Humana Advances Digital Strategy with Enclara Acquisition

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Humana (HUM) made history earlier this year when in April the health insurer was the first to join the Consumer Technology Association (CTA). The Association is composed of companies like Microsoft (MSFT), Fitbit (FIT) (soon to be acquired by Google (GOOGL)), and Apple (AAPL)

The membership was a logical next step after the company founded the 40,000 square foot Humana Studio H in Boston in 2018. The flagship digital space is dedicated to testing and building digital health tools.

This aggressive expansion into digital tools and resources was accelerated last week when Humana announced the purchase of Enclara Healthcare. Enclara is a privately held hospice pharmacy and benefit management provider. 

Humana’s Acquisition of Enclara Supports Its Digital Stack

The Enclara acquisition boosts the Humana offering in several ways, including a technology component. Enclara is recognized as a leader in the in-home pharmacy care area. Their advanced technology has been grown to monitor in-home medication in the hospice home care mobile medication market.

The addition of Enclara supports the Humana digital stack, enhancing both the aforementioned in-home pharmacy technology care as well as electronic medical record connectivity. This is a key component in healthcare regulation.  

In addition to a technology enhancement component, the recently announced Enclara acquisition will also give Humana a boost to its “value based care” model. 

The Enclara acquisition fits squarely within Humana’s “Medical Home” model, which has as a central component, care providers who use electronic medical records as well as electronic prescribing systems. 

Enclara both deepens and expands this model as the company brings a customer base of over 450 hospice providers and over 97,000 patients served on a daily basis. This will give Humana a greatly increased technological and market footprint in the advanced illness care market, a quickly growing market in the U.S.

While the acquisition may take time to be felt in Humana’s stock price, as the impact to 2020 earnings is projected to be small. Accessing this expanding market using Enclara’s tested technology, should be a boost to Humana’s forecast over the next several years.

The acquisition is expected to close sometime in the first half of 2020 assuming no regulatory issues arise. Given Enclara’s status as a private company financial details surrounding the transaction were not disclosed.

Steven Adams’s personal position in Humana: none.

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