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With a leaner, stronger store base, Rite Aid goes to work

BY Michael Johnsen
CAMP HILL, Pa. — Last week, Walgreens Boots Alliance and Rite Aid ended their merger dance with a new deal that will see 2,186 Rite Aid stores — primarily located in the Northeast, Mid-Atlantic and Southeastern regions of the United States, along with three distribution centers —  sold to WBA for a sum total of $5.5 billion, including the termination fee associated with the merger.
So what’s next for Rite Aid?
Rite Aid keeps 2,337 stores, primarily along the West Coast, Pennsylvania, Ohio, Michigan and New Jersey.
“The transaction will transform Rite Aid into a smaller but stronger company that will have less exposure to the pharmacy reimbursement rate pressures that have had such a negative impact on our business,” John Standley, Rite Aid chairman and CEO, told analysts last week.
It won’t be business as usual, Standley acknowledged, but the termination of the WBA merger does mean Rite Aid will again pick up the charge as a cutting-edge front-end merchant with its Wellness format.
“This is an important time for us now that it’s clear we’re going to continue as an independent company to re-engage with our strategic partners,” Standley said. “We worked hard over the last 20 months to keep people engaged, but you know as you would expect with the prospects of the merger were hanging out there, it certainly made life a little more complicated.”
Rite Aid expects to use a substantial majority of the net proceeds from the transaction to repay existing indebtedness, significantly reducing Rite Aid’s leverage levels. Presently, approximately $5.1 billion in Rite Aid debt will mature in 2020.
Mizuho Securities has Rite Aid’s debt levels dropping by 75% following this deal, according to reports. Rite Aid also expects that the federal tax gain on the sale of the assets will be largely offset by its net operating loss carryforwards, resulting in a minimal cash tax payment on this transaction.
As a result, Rite Aid emerges as a much leaner, multi-regional chain and with a much smaller debt load, a factor that leaves the door open to capital commitments, including the continued refreshing of the company’s store base to its Wellness format, which already makes up 60% of Rite Aid’s legacy store base, as well as the continued expansion of its RediClinic retail clinic model.
“We have added retail clinics in stores and we’re continuing to look at that business,” Standley said. “We’ve worked very hard to develop the Rite Aid Health Alliance, which has historically allowed us to partner with healthcare providers in the marketplaces we compete to provide additional services to chronic patients,” he said. “That’s something we’ll go back and revisit.”
And Rite Aid is not surrendering its best stores to the Walgreens transaction. To the contrary, the legacy store base remaining with Rite Aid is a stronger store base, Standley told analysts last week.
“[This store base] is a financially stronger group of stores on a per-store basis than the store base today,” he said. “We will have higher front-end average sales, script count and EBITDA per store,” he said. “ Almost 60% of the stores have been remodeled to the groundbreaking Wellness format, and these stores are in cities and communities where we have strong market share.”
As a footnote to the deal, Rite Aid has signed a two-year noncompete, agreeing not to re-enter or build new stores in markets where the divested stores are located.
Another caveat to the deal, Rite Aid gains greater purchasing power than it had even before the 2,186 stores were sold to Walgreens Boots Alliance. That’s because as part of the deal, Rite Aid still has the option of joining Walgreens Boots Alliance’s generic buying consortium, giving it the buying strength of a much larger company.
“This provides us with an important tool for us to mitigate the reimbursement rate pressure we expect to continue,” Standley said. “The option to purchase from [Walgreens Boots Alliance Development] in the future is important in that it helps ensure that we continue to have access to competitive drug [pricing], whether it’s through that option or through McKesson or otherwise,” Standley added.
Following the completion of the transaction, Rite Aid will continue to operate EnvisionRx, its pharmacy benefit manager, RediClinic and Health Dialog and leverage the capabilities of these subsidiaries to deliver a higher level of care in the communities it serves. Standley noted its PBM EnvisionRx has the potential to grow at a faster rate than it’s retail business.
A map of Rite Aid’s new store base is below, included as part of the company’s presentation to investors last week, with the stars representing retained distribution centers.

 

 

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First-time attendees look forward to all that McKesson ideaShare offers

BY DSN STAFF

McKesson ideaShare is on pace for record attendance this year with customer attendees representing nearly 1,900 independent pharmacies across the United States.  Connecting customers with industry experts and peers, McKesson ideaShare will feature more than 124 networking sessions, seminars and workshops, and 30 continuing education sessions. The conference is designed to provide attendees with tangible, information and best practices that are easy to take home and implement in their own stores to improve their performance and profitability.

