Humana_at_NYSE_1.JPG.scaled1000In a significant twist, the latest news of mergers and acquisitions among the nation’s biggest health care companies leaves open the possibility that the industry could consolidate without Louisville’s Humana being included in a major deal.

The Wall Street Journal reported late Monday that UnitedHealth Group — the largest health care firm in the U.S. — is now seeking to purchase Aetna. That came on the same day as reports that Anthem has made takeover bids for Cigna and has further deflated any talk that Aetna, Anthem, or Cigna were seeking to buy or merge with Humana.

The five firms are the biggest health care companies in the country. Each is adjusting to the changing health care landscape under the Affordable Care Act, touching off a wave of consolidation efforts and associated speculation.

Just days ago, it appeared certain Humana had multiple suitors, driving up its share price and spinning waves of dread in River City. Now it seems Humana could be the last major health insurance firm that doesn’t merge with, or get bought buy, a competitor. Certainly Wall Street investors seem far more skeptical of Humana being acquired at a premium than they were just a few days ago: On Monday, the company’s stock dropped quickly on news of Anthem’s overtures to Cigna. It has stayed down, trading at close to $201 per share (from a high of $219) as of early Tuesday afternoon.

If the four other firms merge, Humana would be the smallest remaining by far. But nothing is certain until deals are signed and regulators sign off, said David Dubofsky, a business professor at the University of Louisville.

“I think that regulators will aggressively challenge an attempt by United to buy Aetna,” he wrote IL in an email. “But if that were to happen, then yes, Humana will be small and at a (slight) disadvantage relative to the mega-companies they will be competing against.”

As reported by the WSJ, Humana could be a challenging corporate fit for some merger partners, including UNH, because the combined size of their Medicare businesses might bring strong regulatory pushback due to antitrust concerns.

Deutsche Bank analyst Scott Fidel wrote in a recent report that Cigna is a better takeover target than Humana for one of the “Big Three” health care firms — UNH, Anthem, or Aetna — because Cigna’s shares trade at a 25 percent discount to Humana’s, and the firm has beaten Wall Street earnings expectations. Humana has missed consensus estimates in the past three quarters.

Fidel said the most lucrative deals for shareholders are, in order: Aetna for Cigna, Anthem for Cigna, and Anthem for Humana. The deals he said are worst for shareholders are, in order: Aetna for Humana, Cigna for Humana, and UNH for Aetna.

The impact of all this on Louisville remains hard to calculate, although there is a lot of potential upside to Humana staying put.

“That would actually be great for Louisville,” Jonathan Blue, head of the investment firm Blue Equity, said of Humana staying on the outside of the latest M&A chatter. He added that it looks like Humana may not currently have a viable suitor.

In the past, Blue has been outspoken about the importance of Humana to the city, and said another company buying it could be a “devastating blow” to Louisville in multiple ways, including the loss of Humana’s large charitable contributions, divvying up of its real estate holdings and, of course, questions about the future of more than 13,000 local jobs.

IL contacted Humana spokesman Tom Noland for comment, but he didn’t immediately respond. Humana has entered a quiet period, citing industry speculation about possible mergers.