Humana shares rallied about $7 late Tuesday after The Wall Street Journal reported that the insurer and drugstore chain owner Walgreens Boots Alliance were “in preliminary discussions to take equity stakes in each other.”
The paper cited people familiar with the matter but said “there’s no guarantee there will be any new deal between the companies.”
Humana shares had fallen with broader markets Tuesday and, at about 3:44 p.m., were trading around $300, down about 3.3 percent from Monday’s close. However, in the last 16 minutes of trading, Humana shares made up most of the decline, closing at $307.22, down just 1 percent.
The talks are occurring amid a backdrop of continuing consolidation in the health insurance and health care industries. Humana rival Aetna and Walgreens rival CVS said Tuesday that they expect their merger to close after Thanksgiving. Aetna formerly planned to merge with Humana, but federal antitrust officials blocked the deal.
Since the announcement of the Aetna-CVS deal, Humana has been a repeated target of merger rumors. In late November 2017, Humana shares spiked after an industry analyst said that Humana was taking steps that made it a possible takeover target of rival Cigna. Early this year, The Wall Street Journal said Humana was in early-stage merger discussions with Walmart.
Humana could not be immediately reached Tuesday evening to talk about the paper’s report.
Health care experts have told Insider for months that the industry pressures that prompted Humana and Aetna to try to merge would continue to lead to more consolidation. When horizontal mergers — with companies in the same industry — are not available, vertical mergers — with partners in a related industry — are the natural next step, experts told Insider.
Humana said in June that it was joining forces with Walgreens to launch two senior-focused primary care clinics within the pharmacy chain’s stores in Kansas City, Mo.
The clinics, which the companies said might open in other markets, represent an additional effort by the Louisville-based insurer to divert patients from hospitals, where costs usually exceed those in clinics, and to gain better control over escalating costs related to chronic conditions.
The Wall Street Journal said, “Cross shareholdings could increase incentives for the companies to work together and make their partnership work.”