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Rite Aid Health Alliance partners with Physician Direct ACO in Detroit

BY Michael Johnsen

CAMP HILL, Pa. — John Standley, Rite Aid chairman and CEO, on Thursday morning morning during its second-quarter conference call announced a sixth Rite Aid Health Alliance partnership with Physician Direct ACO in Detroit. 
 
"We continue to expand our pilot for Rite Aid Health Alliance, our innovative program that empowers physicians, in-store care coaches from Health Dialog and Rite Aid pharmacists to work together in providing a higher level of care to patients with one or more chronic conditions," he told analysts, during the company's second-quarter earnings call. 
 
The Rite Aid Health Alliance employs a team approach with pharmacists, physicians and specially-trained in-store health coaches — all endeavoring to help patients with polychronic and chronic conditions meet certain health-related goals central to improving outcomes. The care team members collaborate with the patient to establish health goals, eliminate barriers and create a personalized healthcare action plan in coordination with the patient’s physician.

For complete second-quarter results, click here

 

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Walgreens executive, Illinois senator to be honored at TASC’s 2014 Leadership Awards

BY Michael Johnsen

 

CHICAGO — Illinois Sen. Mattie Hunter, D-District 3, and author and Walgreens executive Steve Pemberton will receive Treatment Alternatives for Safe Communities’ 2014 Leadership Awards at the agency’s annual luncheon on Dec. 10, according to a TASC blog published Thursday. 
 
“By their leadership and examples, Sen. Hunter and Mr. Pemberton show us what public service looks like,” stated TASC president Pamela Rodriguez. “They are powerful advocates for children and families, and we are honored to present them with our 2014 leadership awards.”
 
TASC will present its 2104 Public Voice Leadership Award award to Pemberton, chief diversity officer and divisional VP for Walgreens. Pemberton spent much of his childhood as a ward of the state of Massachusetts. His memoir, "A Chance in the World: An Orphan Boy, a Mysterious Past, and How He Found a Place Called Home" describes his difficult path through foster care and determined search for family.
 
Pemberton’s story underscores the importance of connected and accountable systems of care, the value in programs and services that protect and support children, and the essential inclusion of opportunities to intervene with parents struggling with substance use disorders or mental illness.
 
“Mr. Pemberton’s painful childhood journey is one that too many children experience,” said Rodriguez, “and we share in his deep commitment to continually improve the services and systems that affect the lives of vulnerable children."
 
Hunter, who will receive TASC’s Justice Leadership Award, is a consistent champion for addiction treatment and fair criminal justice policies. As a state senator since 2003, she has led efforts to assure funding for addiction treatment. She also chaired the Illinois Disproportionate Justice Impact Study Commission and led its investigation of drug policies that have resulted in the over-representation of minorities in Illinois’ courts and prisons.
 
Most recently, Hunter secured successful passage in the General Assembly of legislation designed to expand the use of criminal justice diversion programs that connect individuals to community-based services. This bill is a step forward in enacting “No Entry” policies to reverse the flood of people with non-violent offenses entering the justice system.
 
“We are grateful to Sen. Hunter for her leadership in confronting tough challenges,” said Rodriguez. “Whether securing funding for human services or advocating for policies that apply justice more fairly, Sen. Hunter has been a trusted friend to the families and communities we seek to serve.”
 
Each year, TASC recognizes outstanding leaders who have demonstrated innovation and courage in addressing some of society’s most pervasive challenges. The agency’s 2014 luncheon will take place Wednesday, Dec. 10 at The Westin Michigan Avenue in Chicago.

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Rite Aid reports solid Q2 but revises guidance due to ‘pharmacy headwinds’

BY Michael Johnsen

 

CAMP HILL, Pa. — Rite Aid on Thursday reported revenues of $6.5 billion for its second quarter ended Aug. 30, representing a 3.9% lift credited to rising pharmacy same-store sales. Rite Aid revised its year-end guidance, however, based on anticipated lower pharmacy margins going forward. 
 
"In the second quarter, our team of dedicated Rite Aid associates worked together to execute our strategy and deliver results that reflect growth in net income and adjusted EBITDA and significant increases in same-store sales and prescription count," stated Rite Aid chairman and CEO John Standley. "Heading forward, while we believe that our key initiatives will continue to drive top-line growth, we are revising our guidance based on lower than anticipated pharmacy margin in the second half of fiscal 2015. As we navigate these headwinds, we will remain focused on growing our business, generating continued operational efficiencies and positioning our associates to deliver a consistently outstanding experience for our customers."  
 
Same-store sales for the quarter increased 4.1% over the prior year, consisting of a 1.1% increase in front-end sales and a 5.6% increase in pharmacy sales. Pharmacy sales included an approximate 199 basis point negative impact from new generic introductions. The number of prescriptions filled in same stores increased 3.7% over the prior year period.
 
Prescription sales accounted for 68.8% of total drug store sales, and third-party prescription revenue was 97.5% of pharmacy sales.  
 
Net income was $127.8 million or $0.13 per diluted share compared to last year's second quarter net income of $32.8 million or $0.03 per diluted share. The improvement in net income resulted primarily from an increase in adjusted EBITDA, a lower LIFO charge due to pharmacy inventory reductions and a $62.2 million loss on debt retirement in the prior year, partially offset by higher income tax expense. 
 
Adjusted EBITDA was $364.2 million or 5.6% of revenues for the second quarter compared to $341.6 million or 5.4% of revenues for the like period last year. Adjusted EBITDA improved due to an increase in front-end and pharmacy gross profit, partially offset by an increase in selling, general and administrative expenses related to the company's higher level of sales. 
 
The improved pharmacy gross profit was driven by the increase in pharmacy revenues and the impact on inventory valuation related to the company's transition to its new drug purchasing and delivery arrangement with McKesson, partially offset by lower reimbursement rates. The net effect on inventory valuation resulting from the transition to the outsourced McKesson arrangement is not expected to be material to fiscal 2015 results, but did increase gross profit, adjusted EBITDA and pre-tax income by approximately $40 million in the second quarter.  
 
In the second quarter, the company relocated 5 stores, remodeled 117 stores and expanded 1 store, bringing the total number of wellness stores chainwide to 1,433. The company also opened 1 store and closed 10 stores, resulting in a total store count of 4,572 at the end of the second quarter.  
 
Based upon current estimates for reimbursement rates and anticipated lower profitability from new generics and generic drugs that recently lost exclusivity, the company is expecting decreases in pharmacy margin in the second half of fiscal 2015 as compared to its prior estimates and therefore is lowering its guidance for adjusted EBITDA, net income and net income per diluted share. Adjusted EBITDA is expected to be between $1.2 billion and $1.275 billion. Net income is expected to be between $223 million and $333 million and income per diluted share between $0.22 and $0.33. The company is also narrowing guidance for sales and same-store sales. Sales are expected to be between $26 billion and $26.3 billion and same-store sales to range from an increase of 3% to an increase of 4% over Fiscal 2014. Capital expenditures are expected to be approximately $525 million.  
 
Following the news of the revised guidance, shares of Rite Aid were trading down about $1.08 in late-morning trading to $5.56 as compared to yesterday's close. 
 
 

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