Rite Aid Adds Quality Independent Physicians To Its Health Alliance Program

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Last week, Rite Aid (NYSE: RAD) announced “Quality Independent Physicians” as the seventh healthcare provider partner to join its Rite Aid Health Alliance initiative. “Quality Independent Physicians” comprises of more than 45 independent primary care physicians located in Louisville, Lexington and Southern Indiana, who deliver high-quality care and meet patients’ unique individual health care needs. Rite Aid previously announced that it is piloting Health Alliance partnerships with High Point, North Carolina based Cornerstone Health Care, California based Apollo Medical Holdings, United Accountable Healthcare Network of Buffalo, Penn State Hershey Health System of Hershey, Heritage Provider Network based in Marina Del Rey, and Physician Direct ACO of Sylvan Lake. In June 2014, the company added California based Heritage Provider Network (HPN) to its list of partners, and the deal was touted as the largest partnership since the inception of the Rite Aid Health Alliance program. [1]

The Rite Aid Health Alliance Program Can Increase Footfall In Stores

Introduced in March this year, the Rite Aid Health Alliance program aims at delivering a higher level of care to chronic and poly-chronic patients, by partnering with various healthcare providers. Once partnerships with local practices are formed, primary care physicians recommend the Rite Aid Health Alliance program to patients who have chronic conditions such as congestive heart failure, COPD, diabetes, hypertension, hyperlipidemia or depression. Enrolled patients are then supported by Rite Aid pharmacists and specially trained care coaches, who work with the physician to create a personalized healthcare action plan and engage with the patient between physician visits to implement the plan and improve his or her overall health. Rite Aid’s care team members collaborate with the patient to establish health goals, eliminate barriers and create a personalized health care action plan in coordination with the patient’s physician. Health Dialog, a leading provider of healthcare analytics and decision support, provides care coaches to Rite Aid. It is a wholly owned Rite Aid subsidiary.

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By leveraging the combined expertise of community pharmacists, who are one of the most accessible and trusted resources among healthcare providers, along with specially trained in-store care coaches, Rite Aid believes the program can help increase the footfall in its stores, in turn boosting its top-line growth. Rite Aid, the third largest drugstore chain in the U.S., is the first in the drugstore industry to introduce such an integrated care model.

Fiscal 2014 (ended February) was Rite Aid’s second profitable year in more than five years as it benefited from its ongoing health and wellness transformation. The company reported its eighth consecutive quarter of profitable growth in Q2 2015 (reported on September 18). Rite Aid continues to focus on its store re-modeling initiative, efficient cost management and customer loyalty programs to spur its future growth. Controlling costs and making operational progress remain key focus areas for the company, as its bottom line remains under pressure from lower reimbursement rates, delays in the introduction of certain generic drugs and higher costs for generic drugs that recently lost their exclusivity . In addition to expanding its healthcare offering, Rite Aid is making progress in building up its real estate pipeline to execute its relocation and new store program over the next several years. The company currently operates 4,600 stores in 31 states and the District of Columbia.

Our price estimate of $5.66 for Rite Aid is almost in line with the current market price.

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Notes:
  1. Rite Aid Partners with HPN to Enhance Health Alliance Program, Yahoo Finance, June 25, 2014 []