Kmart pharmacy contributes to Q1 comp-store sales decline
HOFFMAN ESTATES, Ill. — Kmart’s comparable-store sales decreased 11.2% during the fiscal first quarter of 2017 versus the year-ago period, primarily driven by declines in the pharmacy, grocery and household, apparel and home categories.
As Drug Store News previously reported, parent company Sears Holdings is in the process of closing 92 underperforming pharmacy operations in certain Kmart stores.
Kmart had an operating profit of $450 million for the fiscal first quarter, with adjusted EBITDA suffering a loss of $99 million.
Overall, Sears Holdings reported net income of $244 million ($2.28 earnings per diluted share) for the first quarter of 2017 compared to a net loss of $471 million ($4.41 loss per diluted share) for the prior year first quarter.
“During the first quarter, gross margin decreased $247 million compared to the prior year first quarter due to the above noted decline in sales, as well as a decline in our gross margin rate in both the Kmart and Sears Domestic segments, which was largely attributed to a decrease in occupancy leverage,” the company wrote in a Thursday statement.
"While this was certainly a challenging quarter for our company, it was also one that clearly demonstrated our commitment to return Sears Holdings to solid financial footing. We recognize that we need to accelerate our efforts to improve our operational performance and are moving decisively with our $1.25 billion restructuring program,” said Edward S. Lambert, Sears Holdings’ chairman and CEO.
Sears highlighted accomplishments it had made since the beginning of its fiscal first quarter. They are:
- Delivered significant progress on our strategic restructuring program, with $700 million in annualized cost savings already actioned to date, and announced incremental actions to increase our annualized cost savings target to $1.25 billion from $1 billion;
- Paydown of approximately $418 million of term loans outstanding under our revolving credit facility;
- Entered into an agreement with Metropolitan Life Insurance Company to annuitize $515 million of pension liability, which serves to reduce the overall size of the company's pension plan, reduce future cost volatility and reduce future plan administrative expenses;
- Reached an agreement to extend the maturity of $400 million of our $500 million 2016 Secured Loan Facility from July 2017 to January 2018, with the option to extend further to July 2018;
- Expanded the Shop Your Way VIP program to reward our members based on spend and frequency, which has resulted in over a 50% increase in the number of VIP members in the first quarter, compared to the same period last year;
- Opened the first DieHard Auto Center in San Antonio, Texas, with an innovative store format that offers state-of-the-art technology and services, that, combined with our experienced associates, can help today's drivers make the right choices for their vehicle's needs; and
- Named a 2017 Energy Star Partner of the Year-Sustained Excellence Award winner for continued leadership in protecting our environment through superior energy efficiency achievements.
"During the first quarter we took decisive actions to reduce our cost base and drive operational efficiencies which allowed us to make significant progress on our restructuring program,” said Rob Riecker, Sears Holdings’ CFO. “We also remained focused on increasing our financial flexibility and creating value from our asset base to ensure we continue to meet our financial obligations and fund our transformation. We will continue to evaluate our options to deliver further improvements to our operational performance and balance sheet."
FDA to consider extending use of Bristol-Myers’ Opdivo
PRINCETON, N.J. — Bristol-Myers Squibb announced Wednesday that the U.S. Food and Drug Administration accepted a supplemental Biologics License Application that seeks to extend the use of Opdivo (nivolumab) to patients with hepatocellular carcinoma after prior sorafenib therapy. The FDA granted the application priority review and previously granted Opdivo orphan-drug designation for the treatment of HCC.
The FDA action date on the application Sept. 24.
“We believe the FDA acceptance of our application for Opdivo with priority review status is an important recognition of the significant unmet need for patients with [hepatocellular carcinoma], which is often diagnosed in the advanced stage when treatment options are limited,” said Dr. Ian M. Waxman, development lead, Gastrointestinal Cancers, Bristol-Myers Squibb. “We are committed to exploring new treatment options for these patients and look forward to working with the FDA to potentially extend the use of Opdivo as a treatment option in this setting.”
The submission was based on data from the Phase 1/2 CheckMate -040 study investigating Opdivo in advanced HCC patients with and without hepatitis B virus or hepatitis C virus infections. Data from this study were recently published in The Lancet and will be presented at the American Society of Clinical Oncology Annual Meeting 2017 during a poster discussion session on June 3, 2017 from 4:45–6:00 PM CDT in Hall D2.
Hepatocellular carcinoma is the most common type of liver cancer and the second most frequent cause of cancer death worldwide. More than 700,000 people around the world, including about 40,000 people in the United States, are diagnosed with HCC each year. The majority of these cases are caused by hepatitis B virus (HBV) or hepatitis C virus (HCV) infections, making HBV/HCV the most common risk factors for liver cancer.
Survey: Home Infusion providers worry about impact of 21st Century Cures Act
AUSTIN, Texas — A new survey from Innovatix is highlighting concerns home infusion providers have as the 21st Cures Act enters its fifth month. Under the law, which was signed by President Barack Obama in December 2016, the payment structure for infusion drugs under Medicare Part B changed from an average wholesale price to an average sales price.
To compensate for this, the law includes a new Medicare payment for services that accompany home infusion treatments, but that doesn’t take effect until 2021, leaving 92% of home infusion providers surveyed saying they think the change to ASP will be damaging or severely damaging to their business. Thirty-one percent said the reimbursement change would likely push them to stop accepting new patients with Medicare benefits and 34% say they will be forced to discontinue home services for their existing patient population.
“As a result of the severe financial hardship imposed by the Cures Act, Medicare beneficiaries will find it much more difficult to access home infusion services, even though many of them prefer to receive care in the comfort of their own home, or are unable to travel to receive care,” Innovatix said in its results breakdown.
The survey found that 83% of respondents expected for the reimbursement shift to send patients to higher-cost facilities for their infusion, with Innovatix noting that it could be harmful to patient safety.
“Beneficiaries who are often susceptible to infection or other adverse clinical outcomes may now be forced to receive therapy in an institutional setting where they face greater risk of exposure,” the company said.
And beyond patient care, roughly 42% of respondents said they would be force to eliminate such jobs in their pharmacies as pharmacists and nurses, with 21% expecting job reductions of more than 21%.
“This policy change is having a devastating effect on home infusion providers, which many patients rely on to preserve their independence and quality of life,” Innovatix said. “Congress should act immediately to provide relief to pharmacies and ensure access to home infusion services for beneficiaries in 2018.”