Intense focus on the COVID-19 pandemic and its pervasive impact on life in this country should not be allowed to obscure what at any other time would be seen as one of the year’s most important developments in the retail pharmacy sector. Rite Aid’s new management team, headed by president and chief executive officer Heyward Donigan, unveiled its much anticipated strategic plan in mid-March, just as the outbreak of the novel coronavirus was being recognized as a national emergency.
The thoughtfully crafted blueprint calls for Rite Aid to leverage its inherent strengths in order to turn around an enterprise that has, to some degree, stagnated in recent years as a result of two failed merger attempts, the first with Walgreens Boots Alliance, the second with Albertsons Cos. (In between the aborted deals, Rite Aid agreed to sell 2,186 stores, about half the chain, to WBA.) RxEvolution, the revitalization plan developed by Donigan, who joined the company in August 2019, chief operating officer Jim Peters, another newcomer, and their colleagues, rests on three pillars — becoming the dominant mid-market pharmacy benefits manager, unlocking the full potential of Rite Aid’s pharmacists, and reinvigorating the retail experience, both in store and online.
“When I got here I thought that Rite Aid was an iconic brand that had lost its luster and needed to be fully revitalized,” Donigan says. “My ask of the board and my desire as the new CEO was to be able to build on the parts of the business that have great potential, and to capitalize on the real power and mission of our pharmacists. Revitalizing Rite Aid will involve new merchandise, new stores, a new brand identity — the whole nine yards.”
The determination to “make it new” at Rite Aid is evident in every aspect of the plan. The company’s PBM business, EnvisionRxOptions, is taking on a new brand identity — Elixir. More important, the PBM will more closely align its diverse offerings, which include mail-order and specialty pharmacy services, network and rebate administration, and Medicare Part D insurance. That, in turn, will raise Elixir’s profile, and enhance its appeal among mid-size companies, those that employ between 150 and 20,000 workers, and regional health plans across the country. As the only payer-agnostic PBM with a large retail presence, Elixir is equipped to deliver crafted services in a niche market eager for new solutions, according to Donigan.
Restructuring workflow and making better use of technology will enable Rite Aid’s 6,400 pharmacists to practice at the top of their license and encourage customers to take a holistic approach to their well-being. In addition, the company is rolling out its pharmacy of the future, a design that brings pharmacists closer to patients and facilitates interaction.
“We are doubling down on pharmacists as the ultimate extender in the health care system,” Donigan says. “So we are going to be partnering with provider systems and health plans. We do not want to create an infrastructure that further fragments the existing delivery model. What we’re really focused on is the pharmacist as the last mile connector between the primary care physicians or the health systems and the consumer, because we touch a consumer 25 to 30 times a year, more than any other health care professional.”
Rite Aid’s commitment to holistic wellness, which Donigan indicates encompasses mind, body and spirit, will become increasingly apparent in the company’s 2,400 brick-and-mortar locations, as well as in the Store of the Future, slated to debut later this year, and in revamped digital properties. New products that appeal to younger consumers are enlivening the merchandise mix, and shoppers will benefit from a higher degree of personalization, much of it delivered through digital means.
Taken together, the elements of Rite Aid’s strategic plan have the potential to bring about fundamental changes that should enable the company to thrive. Donigan and her team have gotten off to an impressive start, first by stabilizing the company’s finances — bonds due in 2023 have been extended to 2025; debt has been reduced; and annualized corporate expenses have been cut by $55 million — and now by effectively matching Rite Aid’s strengths with unmet needs. By having a clear vision of where it wants to go, the company will be well positioned once the COVID-19 crisis passes.