Rite Aid: Building a health business around wellness

One year after DSN’s groundbreaking ‘Gets Well’ issue, Rite Aid keeps growing profits and cred with shoppers and Wall St.

One year ago, DSN featured an exclusive report, “Rite Aid Gets Well,” on the cover of the Dec. 10, 2012 issue, examining how the company’s core strategy built around wellness empowerment was helping it turn around its business.

One year later, Rite Aid isn’t just “well” — it’s even better than that.

In September, Rite Aid reported its fourth-consecutive quarter of earnings growth, as the company continues to grow sales and gain momentum around its core wellness-based initiatives, including its Wellness+ loyalty program, its Wellness and Genuine Well-Being format stores and the growing cadre of Wellness Ambassadors that are helping to transform the experience of shopping a Rite Aid store.

Importantly, Wall Street also has begun to reward the company for its efforts. At press time, Rite Aid shares were hovering above the $5 mark, having hit a 52-week high of $5.44 — the last time its stock traded that high prior to that was September 2007. And analysts seem to expect that the momentum will continue.

“Rite Aid reported excellent quarterly results buoyed by strong sales growth and expanding margins. Earnings estimates have thus surged, sending this drug store chain to Zacks rank No. 1 — “Strong Buy,” noted an Oct. 16 update from Zacks Investment Research.

To be sure, there is an undeniable stickiness to the results Rite Aid is putting on the board these days. While the yearlong feud between Express Scripts and Walgreens has long been over, it appears that Rite Aid has been able to hold on to a large number of the customers it picked up in the fray. “Prescription same-store sales of 0.9% tracked ahead of our 0.6% forecast, suggesting Rite Aid is maintaining its share of [ESI] scripts, estimated by the company at about 75%,” noted Goldman Sachs analyst Robert Jones, of the company’s recent second-quarter results.

Just as the program has been a major driver of Rite Aid’s overall growth, Wellness+ also has been a major component of the company’s strategy to retain ESI patients — the loyalty program rewards members 25 points per script where state laws allow.

Here, DSN takes a brief look at two of the most critical factors behind the ongoing turnaround at Rite Aid — its Wellness stores and the Wellness+ card.