Rite Aid is pointing to pharmaceuticals and its pharmacists as the key to growing and transforming its business, though bigger competitors whose strategies are more developed may put some speed bumps along that road.
CEO Heyward Donigan, who just celebrated two years with the company, told analysts and investors on a conference call that Rite Aid still has “much work to do to modernize and integrate our assets and finalize and launch the next phase of our new clinical and digital solutions,” but the company’s strategy is “gaining momentum.”
Officially, the Pennsylvania-based pharmaceutical retailer recorded approximately $6 billion in revenue in the second quarter, up 2% compared to the same period last year. Donigan said the results were driven by 2.5 million COVID-19 vaccines administered in the quarter, as well as improved profitability at pharmacy benefits subsidiary Elixir, and strong sales of vitamins and upper respiratory items. Still, that wasn’t enough to stop a net loss of $100 million, or $1.86 per share.
Donigan said the company is focused on integrating Elixir more fully into Rite Aid locations and continues to refine its strategy to compete nationally “in the segments where we are best positioned for success, leveraging our Elixir pharmacists, and new clinical and analytic capabilities.”
Chief Operating Officer Jim Peters said pharmacists are “at the heart of our retail operations,” and their importance has only been amplified amid the pandemic. Rite Aid has expanded its online scheduling platform to allow customers to make appointments for COVID-19, flu and other vaccines, which has helped boost the number of ancillary vaccines administered per store per week by nearly 140%.
The company has also been providing pharmacists with education and training around “focused health topics,” including women’s health and children’s health, to help them provide better assistance to customers. “We are excited to continue our efforts to truly unlock our pharmacists’ full potential to drive increased productivity and meaningfully improve the profitability of our stores.”
Rite Aid has also updated nearly 90% of its retail locations and is testing new concepts around merchandise, services and workflow for a new set of flagship stores.
“While the environment we do business in will continue to be dynamic and, at times, very unpredictable, I’m wildly optimistic about our company’s future and excited about the new Rite Aid we’re building,” Donigan said.
Staring Down the Competition
Even with that optimism, though, Rite Aid appears to be falling behind its much larger competitors CVS and Walgreens, who are taking more proactive steps to capture consumers’ wellness spend. Walgreens has spent the last month launching a series of new initiatives, including a new credit card rewards program to incentivize healthy living; an expansion of its partnership with VillageMD to open new primary care clinics; and a collaboration with Blue Shield of California to offer limited healthcare services.
Related: Walgreens To Incentivize Healthy Living Choices With New Credit Card Rewards Program
And last month, CVS said it would be expanding into mental health counseling amid rising demand for the services due in part to COVID-related stress.
“We continue to play a critical role in helping American prevail against the pandemic while demonstrating the effectiveness of our unique business model, which is focused on meeting customer needs through innovations that make health care more local, affordable and connected,” CVS Health President and CEO Karen Lynch said.
See: COVID-Related Stress and Rising Demand See CVS Expand into Mental Health Counseling
Amazon and Walmart are also quickly encroaching the health and wellness space, with both companies increasing their share of overall health and personal care sales since the beginning of 2020. Earlier this year, Walmart launched new a new prescription savings program through Walmart+ and acquired telehealth provider MeMD; and Amazon has reportedly been considering opening physical pharmacies.
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