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Rite Aid looks to retain ESI patients, provide ‘superior customer experience’

BY Alaric DeArment

CAMP HILL, Pa. — With the dispute between Walgreens and Express Scripts over, one of the biggest challenges for Rite Aid will be retaining the customers it won over during the impasse.

That was the biggest message during a conference call between Rite Aid executives and Wall Street analysts Thursday morning as the company announced its second quarter 2013 results.

“We’re working really hard, and we’re going to do our best to keep all the patients we can,” Rite Aid COO Ken Martindale said. “So we feel good about what we’re going to do, and I hope we can retain a good portion of these patients.”

Doing that will mean “providing a superior customer experience,” as Rite Aid chairman, president and CEO John Standley put it. “I’m proud of the hard work that our entire Rite Aid team puts forth as we look to deliver a one-of-a-kind experience to our customers,” Standley said.

It also means more promotion of the 4,643-store chain’s Wellness+ loyalty card program, whose number of active members has increased by 8% over second quarter 2012 to 25 million. Standley said members accounted for 74% of front-end sales, compared with 69% in second quarter 2012, as well as 68% of prescription sales. Later this year, the company is planning an "extensive" marketing campaign, which Standley said would promote the program’s "incredible value." According to the company, the number of gold and silver members has continued to increase, and those members show basket sizes about 40% to 50% larger than others, with about half of them shopping at Rite Aid stores weekly. "They’re clearly our best customers," Martindale said, adding that the company would introduce "additional concepts" over the next six to nine months.

The Wellness store format has seen expansion as well. The company remodeled 147 stores and now has a total of 570, with the expectation that it will have 780 completed by the end of fiscal year 2013. It also has trained 815 Wellness Ambassadors, staff who are specially trained and equipped to help customers select products and guide them to the pharmacy when needed. Standley said the company had continued to see a "positive impact" on front-end sales at the Wellness stores, compared with the older stores.

On the pharmacy side, where Rite Aid hopes to administer 2 million flu shots this season, compared with last season’s 1.5 million, the company got a significant boost thanks to the contractual dispute between competitor Walgreens and pharmacy benefit manager Express Scripts. Standley said maintaining the ESI customers the company gained would be a top priority, along with enrolling them in the Wellness+ program. "We continue to believe we received our fair share of new ESI scripts,”" CFO and chief administrative officer Frank Vitrano said.

Guggenheim Securities analyst John Heinbockel said the company’s $219 million EBITDA, while behind analyst projections of $225 million to $230 million, still represented a 19% increase over second quarter 2012, while first-quarter EBITDA increased by 16%. "Rite Aid’s [Q2] operating results were strong in absolute terms, rising 19%, but fell short of our recently-raised and consensus expectations largely due to higher SG&A expense dollars," Heinbockel wrote. "We would focus more on the absolute performance."

Sales for the quarter were $6.2 billion, compared with $6.3 billion in second quarter 2012, the decrease stemming primarily from store closings and a decrease in pharmacy comps due to a 750-basis point reduction from new generic introductions, though same-store prescriptions grew by 4%. Same-store sales were flat compared with last year, including a 1.4% increase in front-end comps and a 0.7% decrease in pharmacy comps. Net loss for the quarter was $38.8 million, compared with $92.3 million in second quarter 2012. The company attributed the narrowed losses to increased EBITDA, decreases in LIFO, store closings and impairment and depreciation and amortization charges. The company also updated its fiscal 2013 guidance, expecting sales between $25.1 billion and $25.4 billion in fiscal 2013, with same-store sales ranging from a 1% decrease to a 0.25% increase over fiscal 2012, the reduced guidance stemming from a projected 650-basis point negative impact on pharmacy comps from introductions of new generic drugs and reimbursement rate pressure.

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Dec-31-2012 06:33 am

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G.Froste says:
Dec-20-2012 10:38 am

The dispute puts Rite Aid under pressure but they are still hanging on because they want to provide superior customer experience in the future. watauga river fishing

S.HAND says:
Sep-20-2012 04:03 pm

If Rite Aid wants to fight to Keep these customers they need to recognize to stress, pressure, and burden they have expected their personnel to assume as they reduce hours to the pharmacies while watching the script numbers grow. Customers are waiting longer and more errors are bing made because less does not mean more for the bottom line.

M.LINGENFELTER says:
Sep-20-2012 01:06 pm

I think your sales units might be off. Do you mean billions instead of millions?

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National Association of Specialty Pharmacy to make debut

BY Allison Cerra

TAMPA, Fla. — A nonprofit organization that will be dedicated to representing all specialty pharmacy stakeholders and providing a voice in the specialty pharmacy industry will make its debut in October.

The National Association of Specialty Pharmacy announced it is scheduled to launch the organization and its marketing campaign this coming month. NASP’s mission is to provide educational programs, certification curriculum and professional networking forums for specialty pharmacy healthcare professionals to promote the safe and appropriate use of specialty medications, and improve clinical and economic outcomes for patients. NASP’s goals include providing a certification curriculum in order to assist pharmacists in gaining this deeper knowledge. The organization said it hopes to create a strong voice in specialty pharmacy by improving communication among stakeholders by establishing forums for members to network and collaborate on a national level.

"Specialty therapy management is a critical success factor in achieving the health outcomes desired by a patient’s physician," said, Jeffrey Bourret, senior director of medical affairs for Pfizer’s specialty care business unit. "The rapid pace of healthcare change and the emerging science continues to create complexities in specialty therapy management and an increased need for strong collaboration amongst the healthcare team. NASP will provide a unique forum for specialty pharmacy practitioners to share information and experiences that support the management of patients prescribed specialty pharmaceuticals."

Walgreens VP specialty pharmacy development Ray Tancredi added. "The National Association of Specialty Pharmacy will fill the pressing need for the specialty pharmacy industry. The landscape continues to evolve rapidly, and NASP will be there to guide, educate and report on the most exciting aspects of pharmacy today and in the future."


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Just Born introduces new Peeps, Mike and Ike treats for Halloween

BY Allison Cerra

BETHLEHEM, Pa. — Just Born has introduced new Halloween-themed candies under its Peeps and Mike and Ike brands.

New Peeps snack size mini marshmallow chicks are 34 individually wrapped treats adorned in orange, green and purple. The new Mike and Ike Mummy’s Mix limited-edition flavor mix, packaged in a 5-oz. theater box, includes lemon, orange, grape, lime and raspberry flavors. What’s more, the new Mike and Ike variety bag features Mike and Ike original fruits, RedRageous! and Zours flavors, and is available in both 40-count and 63-count sizes.

The new treats join the current lineup of Just Born Halloween candies, including:

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  • Peeps ghosts, available in both 3- and 9-count packages; and

  • Mike and Ike, Hot Tamales and Peanut Chews candies, available in a variety of treat-giving snack size bags.

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