Winn-Dixie posts Q1 loss
JACKSONVILLE, Fla. Winn-Dixie is off to a rough start as its first-quarter earnings dropped $8.1 million, according to financial reports.
For the quarter, sales fell 2% to $1.64 billion from $1.68 billion. Winn-Dixie attributed the lower sales to six store closures that occurred in fiscal 2009. Excluding those items, net sales decreased $6.3 million. Same-store sales decreased 1.5% for the quarter, compared with the same period last year.
Adjusted EBITDA was $22.8 million for the first quarter, compared with $27 million in the same period last year.
“The economic climate continued to impede our growth during the quarter and caused our adjusted EBITDA to fall below last year’s levels,” said Winn-Dixie chairman, president and CEO Peter Lynch. “Identical store sales declined due to the absence of storm-related sales that we experienced last year and a shift by consumers towards generic pharmaceuticals. These factors, coupled with deflationary trends in many of the items we sell, led to a decline in basket size for the chain.”
Meanwhile, the company said that by the end of the quarter it had remodelled 170 stores since starting a remodelling program in 2007. It plans to remodel 75 stores during the current fiscal year.
Walmart beautifies Web offerings
BRISBANE, Calif. drugstore.com.—Retail giant Walmart is looking to make shopping even easier with the launch of a new at-home delivery option on thousands of health-and-beauty products purchased online—a move that undoubtedly better positions the company to go head-to-head with other online retailers of health-and-beauty aids, such as
“Customers have long trusted Walmart to provide the best values on health and beauty brands in our stores, and now customers can also access these savings online at Walmart.com with the convenience of home delivery,” stated Kelly Thompson, Walmart.com’s chief merchant. “By offering savings on our customers’ favorite health and beauty items online and in our stores, we can better help our customers shop the way they want.”
By visiting the site www.walmart.com/health, shoppers can select from thousands of health-and-beauty products—including makeup, skin care, diapers, vitamins and more—and have the items shipped to their home for 97 cents per item. Featured brands include Neutrogena, Pampers, L’Oréal, Colgate, Pantene and Gillette. Free samples of select items also are available through the Web site.
For example, Maybelline New York’s Colossal Classic Volum’ Express washable mascara is priced at less than $6, Centrum multivitamin, chewable Dora the Explorer Centrum for Kids 110-ct cost less than $10, and Sudafed PE Caplets Severe Cold Multi-Symptom 24-ct are priced at less than $6.
Carving out healthcare reform
It won’t be pretty. It will be complex and difficult to understand, at least in the beginning. And it’s almost guaranteed to leave many of America’s fractured interest groups and entrenched healthcare stakeholders dissatisfied, even angry. But for all that, it appears increasingly likely that some form of highly compromised, patchwork health-reform legislation will stagger out of both houses of Congress this fall and onto the desk of President Obama for his certain signature.
On Oct. 13, the health-reform express gained a sudden and dramatic acceleration with passage by the Senate Finance Committee of the America’s Healthy Future Act. The bill, authored in part by committee chairman Max Baucus, D-Mont., represented what Baucus and Obama administration officials called a bipartisan compromise, and was considered the most likely of several health-reform proposals hammered out in both houses of Congress to gain broad support on the floor of the Senate. Nevertheless, only one Republican on the Finance Committee—Sen. Olympia Snowe, R-Maine—broke ranks with her party and voted in favor of the proposal, which passed on a 14-9 vote.
As of mid-October, much work remained to be done before the White House could come even close to claiming victory on its top domestic priority: passage of landmark legislation to overhaul the healthcare system and extend health coverage to every American. The Baucus bill had yet to undergo what is sure to be a difficult reconciliation process as House and Senate leaders attempt to merge it with several other congressional health-reform proposals that have emerged in recent weeks, including a bill generated by the Senate Committee on Health, Education, Labor and Pensions.
Nevertheless, prospects for health-reform legislation were bolstered by a projection earlier this month from the nonpartisan Congressional Budget Office. After analyzing the impact of the Baucus proposal, the CBO predicted that the plan would cut the federal budget deficit by $81 billion over 10 years, while extending health insurance to millions more Americans. The savings would come largely by slowing the projected rise in Medicare spending—in particular by shaving $117 billion in payments to privately run Medicaid Advantage plans—and by taxing high-cost insurance policies.
Armed with that data, Senate majority leader Harry Reid, D-Nev., has promised to “work with the White House and the chairmen of the HELP and finance committees to craft a bill that can garner 60 votes.”
It won’t be easy. The total cost of the Senate proposal—aimed at overhauling the nation’s health system and broadening health coverage—would be $829 billion over the next 10 years, according to the budget office. And, bitter and almost unanimous opposition from Republican leaders in the House and Senate is almost certain to make the road to passage of any health-reform bill, including the Baucus plan, a rocky one in the coming weeks. Sen. Chuck Grassley, R-Iowa, the ranking Republican on the Senate Finance Committee, summed up his party’s opposition, saying the Baucus proposal “includes hundreds of billions of dollars in new taxes and fees” and “still leaves 25 million people without health insurance.”
