Humana Partners with Novo Nordisk

In a concerted effort to provide better healthcare services to diabetic patients, Humana Inc. ( HUM - Analyst Report ) partnered with Novo Nordisk Inc. ( NVO - Analyst Report ) to conduct research and explore quality treatment opportunities for diabetes. The companies formed a strategic alliance to conduct intensive research in this field for a year.

The alliance will further boost Humana’s expertise in developing innovative programs that can change the life of diabetics for better. This collaboration gives both the companies the opportunity to arm themselves with their most efficient researchers and observe treatment procedures and subsequently improvise on them.

Also, they will study the rate of occurrence of diabetes amongst the senior population. Humana will use its affiliations with Competitive Health Analytics, Inc. to derive quality results from the research.

Humana is slated to benefit from its current investments as the number of people falling prey to diabetes is alarmingly high. Centers for Disease Control and Prevention reported that approximately 26 million people in America suffer from diabetes and this number is steadily increasing.

On the flip side, such research programs involve high expenses, which might weigh on margins.

Humana has been expanding its business platform over the last several years both organically as well as inorganically. It acquired Arcadian, SeniorBridge, Concentra and MD Care, besides expanding its Medicare coverage. Humana also enhanced the quality of its healthcare services, expanded its provider network in various regions and reduced its exposure to health care overhaul regulations.

AetnaInc. ( AET - Analyst Report ) , a close competitor of Humana, is also equally proactive when it comes to expanding its services inorganically. Last month, Aetna extended its relationship with Banner Health Network for Accountable Care Collaboration to offer health management and other patient oriented services to over 200,000 patients.

Per the agreement, both the companies are scheduled to provide support to 50,000 patients of Medicare fee-for-service who come under the purview of the Pioneer ACO shared savings program. The members who are a part of Aetna’s ACO relationship with Banner Health Network are also eligible for similar benefits.

Both Humana and Novo Nordisk currently retain a Zacks #3 Rank, which translates into a short-term Hold rating. We also retain our long-term Neutral recommendation on the shares of Humana.