Rite Aid 2015 Annual Report Download - page 10

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supports sales analysis and recognition of customer trends. This same point- of-sale technology
facilitates the maintenance of perpetual inventory records which, together with our sales analysis, drives
our automated inventory replenishment process.
We continue to embrace technology as a way to enhance the customer experience. We completed
the development and implementation of our improved mobile app, which is now available for download
for both the Android and iPhone platforms. This free app allows our customers to use their
smartphones to manage their wellness + account, access the weekly circular to view sale items, order
photo prints and locate a nearby Rite Aid store. We have continued to strengthen our presence on
social media sites such as Facebook, Twitter and Pinterest through unique promotions and contests.
Sources and Availability of Raw Materials
During fiscal 2014, we purchased brand pharmaceuticals and some generic pharmaceuticals from
McKesson Corporation (‘‘McKesson’’). Beginning in fiscal 2015, with limited exceptions, we purchased
all of our branded pharmaceutical products and almost all of our generic (non-brand name)
pharmaceutical products from McKesson. If our relationship with McKesson were disrupted, we could
temporarily have difficulty filling prescriptions for branded and generic drugs until we executed a
replacement wholesaler agreement or developed and implemented self-distribution processes.
We purchase our non-pharmaceutical merchandise from numerous manufacturers and wholesalers.
We believe that competitive sources are readily available for substantially all of the non-pharmaceutical
merchandise we carry and that the loss of any one supplier would not have a material effect on our
business.
We sell private brand and co-branded products that generally are supplied by numerous
competitive sources. The Rite Aid and GNC co-branded PharmAssure vitamin and mineral supplement
products and the GNC branded vitamin and mineral supplement products that we sell in our stores are
developed by GNC, and along with our Rite Aid brand vitamin and mineral supplements, are
manufactured by GNC.
Customers and Third Party Payors
During fiscal 2015, our stores filled approximately 304 million prescriptions and served an average
of 1.9 million customers per day. The loss of any one customer would not have a material adverse
impact on our results of operations.
In fiscal 2015, 97.5% of our pharmacy sales were to customers covered by third party payors (such
as insurance companies, prescription benefit management companies, government agencies, private
employers or other managed care providers) that agree to pay for all or a portion of a customer’s
eligible prescription purchases based on negotiated and contracted reimbursement rates. During fiscal
2015, the top five third party payors accounted for approximately 69.7% of our pharmacy sales. The
largest third party payor, Express Scripts, represented 27.8% of our pharmacy sales.
During fiscal 2015, Medicaid and related managed care Medicaid payors sales were approximately
18.6% of our pharmacy sales, of which the largest single Medicaid payor was approximately 1.3% of
our pharmacy sales. During fiscal 2015, approximately 32.1% of our pharmacy sales were to customers
covered by Medicare Part D.
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