This year also features more than 900 first-time attendees. DSN caught up with first-time attendees Jan Scott, owner of Nicholls Pharmacy in Nicholls, Ga., and Yunus Wasel of Greater Care Pharmacy in Warren, Mich., to ask why they decided to attend McKesson ideaShare this year and what they expect to get out of the meeting.

For tips for first-time attendees, click here.

DSN: Why did you decide to attend McKesson ideaShare?

Wasel: As a new pharmacy with McKesson, it is very valuable for me to attend the McKesson ideaShare meeting for a number of reasons.  First, I’m very interested in learning what I can do to improve my pharmacy’s performance and growth from all angles. Second, I’d like to network with other pharmacy owners and learn from their experiences on how to go about handling certain issues, and third, to complete a few CE courses.

Scott: We’ve been going through some soul searching since we’re a small store in a town of 3,000 people.  We’re 12 miles from any healthcare center of any kind, so we wind up providing a lot of healthcare advice and ancillary services for a fairly low socio-economic patient base that often doesn’t have transportation to get to healthcare appointments. We’re attending McKesson ideaShare to get ideas for things to bring back to the community that we didn’t have available before. We want to provide as many ancillary services as possible. As payment pressures increase, we’re looking for new ideas to generate revenue and help with competition.

DSN: What are the top two things you would like to accomplish at McKesson ideaShare?
       
Scott: The No. 1 thing is to increase patient services, such as diabetes education, and I want to learn about new ideas for how to help patients improve their quality of life. Vaccinations are another important area. I’ve completed the training, but want to get ideas and advice on how to get the program finalized and set up. From a business and operational standpoint, I’ve selected a variety of CE courses on management topics, such as business problems in rural settings. I also need to have a better understanding of what the PBMs are doing and what we can do about it: DIRs are front and center.

Wasel: I would like to learn about what else I can do to improve customer satisfaction and pharmacy profit, and how to achieve those improvements at my pharmacy. I also want to learn ahead of time what opportunities or obstacles are expected in the near future for independent pharmacies from federal regulations, compliance and insurance reimbursements.

DSN: Are there specific programs or services that you want to learn more about at McKesson ideaShare?
      
Scott: We have gone through the brochure very closely and are interested in helping diabetes patients with adherence and outcomes. I’m interested in the DIR estimator and the Game Changers in pharmacy session, and have signed up my husband, who takes care of the business side of things, for a number of effective pharmacy management sessions.

Owning a pharmacy is not just about monetary profit.  It's love and passion to serve others that drives me daily.  This can only be accomplished by having a sustainable business so that I can continue to be a valued healthcare provider to my small community who needs me.  It's my responsibility to run a good pharmacy for my patients' sake.  I know my peers feel the same way, which is why our whole goal is to share ideas and get ideas.

Wasel: I’m very interested in seeing what programs McKesson has to offer and to meet with different vendors and third parties that I may not learn about without attending the meeting and seeing it all in person. I would say pharmacy management and medication synchronization are on the top of my list, so I can get a better understanding of how to implement both at the pharmacy.

DSN: How do you plan to capture ideas to implement in your pharmacy after McKesson ideaShare?
       
Wasel: I expect to be able to come back with plans to put forward at the pharmacy by attending sessions on the top topics, networking with other pharmacy owners, checking out McKesson program and solutions on the show floor, as well as meeting with other vendors. I'm glad McKesson puts together events like ideaShare to bring its customers together to learn and at the same time, appreciate our role in the pharmacy field.  Without it, I don’t know where I’d find the time or resources to come up with brand new ideas to improve performance at my pharmacy.
 
Scott: We’re going to attend sessions, gather paperwork and apps to bring back and help the practice.  I really like the idea of the Roadmap Planning working session to develop a plan, a strategy for what to do and how. It is great to have access to ideas and guidance from peers who have already done it – that’s what this meeting is all about.

DSN will follow Scott and Wasel as they attend McKesson ideaShare next week and offer a recap of their experience after the McKesson ideaShare meeting. Stay tuned for more information.

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How to have a successful McKesson ideaShare: Attend, network and take action

BY DSN STAFF

For more than 30 years, McKesson ideaShare has focused on giving independent pharmacists and owners the knowledge, tools and resources they need to improve their pharmacy’s performance. This year’s conference comes with a warning label: 

“Warning: Attendance may cause extreme success. Common side effects include: greater knowledge, improved performance and higher revenue.”

