360° Coverage : Rite Aid's Q4'14 Earnings: Wellness Stores Drive Growth

2 Updates

Rite Aid's Q4'14 Earnings: Wellness Stores Drive Growth

Apr 11 2014, 1:54pm CDT | by

Backed by its store re-modeling initiative, efficient cost management and customer loyalty programs, leading U.S. drugstore chain Rite Aid reported its sixth consecutive quarter of positive net...

Filed under: news

 
 
 

20 weeks ago

Rite Aid's Q4'14 Earnings: Wellness Stores Drive Growth

Apr 11 2014, 1:54pm CDT | by

Backed by its store re-modeling initiative, efficient cost management and customer loyalty programs, leading U.S. drugstore chain Rite Aid reported its sixth consecutive quarter of positive net income in Q4 2014. The company witnessed a 2.2% growth in its Q4 2014 revenue primarily on account of an increase in pharmacy gross profit, driven by generic purchasing efficiency as well as an increase in front-end gross profits. Rite Aid’s ongoing expense control measures benefited the company in the quarter. Q4 2014 net income stood at $57 million as compared to $124 million in Q4 2013. However, if we exclude LIFO charges and losses on debt retirement from the results of both years, net income this year was higher by $29 million.

Fiscal 2014 was Rite Aid’s second profitable year in more than five years as the company benefited from its ongoing health and wellness transformation. Though its fiscal 2014 revenue increased only marginally, net income almost doubled compared to fiscal 2013. The company believes that the continued positive growth momentum places it in a position to evolve its strategy from one that focuses on turning the company around to one that emphasizes on growth.

Effectively leveraging its cost structure, investing in new stores and making operational progress remain key focus areas for Rite Aid, as it aims to build a unique brand focused on health and wellness. In fiscal 2014, the company completed additional refinancing to extend maturities and reduce its interest expense, factors that give it the required flexibility to better execute its business plan.

We will update our valuation for Rite Aid after the fiscal 2014 earnings release.

View our detailed analysis for Rite Aid

Wellness Store Remodels Remains A Key Growth Strategy

Loyalty programs such as the Wellness+ program have been one of the key factors driving growth in Rite Aid’s pharmacy sales, as well as front-end sales. The Wellness+ program helps strengthen the relationship with customers, which in turn increases the number of loyalty shoppers at Rite Aid. It remains a key component of Rite Aid’s health and wellness offering. The company made significant progress in transforming its stores into true neighborhood destinations for health and wellness in fiscal 2014. Last quarter, Rite Aid completed 94 remodels, 3 expansions and 2 relocations, taking the total number of Wellness stores to 1,215. It plans to remodel an additional 450 stores in fiscal 2015.

The Wellness store continues to outperform the non-wellness stores in terms of same-store front-end sales and script count. In fiscal 2014, front end same-store sales in the wellness stores exceeded the non-wellness stores by 3.2 percentage point and script growth in the wellness stores exceeded the non-wellness stores by 1 percentage point.

Last year, Rite Aid successfully launched its Wellness65+ program, which is aimed at senior patients who are known to be higher spenders in the pharmacy category. By the end of fiscal 2014, 1.7 million senior citizens had enrolled in the program and Rite Aid claims that the program is attracting new customers as well as strengthening the loyalty of its existing members. According to a 2012 RAND Health study, wellness programs are the rage in corporate America, with half of surveyed companies offering wellness promotion programs.

Rite Aid’s immunization program is another key component of its chain-wide wellness program. It exceeded its chain-wide goal by immunizing more than 3.2 million patients against the flu last year. Its Wellness stores, which feature the Wellness ambassadors, averaged 38% more flu shots than non-wellness stores.

Wellness stores will continue to be a key part of Rite Aid’s growth strategy over the next few years.

Recent Acquisitions To Benefit Rite Aid’s Health & Wellness Strategy
/>

This month, Rite Aid made two acquisitions – Health Dialog Services Corporation and RediClinic – to advance its retail and wellness strategy.

Health Dialog Services Corporation is a health coaching and analytics firm which provides in-store care coaches. Rite Aid believes that the company will play a key role in advancing its Health Alliance program. It expects to benefit from Health Dialog’s industry-leading analytics and shared decision making tools as it focuses on further strengthening its healthcare offering.

RediClinic is a leading retail clinic operator operating across 30 locations in the greater Houston, Austin and San Antonio areas. Post the acquisition, RediClinic will become a subsidiary of Rite Aid. Retail clinics play an importance role in today?s healthcare delivery system and will benefit Rite Aid’s overall health and wellness strategy. Rite Aid intends to leverage RediClinic’s expertise to deliver convenient healthcare and wellness programs to its customers in select markets. Rite Aid plans to open 70 new RediClinic over the next 18 to 24 months.

Rite Aid also announced an expanded tie-up with McKesson Corporation, the largest distributor of pharmaceutical and medical supplies in the US. The new partnerships are in line with the company’s strategy to expand its offerings to cover a broader range of health products and services.

Fiscal 2015 Guidance/>/>

- Rite Aid expects the second half of fiscal 2015 to be stronger than the first two quarters, due in part to the strength in fiscal 2014′s first half as well as the introduction of several new generics in the second half of fiscal 2015.

- Total sales to be between $26 billion and $26.5 billion.

- Adjusted EBITDA to be between $1.33 billion and $1.4 billion.

- Same-store sales to increase by 2.5% – 4.5%, including the anticipated negative pharmacy sales impact of new generic introductions and continued reimbursement rate pressure.

