Rite Aid outlines growth strategy at Analyst Day
Rite Aid hosted an Analyst Day Monday to outline its new strategy and plan for growth. Heyward Donigan, president and CEO of the Camp Hil, Pa.-based retailer, noted that the plan is focused on using its strengths to grow EBITDA and reduce its debt load.
"Rite Aid is a business in the midst of a turnaround and it is time for a radical change — our RxEvolution," Donigan said. "This is not business as usual at Rite Aid. We have the unique opportunity to serve a growing customer base and strengthen the power of our iconic brand.”
She noted that since she took the reins in August, the company has been working to build a foundation for its turnaround, including changes to its management team, reductions in its leverage ratio and a focus on execution and innovation. “We are in the process of profoundly changing and modernizing the technology platforms that power our company, with a relentless focus on customer experience and design,” Donigan said. “We are also executing well on our prescription and clinical services growth. Rite Aid is now better positioned to execute on our key initiatives to grow our revenue, achieve efficiencies across our business, drive Adjusted EBITDA growth and generate cash flow to invest in our business and reduce our debt."
The company’s growth plan is focused on three areas in particular — solidifying its EnvisionRxOptions as the dominant mid-market PBM, unlocking the value of its pharmacies and revitalizing its digital and retail experience.
With regard to EnvisionRxOptions, Rite Aid said that it contains within it multiple PBMs and technology and claims adjudication software, as well as mail-delivery and specialty pharmacy services. The company plans to rebrand the business as Elixir and expects it to be well-positioned with mid-market employer groups and regional health plans, and said the company stands out as the only payer-agnostic PBM with a. retail pharmacy footprint.
In terms of leveraging pharmacists, Rite Aid said that it is innovating across its pharmacy channels to bring over-the-counter, clinical and holistic health-and-wellness solutions to patients to help them thrive. Rite Aid said it is envisioning an expanded role for its more than 6,400 pharmacists to be advocates who encourage a holistic approach to health. The company also is unveiling its Pharmacy of the Future concept, which moves the pharmacist closer to the customer, as well introducing new workflows, tools and store design to encourage more meaningful patient engagement.
“We are doubling down on our pharmacy business. We are renewing our commitment to leverage the power of our trusted pharmacists across our retail and pharmacy services business to deliver on the promise of real consumer engagement,” Donigan said. “Our pharmacists are among the most accessible and trusted health care professionals in America. This means we really can help our customers not just get healthy, but get thriving."
As it initiates its pharmacy shift and PBM repositioning, Rite Aid also said that it is stepping up its personalized digital engagement and refreshing merchandise to offer a selection that resonates with younger shoppers. It will be rebranding with a new logo to signal the change, which will be accompanied by its Store of the Future — a whole-family wellness destination.
Alongside its plans, Rite Aid shared its fiscal 2020 outlook, in which it expects revenue to be roughly $21.9 billion with a 1%-1.1% increase in same-store sales over fiscal 2019. For fiscal year 2021, Rite Aid is expecting revenue between $22.5 billion and $22.9 billion, with retail pharmacy same-store sales expected to increase 1.5%-2.5% and pharmacy services revenues of between $6.75 billion and $6.85 billion. It anticipates a net loss in 2021 of between $91 million and $119 million.