Rite Aid acquisitions strengthen wellness position, position retailer for growth

CAMP HILL, Pa. — Spring 2014 will be marked as a watershed moment for Rite Aid — it's the season Rite Aid officially transitioned from an operation on the turnaround to a renewed and recharged entity positioned for future growth.

"Fiscal 2014 was far more than just another great year for Rite Aid," John Standley, Rite Aid chairman and CEO, shared with analysts Thursday morning. "Because of our continued positive momentum, we are now in a position to evolve our strategy from one that focuses on turning our company around to one that emphasizes growth. Because of the rapid change taking place throughout the healthcare industry, we believe there is enormous opportunity to meet evolving marketplace needs, better serve our customers and demonstrate our value to the healthcare system. In many ways, we feel as though we're beginning a new chapter here at Rite Aid as we look to further expand our healthcare offerings and strengthen the many wellness offerings that have driven our recent success."

And Rite Aid will be pursuing that new growth with a vengeance. In the past month alone, Rite Aid has acquired Health Dialog Services Corp. to bolster the company's Rite Aid Health Alliance, a health management collaboration between pharmacists, in-store care coaches and local physicians to provide comprehensive care and support to patients with chronic and poly-chronic conditions.

The drug store chain also acquired RediClinic with plans to open 70 new clinics over the next 18 to 24 months. Rite Aid and RediClinic plan to expand RediClinic's penetration in the Texas market through the retail clinic operator's partnership with H-E-B. Rite Aid also will expand the clinic operation into its own stores, though it did not identify which markets as of yet. Rite Aid currently has no plans to open drug stores in Texas. "The real opportunity with RediClinic is to, one, bring it to Rite Aid stores, and two, continue to support their business like they've done with their very good partner down in Texas," Standley said.   

Rite Aid also established the cornerstone to a specialty pharmacy business with its recent accreditation by URAC, a Washington, D.C.-based healthcare accreditation organization that establishes quality standards.

All of this supports Rite Aid's potent Wellness Store proposition, which now numbers 1,215 locations and is expected to grow by 450 stores in fiscal 2015. "We think the addition of Rite Aid Health Alliance and RediClinics to select Wellness stores will provide a powerful healthcare experience in the communities that we serve," said Ken Martindale, Rite Aid president and COO.

Rite Aid's Wellness Ambassadors have played a significant role in the successful launch of Rite Aid's wellness65+ loyalty program. "To date, more than 1.7 million seniors have enrolled in this program, which is specifically designed to meet the unique needs of our senior customers," Martindale said.

In terms of the broader wellness+ loyalty card program, Rite Aid is leveraging the more than 1.6 billion transactions generated from 25 million active members to form stronger one-to-one relationships with customers.

Rite Aid's Wellness Ambassadors helped Rite Aid exceed its immunization goals for the second year running. "This year, our Wellness stores, which feature our Wellness Ambassadors, averaged 38% more flu shots than non-Wellness stores. In addition, our Wellness Ambassadors helped increase our number of business-to-business flu shot clinics, which represented a key area of growth during our campaign," Martindale said.

In the past year, Rite Aid has immunized more than 3.2 million patients. Of that, 430,000 were for non-flu vaccinations, which is up 5% year-over-year. "Our nearly 2,000 Wellness Ambassadors made positive contributions to this wellness result," Martindale said.

Springtime is a time for new beginnings. And while there's nothing really new in Rite Aid's ability to position itself for the future — after all, the company has a long heritage of beating the odds and taking underperforming operations, first its own banner in 2005 and more recently the former Eckerd store base, and transforming them into growth engines again — there's a sense that Rite Aid is just getting started on its road to delivering a comprehensive wellness solution.


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