- Earnings per diluted share of $0.31 to $0.42.

- Capex of $525 million.

See More at Trefis | View Interactive Institutional Research (Powered by Trefis)

Like our charts? Embed them in your own posts using the Trefis WordPress Plugin.

 
Update
2

2 days ago

Khazanah throws MAS RM6b lifeline

Aug 29 2014 5:01pm CDT | Source: Business Times Singapore

August 30, 2014 1:15 AMKHAZANAH Nasional will inject RM6 billion (SS$2.4 billion) over three years to resuscitate loss-making Malaysia Airlines (MAS) under a recovery plan that includes even an Act of Parliament. Other key moves are migrating its operations, assets and liabilities to a new compan ...
Source: Business Times Singapore   Full article at: Business Times Singapore
 

 
Update
1

3 days ago

MAS posts loss of RM307m for Q2

Aug 28 2014 5:00pm CDT | Source: Business Times Singapore

August 29, 2014 1:13 AMMALAYSIA Airlines (MAS) registered a loss of RM307 million (S$122 million) for the second quarter to end-June, but warned of worse to come in the second half when the "full financial impact of the double tragedies of MH370 ...
Source: Business Times Singapore   Full article at: Business Times Singapore
 

 

Don't miss ...

 

<a href="/latest_stories/all/all/30" rel="author">Forbes</a>
Forbes is among the most trusted resources for the world's business and investment leaders, providing them the uncompromising commentary, concise analysis, relevant tools and real-time reporting they need to succeed at work, profit from investing and have fun with the rewards of winning.

 

blog comments powered by Disqus

Latest stories

Japan announces 3.5 trillion yen investment to India
Tokyo, Sep 1 (IANS) Japan Monday announced public-private investment of 3.5 trillion yen (Rs.2.03 trillion) in India.
 
 
Man with 'disconnected' brain, alive and kicking at 88!
New York, Sep 1 (IANS) This may sound and read unbelievable but there is an elderly man whose brain has no neural fibre connection between his two hemispheres!
 
 
Ebola toll in Guinea 460
Conakry, Sep 1 (IANS) At least 690 Ebola virus disease cases have been confirmed in Guinea, out of which 460 people have died, the latest data released by the health ministry here shows.
 
 
Caffeinated 'energy' drinks bad for heart
London, Sep 1 (IANS) "Energy" drinks which are so popular during physical exercise and even otherwise among children and younger adults can cause heart problems, a research shows.
 
 
 

Latest from the Network

Abe wants 'special strategic' ties with India
Tokyo, Sep 1 (IANS) Japanese Prime Minister Shinzo Abe Monday said ties with India should be elevated to a "special strategic partnership". "We have to fundamentally improve our ties in every field to elevate our...
Read more on Politics Balla
 
New blood test to reliably detect TB
London, Sep 1 (IANS) A new blood test has been developed to provide a fast and accurate tool to diagnose tuberculosis in children. About one million children develop tuberculosis (TB) globally each year but detecting...
Read more on Business Balla
 
Talks on for civil nuclear deal with Japan: Modi
Tokyo, Sep 1 (IANS) Prime Minister Narendra Modi Monday said negotiations were on for a civil nuclear agreement with Japan, indicating that the deal is not likely to be sealed during his ongoing five-day visit to the...
Read more on Politics Balla
 
Japan announces 3.5 trillion yen investment to India
Tokyo, Sep 1 (IANS) Japan Monday announced public-private investment of 3.5 trillion yen (Rs.2.03 trillion) in India. India and Japan held official talks Monday in the third day of Prime Minister Narendra Mdoi's five-...
Read more on Politics Balla
 
England's approach to spin bowling flawed: Sourav Ganguly
London, Sep 1 (IANS) Former India cricket captain Sourav Ganguly has said flawed approach to spin bowling and failure to score runs freely are the main factors that are troubling England in the ODIs. As India close in...
Read more on Sport Balla
 
Indian found dead in Qatar
Dubai, Sep 1 (IANS) An Indian man was found dead at his house in Qatar's Al Wakrah city, a media report said Monday. The victim was identified as Sirajul Muneer, 38, a driver at a local household, the Gulf Times...
Read more on Politics Balla
 
Modi makes a veiled attack on global powers
Tokyo, Sep 1 (IANS) In a veiled attack on the global powers, Prime Minister Narendra Modi said Monday that the world was witnessing expansionism as seen in the 18th century but it needed to take the path of development...
Read more on Politics Balla
 
1,420 people killed in Iraq in August: UN
Baghdad, Sep 1 (IANS) A total of 1,420 Iraqis have been killed and 1,370 injured in terrorist attacks and violence during August, the UN Assistance Mission for Iraq (UNAMI) said in a statement Monday. The statement...
Read more on Politics Balla
 
Flamengo extend winning streak in Brazil's Serie A
Rio de Janeiro, Sep 1 (IANS) Alecsandro converted a late penalty to hand Flamengo a 2-1 victory over Vitoria in Brazil's Serie A championship. The veteran striker coolly netted from the spot after Juan handled Gabriel...
Read more on Sport Balla
 
Man with 'disconnected' brain, alive and kicking at 88!
New York, Sep 1 (IANS) This may sound and read unbelievable but there is an elderly man whose brain has no neural fibre connection between his two hemispheres! For a layman, human brain is divided into two hemispheres...
Read more on Apple Balla