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DSNTV: Walgreens’ Alex Gourlay shares his goals as NACDS chairman

BY DSN STAFF

At the National Association of Chain Drug Stores Annual Meeting, Walgreens Boots Alliance co-COO Alex Gourlay took over the organization’s chairmanship from H-E-B chief merchant Martin Otto. Ahead of his first official speech as chairman, Gourlay sat down with Drug Store News editor in chief Rob Eder at the NACDS Annual Meeting to discuss the new efforts from NACDS around its future value targeting initiative.

“This idea of being a think tank and thinking like a startup is something I’m really supportive of,” Gourlay said. “From a personal point of view, I want to put the customer and the patient absolutely at the heart of NACDS and the NACDS marketplace.”

Watch the video above to hear more from Gourlay about his plans for NACDS, his views on the state of the industry and some of the insights he’s gained about business after being in the industry since he first started working at the Boots in his native Glasgow, Scotland, at 17 years old.

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Rite Aid Q1 revenues decline 4.9% to $7.8 billion

BY Michael Johnsen

CAMP HILL, Pa. — Rite Aid on Thursday reported revenues of $7.8 billion, a decrease of 4.9%. Net loss totaled $75.3 million, or $0.07 per diluted share, and adjusted net loss was $52.4 million, or $0.05 per diluted share.

Retail Pharmacy Segment revenues were $6.4 billion and decreased 4.9% compared to the prior year period primarily as a result of a decrease in same-store sales and reimbursement rates. Revenues in the company's Pharmacy Services Segment were $1.5 billion and decreased 5.6% compared to the prior year period, due to an election to participate in fewer Medicare Part D regions, which caused a decrease in covered lives at Envision Insurance Company.

Same-store sales for the quarter decreased 3.9% over the prior year, consisting of a 5% decrease in pharmacy sales and a 1.5% decrease in front-end sales. Pharmacy sales included an approximate 222 basis point negative impact from new generic introductions. The number of prescriptions filled in same stores, adjusted to 30-day equivalents, decreased 1.1% over the prior year period due in part, to exclusion from certain pharmacy networks that Rite Aid participated in the prior year. Prescription sales accounted for 67.9% of total drug store sales, and third party prescription revenue was 98.3% of pharmacy sales.

Rite Aid also announced that it has entered into an asset purchase agreement with Walgreens Boots Alliance, whereby WBA will acquire 2,186 stores, related distribution assets and inventory from Rite Aid for an all-cash purchase price of $5.175 billion, on a cash-free, debt-free basis. Under the terms of the agreement, Rite Aid has the option to purchase generic drugs that are sourced through an affiliate of WBA at cost, substantially equivalent to Walgreens for a period of 10 years.  

Rite Aid expects to use a substantial majority of the net proceeds from the transaction to repay existing indebtedness, significantly reducing Rite Aid's leverage levels. Rite Aid also expects that the federal tax gain on the sale of the assets will be largely offset by its net operating loss carryforwards, resulting in a minimal cash tax payment on this transaction.  

Following the completion of the transaction, Rite Aid will continue to operate EnvisionRx, its pharmacy benefit manager, RediClinic and Health Dialog and leverage the capabilities of these subsidiaries to deliver a higher level of care in the communities it serves.

"I would like to thank our entire Rite Aid team for their extraordinary efforts during this process and their tremendous focus on taking great care of our customers and patients," stated John Standley, chairman and CEO Rite Aid. "We have an outstanding team of associates and, with their continued support, we will work together to deliver a great customer experience, improve our business and deliver value to all of our stakeholders."

In the first quarter, the company opened one store, relocated four stores, remodeled 67 stores and expanded one store, bringing the total number of wellness stores chainwide to 2,482. The company closed 14 stores, resulting in a total store count of 4,523 at the end of the first quarter.
 

