CAMP HILL, Pa. — Rite Aid Corp.’s flagging stock price notwithstanding, the chain has “great opportunities for growth,” chief executive officer John Standley said this month at the annual JP Morgan Healthcare Conference.
Standley spoke less than a week after the New York Stock Exchange notified the retailer that it was no longer in compliance with continued listing standard rules because its stock price has fallen below the exchange’s share price rule. The NYSE requires the average closing price of a listed company’s common stock to be at least $1 per share over a consecutive 30 trading-day period.
In accordance with the NYSE’s rules, the chain has six months from the receipt of the notice to regain compliance with the price condition or until the company’s next annual meeting of stockholders if stockholder approval is required, as would be the case to effectuate a reverse stock split, to cure the share price noncompliance. During this time period, Rite Aid’s common stock will continue to be listed and will trade as usual. Rite Aid is in compliance with all other NYSE continued listing standard rules.
Standley said the chain is following three paths toward its goal of “building a leader in health and wellness.” It is serving as “the trusted advisor” for pharmacy customers, establishing “a winning value proposition for payers and providers,” and becoming more of an omnichannel retailer to interact with customers and patients “where, when and how they want to shop.”
To boost the trust of patients, the chain is trying to redistribute workloads to free up pharmacists. One-trip refills consolidate work, while courtesy refills help Rite Aid predict when scripts will get filled and let it use central fill to take out rote labor “and allow our teams to try and spend more time interacting with our customers and patients to drive clinical outcomes,” Standley said. “And that’s really where we can create a lot of value.”
Efforts behind the scenes make the retailer more relevant and more important when combined with its store density, and encourages payers “to come forth and work with us and get us access to more lives through preferred and limited networks,” he said.
Rite Aid is also intent on growing the front-store business. As part of a focus on merchandising, the chain is pushing deeper into the wellness space. “We’ve got a number of merchandising initiatives coming this year, and we’ll continue to evolve and adapt the wellness format,” Standley said.
Some 70% of Rite Aid stores have been converted to the Wellness format, with a goal of getting to 85%, he noted. “So we’re making great progress there.”
Other merchandising initiatives include the rollout of new lines, like Kokie and e.l.f. in the beauty department.
“In addition to the things we’ve done in beauty, we’re making some progress in some areas of consumables with some healthier snack items that are rolling out,” added Standley. “And we are testing some new merchandise formats for consumables, particularly around food in our Wellness format.”
On the omnichannel front, the retailer will pilot a project with the Instacart delivery service in the spring. “We’re excited about that to expand our home delivery capabilities,” Standley said.
Rite Aid has also done “a great job” with its mobile app, which continues to get expanded use.
All told, the chain has a number of ways of interacting with patients, whether through a drive-through or pharmacy delivery — which it has in almost 50% of its stores — or flu clinics, mail order or e-commerce site. “We have a really good portfolio of digital capabilities here that we’re trying to bring together in a more cohesive way and a more developed way as we move forward,” said Standley.
Regarding the stock price, Rite Aid intends to pursue measures to cure the share price noncompliance, including through a reverse stock split of the company’s common stock, subject to stockholder approval no later than at Rite Aid’s next annual meeting, if such action is necessary for compliance. No date has been set for the company’s next annual meeting.
Under NYSE rules, Rite Aid can regain compliance at any time during the six-month cure period if on the last trading day of any calendar month Rite Aid has a closing share price of at least $1 and an average closing share price of at least $1 over the 30 trading-day period ending on the last trading day of that month or on the last day of the cure period.