The report didn't disclose terms for the deal, although Humana's market value is $37 billion. In 2017, Humana reported net income of $2.4 billion on revenue of $53.8 billion. Walmart's biggest acquisition to date was its $10.8 billion purchase of British retailer Asda Group in 1999. In 2016, Walmart also bought ecommerce site.
Shares of Humana surged more than 10 percent in after-hours trading on Thursday.
It's not certain the discussions will result in a deal, with the companies reportedly considering a range of options. Walmart's interest in Humana may stem from its thousands of pharmacies, which are located within its retail stores.
Humana could also help Walmart strengthen its relationship with seniors, since Humana is the second-largest provider of Medicare Advantage plans, or private insurance plans offered through Medicare, according to The Journal.
"The U.S. healthcare industry, including insurers, has never been particularly customer-centric," wrote Neil Saunders, managing director of GlobalData Retail, in a research note. "Therein lies a potential opportunity for Walmart to bring some much-needed focus and discipline to the health insurance industry."
The health care industry has undergone rapid consolidation in recent years. That includes a 2017 deal by drugstore chain CVS Health (CVS) to (AET) for $69 billion and Cigna's (CI) $52 billion purchase earlier this year of pharmacy benefits manager Express Scripts (ESRX).
A proposed $34 billion merger between Aetna and Humana collapsed last year.
One risk for Walmart, according to Saunders: getting tangled in the complex health care industry at a time when it's also coping with a changing retail environment.
"Integrating and running the business would be even more challenging. It would mark a significant change of direction for Walmart, which would, overnight, move from being a retailer to a more diversified consumer services company," he wrote.
At the same time, such a deal could help it remain competitive with Amazon (AMZN), which earlier this year said it was partnering with Berkshire Hathaway and JPMorgan Chase to to lower health-care costs.