Rite Aid 2014 Annual Report Download - page 7

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Once a patient enrolls, Rite Aid pharmacists and specially-trained in-store care coaches work with the
physician to create a personalized health care action plan and engage with the patient between
physician visits to support the patient in implementing the plan and improving overall health.
As of March 1, 2014, the Rite Aid Health Alliance program was active in three markets and we
intend to expand the program to additional markets and stores throughout fiscal 2015. We are
committed to continue to grow and develop our pharmacy and healthcare related service offerings to
better meet the needs of customers and further strengthen our brand of health and wellness, both
organically and through our recent acquisitions of Health Dialog and RediClinic.
On April 1, 2014 we acquired Boston-based Health Dialog, a provider of health coaching, shared
decision making tools and health care analytics. Health Dialog helps health plans, employers and
physician groups improve healthcare quality while reducing overall costs. Health Dialog offerings
include health coaching for medical decisions, chronic conditions, and wellness; population analytic
solutions; and consulting services. Our acquisition of Health Dialog will play a key role in advancing
our Rite Aid Health Alliance program. We will benefit from Health Dialog’s industry-leading analytics
and shared decision making tools as we continue to strengthen our health care offering. At the same
time, the acquisition will provide Health Dialog with an expanded footprint to grow its portfolio of
clients and services as a 100 percent owned subsidiary.
On April 10, 2014 we acquired Houston-based RediClinic, a leading operator of retail clinics.
Retail clinics play a critical role in today’s health care delivery system and will play an important role in
our overall health and wellness strategy. RediClinic currently operates 30 clinics in the greater Austin,
San Antonio and Houston areas. RediClinics are staffed by board certified nurse practitioners and
physician assistants, who are trained and licensed to treat common conditions and provide preventative
services, in collaboration with local physicians who are affiliated with a leading health care system in
each market. Patients can be treated for more than 30 common medical conditions and RediClinic’s
clinicians are able to write prescriptions for these conditions when appropriate. Additionally,
RediClinics provide a broad range of preventive services, including screenings, medical tests,
immunizations and basic physical exams. We are committed to expanding RediClinic’s footprint in Texas
and will leverage their expertise to deliver convenient health care and wellness programs to our
customers in selected markets. We expect to open an additional 70 RediClinics over the next 18 to
24 months.
Prescription File Purchases—In fiscal 2014, we increased the amount of capital spent on the
purchase of prescription files to $87.4 million, up from $67.1 million in fiscal 2013. We have allocated
$90.0 million of our fiscal 2015 capital expenditures budget for prescription file buys as they typically
deliver a strong return on investment.
Drug Purchasing and Distribution Efficiencies—In fiscal 2014, we announced an expanded
agreement with our long-time partner McKesson for pharmaceutical purchasing and distribution. As
part of this five-year agreement, McKesson will assume responsibility for purchasing all brand and
generic medications we dispense in our stores as well as delivering those medications to our nearly
4,600 store locations. We expect that this partnership will leverage the scale of both companies to
deliver greater purchasing and distribution efficiencies, ensure the highest levels of service for our
customers and generate additional cash flow to further fuel our long-term growth.
Private Brands—In fiscal 2011, we began to roll out our new private brand architecture, which
included the consolidation of our private brands into three separate tiers. The initiative included
enhanced package designs for our private brand items and the introduction of our price-fighter brand,
Simplify. We now have approximately 3,000 private brand items and our private brand penetration has
increased from 16% in fiscal 2011 to 18.2% as of the end of fiscal 2014. In fiscal 2015, we will continue
to aggressively promote our private brands, which offer great value to our customers and strong
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