Rite Aid Corporation is a drugstore chain in the United States and a Fortune 500 company. It is headquartered in East Pennsboro Township, Cumberland County, Pennsylvania, near Harrisburg. Rite Aid is the largest drugstore chain on the East Coast and the third largest in the U.S.
Rite Aid began in 1962, opening its first store in Scranton, Pennsylvania; it was called Thrift D Discount Center. After several years of growth, Rite Aid adopted its current name and debuted as a public company in 1968. As of 2017, Rite Aid is publicly traded on the New York Stock Exchange under the symbol RAD. Its major competitors are CVS and Walgreens. In late 2015, Walgreens announced that it would acquire Rite Aid for $9.4 billion pending approval. However, on June 29, 2017, over fear of antitrust regulations, Walgreens Boots Alliance announced it would buy roughly half of Rite Aid's stores for $5.18 billion. On September 19, 2017, the Federal Trade Commission (FTC) approved a fourth deal agreement to purchase Rite Aid with 1,932 stores for $4.38 billion total.
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History
Alex Grass founded the Rite Aid chain in Scranton, Pennsylvania in September 1962, after marrying into Harrisburg Pennsylvania's Lehrman family in the early 1950s. The first store was called Thrift D Discount Center. The store expanded into five additional states in 1965 and went public as Rite Aid in 1968. It moved to the New York Stock Exchange in 1970. Rite Aid has been ranked as one of Fortune 500's Largest U.S. Corporations.
Growth and acquisitions
Ten years after its first store opened, Rite Aid operated 267 locations in 10 states. 1983 marked a sales milestone of $1 billion. A 420-store acquisition along the east coast expanded Rite Aid's holdings beyond 2,000 locations, as did the acquisition of Gray Drug in 1987. Among the companies acquired was Baltimore, Maryland's Read's Drug Store. On April 10, 1989, Peoples Drug's 114 unit Lane Drug of Ohio was purchased by Rite Aid.
Rite Aid acquired twenty-four Hook's Drug stores from Revco in 1994, selling nine of those stores to Perry Drug Stores, a Michigan-based pharmacy chain. One year later, in turn, the 224-store Perry chain was acquired by Rite Aid. The 1,000-store West Coast chain Thrifty PayLess was later acquired in 1996. The acquisition of Thrifty PayLess included the Northwest-based Bi-Mart membership discount stores, which was sold off in 1998. Acquisitions of Harco, Inc. and K&B, Inc. brought Rite Aid into the Gulf Coast area.
In the 1990s, Rite Aid partnered with Carl Paladino's Ellicott Development Co. to expand the company's presence in upstate New York.
In 2015, Rite Aid purchased EnvisionRx, a pharmacy benefit manager, which owns subsidiary PBMs MedTrak, Connect Health Solutions, and Smith Premier Services.
Partnership with GNC
General Nutrition Corporation (GNC) and Rite Aid formed a partnership in January 1999, bringing GNC mini-stores within the Rite Aid pharmacies. A partnership with drugstore.com in June 1999 allowed customers of Rite Aid to place medical prescription orders online for same-day, in-store pickup.
Company troubles
Rite Aid had a major accounting scandal that led to the departure (and subsequent jail time) of several top ranking executives, including CEO Martin Grass. Former Rite Aid vice chairman Franklin C. Brown is serving a 10-year sentence in a medium-security facility at Federal Correctional Complex, Butner, near Raleigh, North Carolina. After serving six years in prison, Martin Grass was released on January 18, 2010. Founder Alex Grass died of cancer on August 27, 2009.
At the time, Rite Aid had just acquired Thrifty PayLess and was integrating the stores into the company. As a result, Leonard Green, who ran the investment firm that had sold those stores to Rite Aid, took control of the company and installed Mary Sammons from Fred Meyer as CEO.
In July 2001, Rite Aid agreed to improve their pharmacy complaint process by implementing a new program to respond to consumer complaints.
On July 25, 2004, Rite Aid agreed to pay $7 million to settle allegations that the company had submitted false prescription claims to United States government health insurance programs.
