Humana’s Acquisition of Curo Health Services Makes Walmart Takeover Unlikely

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Humana BuildingThere’s never a dull moment in the world of healthcare, especially lately. Earlier this month, rumors flew of a possible Walmart takeover of Humana. Analysts weren’t surprised; the takeover seemed likely given Amazon’s rumored foray into healthcare and the fierce competition between Amazon and Walmart.

Humana’s acquisition of Curo Health Services, however, makes a Walmart-Humana takeover much less likely.

Curo Health Services is a national hospice provider. Humana is teaming up with two private-equity firms, TPG Capital and Welsh, Carson, Anderson & Stowe, to buy privately held Curo Health Services for about $1.4 billion, the group’s second such deal in five months that will create the largest hospice operator in the United States. The group will merge Curo with Kindred Healthcare, another hospice business it purchased in December.

Steven Halper and Yulia Norenko, analysts with global financial services firm Cantor Fitzgerald, stated in a research note that this move “indicates to us that [Humana] should not be viewed as a takeover target.”

Halper and Norenko’s note said the acquisition of Curo Health Services by Humana and its private-equity partners — TPG Capital and Welsh, Carson, Anderson & Stowe — is in line with the company’s strategy behind acquiring Kindred Healthcare.

This strategy includes Humana controlling a spectrum of health care providers that could improve the health of the seniors in Humana’s Medicare Advantage plans, the company’s core product, and gaining access to more provider and patient data.

So what does this mean for Humana, Walmart, and healthcare as a whole?

1) Just because the takeover isn’t likely doesn’t mean a partnership won’t happen.

Walmart and Humana already have a partnership to offer Humana members deals on prescription drugs, and this could signal that a deeper partnership is on the horizon.

 

2) This isn’t the end of Walmart’s exploration of healthcare takeovers.

Regardless of the Humana partnership/takeover, sources suggest that Walmart is looking into other acquisitions in the healthcare space. Sources familiar with the parties say that Walmart is currently in talks with online pharmacy startup PillPack.

According to CNBC, “The sources cautioned that the PillPack deal is not yet finalized and could still fall apart, and that Walmart has considered buying a number of start-ups. Still, the sources said discussions between the two about a sale have been happening for months.

 

3) This is just the beginning of large-scale disruption in the healthcare space.

Amazon’s talks of moving into healthcare signal a larger industry trend, as factors like high drug prices, convoluted reimbursement systems, and advances in technology have created the perfect environment for change.

 

While the passing consolidations are creating big wakes in the industry, we’re confident that well-managed, independent medical practices can still be successful. We’re here to help those practices ensure their own financial viability.

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