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Walgreens Boots Alliance generates $30.1 billion in Q3 sales, up 2.1%

BY Michael Johnsen

DEERFIELD, Ill. — Walgreens Boots Alliance on Thursday generated fiscal 2017 third quarter net earnings of $1.2 billion, up 5.3%, for the period ended May 31. Sales in the third quarter were $30.1 billion, an increase of 2.1% from the year-ago quarter, and an increase of 5% on a constant currency basis.

“Our results this quarter continued to meet our expectations as strategic partnerships brought more patients to our U.S. pharmacies," stated Stefano Pessina, executive vice chairman and CEO Walgreens Boots Alliance. "This led to our highest reported quarterly retail prescription market share in the U.S. Our ongoing cost transformation program continues to bear fruit and we remain confident in the long term growth of our company.”

Adjusted fiscal 2017 third quarter net earnings attributable to Walgreens Boots Alliance increased 11.9% to $1.4 billion, up 13.6% on a constant currency basis, compared with the same quarter a year ago. Adjusted diluted net earnings per share for the quarter increased 12.7% to $1.33, up 14.4% on a constant currency basis, compared with the same quarter a year ago.

Retail Pharmacy USA had third quarter sales of $22.5 billion, an increase of 6.3% over the year-ago quarter. Sales in comparable stores increased 3.7% compared with the same quarter a year ago.

Pharmacy sales, which accounted for 69.9% of the division’s sales in the quarter, increased 10.3% compared with the year-ago quarter. This was primarily due to higher prescription volumes including mail and central specialty following the formation of AllianceRx Walgreens Prime. Comparable pharmacy sales increased 5.8%, primarily due to higher volume.

Reimbursement pressure and generics had a negative impact on comparable pharmacy sales growth, which was partially offset by brand inflation. The division filled 255.2 million prescriptions (including immunizations) adjusted to 30-day equivalents in the quarter, an increase of 8.5% over the year-ago quarter. Prescriptions filled in comparable stores increased 8.3% compared with the same quarter a year ago, primarily due to Medicare Part D growth and volume growth from previously announced strategic pharmacy partnerships. The division’s retail prescription market share on a 30-day adjusted basis in the third quarter increased approximately 110 basis points over the year-ago quarter to 20.5%, as reported by IMS Health. This was the division's highest reported quarterly retail prescription market share in the U.S.

Retail sales decreased 1.8% in the third quarter compared with the year-ago period, which includes the impact of the previously announced closure of certain e-commerce operations. Comparable retail sales were down 0.4% in the quarter, with declines in the consumables and general merchandise category and in the personal care category partially offset by growth in the health and wellness category and in the beauty category.

Walgreens Boots Alliance also announced today a new definitive agreement with Rite Aid under which Walgreens Boots Alliance will purchase 2,186 stores, three distribution centers and related inventory from Rite Aid in exchange for $5.175 billion in cash, the assumption by Walgreens Boots Alliance of the related real estate leases and the grant of an option to Rite Aid, exercisable through May 2019 and subject to certain conditions, to become a member of Walgreens Boots Alliance’s group purchasing organization. Walgreens Boots Alliance will also assume certain limited store-related liabilities as part of the new transaction.

Retail Pharmacy International had third quarter sales of $2.8 billion, a decrease of 10.3% from the year-ago quarter mainly due to currency translation. Sales decreased 0.2% on a constant currency basis.

On a constant currency basis, comparable store sales increased 0.2% compared with the year-ago quarter. Comparable pharmacy sales decreased 0.1% on a constant currency basis, primarily due to the negative impact of pharmacy funding in the U.K. Comparable retail sales increased 0.4% on a constant currency basis, reflecting growth in the U.K.

Pharmaceutical Wholesale had third quarter sales of $5.3 billion, a decrease of 7.9% from the year-ago quarter, mainly due to currency translation. On a constant currency basis, comparable sales increased 3.7%, which was ahead of the company’s estimate of market growth, weighted on the basis of country wholesale sales, with growth in emerging markets and the U.K. partially offset by challenging market conditions in continental Europe.

 

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