Walgreen Study Confirms The Rising Popularity Of Retail Clinics

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According to a new study by Walgreen (NYSE:WAG), patients in the U.S. are relying more on nurse practitioners at retail clinics to provide chronic and preventive health services. Retail clinics are walk-in health clinics at a pharmacy store that utilize nationally recognized protocols to diagnose and treat minor health conditions, perform health screenings, monitor chronic conditions and dispense vaccinations at much lower prices than a hospital. It is usually staffed with advanced degree nurses known as nurse practitioners who treat routine maladies. The findings of the study were released earlier this month, and were based on a retrospective longitudinal study examining patient visits to Healthcare Clinic at select Walgreen stores from 2007 through 2013.

Below are some of the key finding of the Walgreen study:

– The percentage of visits to Healthcare Clinic locations for preventive services, screening and chronic visit utilization (combined) increased from 4% in 2007 to 17% in 2013.

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– The annual percentage of return patient visits to Healthcare Clinic increased from 15% in 2007 to over 50% in both 2012 and 2013.

Being the largest drugstore chain  in the U.S., Walgreen aims to be the first choice in health and daily living for everyone in America, and beyond.

View our analysis for Walgreens

Retail Clinics Benefit From The Shortage Of Primary Care Physicians In The U.S.; Walgreen’s Healthcare Store Count Falls Behind CVS

The U.S. is currently facing an acute shortage of primary care physicians. With 30 million additional Americans expected to be included under healthcare coverage (as a result of the Affordable Care Act), the demand is expected to outweigh the supply by about 45,000 doctors by the end of this decade. [1] Expanding its Healthcare Clinc footprint can help Walgreen take advantage of this huge demand-supply gap.

While Walgreen has a higher pharmacy store count compared to CVS Caremark (NYSE:CVS) (which has the second largest store count in the U.S.), it falls behind CVS in the number of retail clinics in its stores. As per a recent report by Merchant Medicine, CVS has a considerable lead with more than double the number of retail clinics compared to its closest competitor Walgreen. While CVS has over 800 MinuteClinics (its retail clinics) in 28 states, Walgreen operates around 400 clinics in 19 states. Additionally, the report claims that CVS continues to open clinics at a much faster pace than its competitors. Target and Kroger are some other companies that run similar retail clinics. Operating 119 retail clinics, Kroger is ranked number three followed by Wal-Mart (92) and Target (70). [2]

Walgreen claims that the variety of services offered at Healthcare Clinic at select stores has increased over the past several years, from providing vaccinations at the beginning, to diagnosing and treating a number of chronic conditions today. The company believes that the expansion of chronic and preventive services last year is a key factor in driving more return visits from its customers.

With the current locations and clinic count, the Convenient Care Association estimates that 33% of Americans live within 10 minutes of a Walgreen Healthcare Clinic.((More Patients Turning to Retail Clinics for Chronic Care and Preventive Services, New Walgreen Study Shows, Walgreens Newsroom, July 17, 2014)) We think the company will gain from expanding its retail clinic footprint in the future.

Our price estimate of $64 for Walgreens is at an approximate 10% discount to the current market price.

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Notes:
  1. CVS Caremark’s CEO Presents at UBS Global Healthcare Conference (Transcript), Seeking Alpha, May 20, 2014 []
  2. CVS Doubles Up Walgreen In Retail Clinics As Obamacare Patients Seek Care, Forbes, June 5, 2014 []