017 and is the second-largest provider of the private Medicare plans known as Medicare Advantage. Medicare is seen as an insurance growth engine as baby boomers reach the age of eligibility.

In June, the companies announced that a Humana unit would run primary care clinics for older people in two Walgreens outlets in the Kansas City market. Seniors are major users of pharmacies and the collaboration is part of a bigger drive by Humana to expand the business of providing direct care to Medicare Advantage members. The insurer has become a big player in home-care and hospice services, and is expanding primary care offerings with the Partners in Primary Care clinics.