“The warning is a little tongue and cheek, but the message is on target. Whether this is your first ideaShare or your 20th, we wanted to let all attendees know McKesson and Health Mart can help them to achieve maximum results,” said Michelle Gilliam, director of Health Mart Marketing.

Connecting customers with industry experts and peers, McKesson ideaShare will feature more than 124 educational sessions with 80 unique topics. Ranging from theater sessions to small group seminars to “Do-it-with-me” workshops, the conference is designed to provide attendees with tangible, information and best practices that are easy to take home and put into action.

“We’re focusing on giving independent pharmacists and owners the knowledge, tools and resources they need to improve their pharmacy’s performance and maximize profits. This year’s show will highlight Health Mart’s approach to helping independents transform their business by driving improvements in clinical performance and store profitability,” said Steve Courtman, president of Health Mart. “We’ve reimagined the meeting experience to give independent pharmacies more peer-to-peer networking and the opportunity to create a 12-month Roadmap focused on helping them run a better business while becoming a preferred destination for patient care.”

Enhanced McKesson ideaShare mobile app: Matches customer interests with content and solutions
Helping independent pharmacies excel clinically and run a successful thriving business is at the core of Health Mart’s strategy and a driving factor for the introduction of Health Mart Pathway to Better Pharmacy Performance and Profit. Introduced at last year’s meeting, the Health Mart Pathway details a realistic process for members to make practical changes to their business to enhance their profitability. “Based on feedback from attendees, the educational sessions, seminars and workshops at McKesson ideaShare have been developed for pharmacists and owners who are committed to driving greater efficiency both in the clinical as well as the operations side of their business,” added Gilliam. “Every pharmacy may be at a different stage along The Health Mart Pathway and have different goals for what they want to learn and accomplish at the meeting, which is why we are helping them to customize their ideaShare experience to gather the specific resources, tools and expert advice they need to build a successful future.”

My schedule questionnaire helps customize meeting experience quickly
To help attendees get the most out of the conference, McKesson has created a mobile app that matches customer interests with McKesson ideaShare content and solutions; helps build a personalized meeting schedule; and streamlines the ability for attendees to get the tools and knowledge they need to evolve their businesses and increase profitability in the changing pharmacy landscape. 

Gilliam encouraged McKesson ideaShare attendees to download the event mobile app “event4me” from the Apple App Store or Google Play to customize their meeting experience. “To use their time at the conference most effectively and focus on what matters most to their businesses, attendees answer 10 questions on their needs and interests. Once the My Schedule questionnaire is complete, they get personalized recommendations for sessions and booths to visit. This includes CE, exhibit floor theater sessions, networking meet-up spots and workshops,” Gilliam added. 

In addition to helping attendees create a personalized schedule, the mobile app also:

  • Provides interactive maps and general show information.
  • Enables attendees to participate in real-time Q&A during sessions and provide opinions on surveys.
  • Provides updates and helpful details on exhibit floor sessions and exhibit booths, such as show specials and promotions. Attendees can have digital booth and session materials emailed to them after the show.

Roadmap to success helps owners hold themselves accountable for results
Based on answers to the My Schedule Questionnaire, the app also makes recommendations for a 12-month plan to achieve results for a pharmacy’s performance and profits. This new tool saves time and gives pharmacists ideas by pre-populating strategies and tactics that can be edited. Owners can finish this plan on their own or collaborate with peers in a 45-minute Roadmap Planning Session.

With expanded appointment scheduling (available online only before the show at McKessonideaShare.com/my plan), attendees can request dedicated appointment times to meet with experts about:

  • McKesson Pharmacy and Technology Services (MPTS) — Learn how MPTS solutions help provide improved efficiency and margins, increased profits and lead to better overall patient care;
  • Generics — Get details on the 3% rebate on all McKesson OneStop Generics for registered McKesson ideaShare 2017 attendees;
  • Digital Marketing Consultation — Review the health of the pharmacy’s online presence with a free consultation with a digital expert from the Marketing Hub. Get insights to actively make improvements to optimize the online presence. (Health Mart members only);
  • EQuIPP — Speak with a PQS staff member to review pharmacy performance and review improvement strategies; and
  • Roadmap Planning — Work with peers to create a personalized 12-month action plan to achieve maximum performance results and profits.

Tangible ideas to use today to impact performance and business profitability
“Customers attend McKesson ideaShare to network with peers and share ideas and best practices that they can implement in their own stores to improve their performance and profitability,” said Gilliam. “The new mobile app and Roadmap Planning tools are designed to help them maximize their time at the meeting and give them real ideas that they can implement as soon as they get home that will have an immediate impact on their business.”

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