Walgreens, Humana Mull Partnership Expansion

Drugstore owner Walgreens Boots Alliance is in preliminary discussions with health insurer Humana about possibly taking equity stakes in each other. The companies already have a partnership that serves seniors from two Walgreens locations. Now, citing sources familiar with the matter, The Wall Street Journal (WSJ) reported that Walgreens and Humana are having wide-ranging talks that include expanding that venture.

The news comes as drugstore owners and healthcare providers are looking for ways to diversify, especially since there are rumors swirling that Amazon will eventually be entering the pharmaceutical market. Last year, for example, CVS acquired the number-three U.S. health insurer Aetna for $69 billion. By combining, the two will have more scale so they can bargain for better prices on prescription drugs. Passing on those cheaper prices to consumers could also stunt Amazon’s growth in the market. What’s more, an expanded retail footprint would be a cheap way to have more distribution centers and places for in-store clinics.

For Walgreens, expanding its relationship with Humana could replicate expected benefits of the CVS-Aetna deal for less than a takeover. Humana’s market value is currently about $42 billion, while Walgreens’ is $78 billion.

In addition to its talks with Humana, Walgreens has taken an interest in going more digital through partnerships with Kroger and Birchbox. In fact, partnerships are an important part of Walgreens’ performance plan going forward. Rather than try to be everything for every customer, the brand is thinking strategically about the right end-to-end experience for the Walgreens shopper  then figuring out what it can contribute, and when it makes sense to enlist and ally with a similar vision.

Last month, the company announced it would expand its collaboration with LabCorp, opening at least 600 LabCorp patient-service centers at Walgreens stores over the next four years.