That projection, however, includes roughly 8 million illegal immigrants, according to CBO projections. Neither the Baucus bill nor the White House has proposed insuring illegal immigrants.
Amid the rough-and-tumble that awaits any health-reform package on the floor of the House and Senate, retail pharmacy and retail clinic advocates have drawn some solace from several elements of the Baucus reform proposals. The bill, the National Community Pharmacists Association noted, “includes several provisions ensuring the ability of community pharmacies to continue providing critical services to patients.”
“Chairman Baucus understands the significant role community pharmacies play, and we appreciate his support,” NCPA EVP and CEO Bruce Roberts said.
Among the bill’s pharmacy-friendly elements, he noted, was language that gives pharmacies a somewhat more generous reimbursement for dispensing generic drugs to patients covered by Medicaid. Under a formula supported by Baucus, Medicaid would pay pharmacies 175% of the weighted average of the average manufacturer’s price of the generic.
A permanent fix for the Medicaid reimbursement system remains a top priority for all of retail pharmacy, as well. Under current regulations dictated by the Deficit Reduction Act and the Centers for Medicare and Medicaid Services, both pharmacies and taxpayers will be penalized for dispensing lower-cost generic drugs to patients on Medicaid under a new reimbursement model based on a skewed reading of the average price paid to manufacturers for those drugs.
“NACDS strongly commends the [Baucus bill’s] adoption of a ‘weighted average’ AMP rather than the lowest AMP to set FULs [federal upper limits on Medicaid generic reimbursement],” said Steve Anderson, president and CEO of the National Association of Chain Drug Stores.
The bill passed out of the Senate Finance Committee also contains another pharmacy-friendly feature, by exempting small-scale pharmacies from Medicare’s durable medical equipment accreditation regulation. Pharmacy leaders have long opposed the accreditation requirement as an unwarranted burden on their business and professional practice. (For more, see story on page 21.)
NCPA also strongly supports an amendment from Senator Maria Cantwell, D-Wash., which was added to the legislation before its passage by the Baucus panel. That amendment, Roberts said, “will lead to transparency regarding the deals pharmacy benefit managers…reach with drug manufacturers.”
The PBM industry strongly opposes the Cantwell amendment. Other provisions, including a plan to tax premium, high-cost insurance benefits provided by employers, also have drawn opposition from the insurance industry and other interest groups.
Among the companies opposing the Cantwell amendment is CVS Caremark, which operates the nation’s largest pharmacy benefit management firm, and rival Medco Health Solutions. The measure—which would require PBMs to disclose to their health plan clients the rebates they receive from drug companies, and how much of those savings are passed on—would disrupt negotiations between drug suppliers and PBMs and hamper free enterprise, asserted CVS Caremark chairman, president and CEO Tom Ryan.
In an interview on CNBC Sept. 10, Ryan raised concerns about some other aspects of the health-reform movement. “We don’t think the public option is the way to go. We think, in fact, that it will stifle competition and innovation,” he said. “If anything, a public-private partnership might be the answer, similar to the federal employee healthcare program or the Medicare Part D drug coverage program.”
The result of that alliance in the Part D program between government and the private health plans that administer the program, Ryan added, has been that “we save seniors $1,200 on average, coming in a third less than government estimates.”
Ryan also supports insurance reform, so that insurers aren’t allowed to drop people with pre-existing conditions, and favors medical malpractice reform. “The bottom line is, if we’re spending $3 trillion on health care now, we can’t just put 47 million uninsured on top of it,” Ryan asserted. “We have to find a way to do it piecemeal, where we…look for cost savings around evidence-based medicine, around the use of generics,” and other means.
“Look at the drug spend” as another example of potentially huge cost savings, Ryan added. “A dollar invested in prescription drugs, where people take them appropriately, saves $7 in the healthcare system.”
Greg Wasson, president and CEO of Walgreens, also expressed guarded support for health-reform legislation. “We support the Obama administration’s guiding principles of improved access, greater affordability and higher quality as part of any reform platform,” he said in a conference call with investment analysts Sept. 29. “And we agree with the need to shift focus to preventing and managing chronic disease, and emphasizing health and wellness.”
Walgreens, Wasson added, would play a big role in that shift to prevention and wellness. “We’re on the front line of health care with 68,000 professionals who can impact peoples’ behavior through direct, face-to-face interactions,” he noted.
Despite calls for a government-sponsored health plan alternative to compete with the private insurance marketplace, Wasson predicted that “with nearly 170 million Americans currently insured by their employer, corporate America will undoubtedly continue to play a vitally important role in the healthcare system,” he said.
For the burgeoning retail clinic industry, meanwhile, the end result of an effective health system overhaul could mean “addressing the need for cheaper, better, more equitable primary care…by decentralizing the system,” noted one healthcare blogger, Ed Morrissey, who writes for the Hot Air news and opinion Web site.
By promoting retail clinics as an alternative to expensive primary care delivered by time-pressed family physicians and hospital emergency rooms for the uninsured, he noted last month, “simple problems can be handled farther away from the hub (and expense) of hospitals and doctors’ offices by nurse practitioners who cost less to train and therefore less to employ.”