In August 2007, Rite Aid acquired approximately 1,850 Brooks/Eckerd Stores throughout the United States in hopes of improving their accessibility to a wider range of consumers. On December 21, 2007, The New York Times reported that Rite Aid had record-breaking losses that year, despite the acquisition of the Brooks and Eckerd chains. The following fiscal quarter saw an increase in revenue but a sharp fall in net income as Rite Aid began the integration process. Rite Aid shares fell over 75% between September 2007 and September 2008, closing at a low of $0.98 on September 11, 2008. Rite Aid shares subsequently dropped to $0.20 on March 6, 2009, the all-time low as of 8 December 2011.
Scott Cole & Associates, APC filed a class action lawsuit against Rite Aid Corporation on behalf of its salaried California Store Managers. It was alleged that Rite Aid failed to pay overtime to these workers and denied them their meal and rest periods. In 2009, the action settled for $6.9 million. Scott Cole & Associates - Rite Aid Class Action
In June 2010 John Standley was promoted from Chief Operating Officer to Chief Executive Officer, with former CEO Mary Sammons retaining her position as Chairperson; Ken Martindale, previously co-President of Pathmark, was named Chief Operating Officer.
Customer loyalty and rewards programs
The wellness+ card is Rite Aid's free shopping rewards card that started nationwide on April 18, 2010. It became a part of the newly launched American Express-backed Plenti rewards program in May 2015.
Merger with Eckerd and Brooks
On August 23, 2006 the Wall Street Journal announced that Rite Aid would be buying the Eckerd Pharmacy and Brooks Pharmacy chains (Brooks Eckerd Pharmacy) from the Quebec-based Jean Coutu Group for US$3.4 billion, and merging the two chains into one dominant pharmacy system. The company's shareholders overwhelmingly approved the merger on January 18, 2007.[3] After some store closures and the conversion of the two chains was completed, Rite Aid became the dominant drug store retailer in the Eastern U.S., and the third largest drug retailer nationwide (behind the faster-growing Walgreens and CVS chains).
Similar to what CVS experienced in the Chicago metropolitan area after its purchase of Albertsons drug store chains, the deal gave Rite Aid stores that were too close to each other. (Only 23 stores nationally were sold to Walgreens, The Medicine Shoppe, or independent owners to meet federal regulations.) In many situations, especially in Pennsylvania, where both chains were dominant and had roots in the Commonwealth (Rite Aid originated in Scranton; Eckerd began in Erie, while Thrift Drug was popular in the Pittsburgh area), there were, in some cases, neighboring Rite Aid stores. However, in March 2008 some of these overlapping stores were closed. Most of these stores that closed were pre-existing Rite Aids from before the Eckerd deal, since Eckerd had built newer, more modern stores with drive-through pharmacies and larger space under ownership of both JCPenney and Jean Coutu Group; and the "moved to" sites were converted Eckerds. Employees at the closed stores were transferred to nearby ones, so no layoffs were necessary.
Rite Aid had sold some stores to JCPenney's Thrift Drug chain in the mid-1990s shortly before JCPenney's acquisition of Eckerd and had also sold all of their Massachusetts stores to Brooks in 1995, bringing some existing Eckerd and Brooks stores that were once Rite Aids full circle.
Because Eckerd was previously owned by JCPenney, Eckerd stores accepted JCPenney charge cards. Since the merger, all Rite Aids take JCPenney charge cards, a policy also followed by competitor CVS/pharmacy, which had earlier acquired most of the Eckerd chain in the southeastern United States.
As of 2017, New York with 600 stores is home to the largest number of Rite Aids, followed by California and Pennsylvania with 583 and 540 respectively.
Market exits
On January 4, 2008, Rite Aid Corporation announced that it would terminate operation of it's 28 Rite Aid stores in the Las Vegas, Nevada, area and had signed an agreement to sell patient prescription files from that metro market to Walgreens. The company said Las Vegas was a non-core market that had not been contributing to overall results, and it had not opened a new store there since 1999. One Nevada store would remain open in Gardnerville, near the California border, where Rite Aid at the time had more than 600 stores.
On February 5, 2009, Rite Aid announced that it would terminate operations of seven Rite Aid stores in San Francisco, along with five stores in eastern Idaho through a sale to Walgreens.
Sale of stores to Walgreens
On October 27, 2015, Walgreens announced that it would acquire Rite Aid in a deal valued at $9.4 billion ($9 per share), pending regulatory and shareholder approval. The deal would have resulted in a merger of two of the United States' three largest pharmacy chains. Walgreens planned to keep the Rite Aid name on existing stores when the deal went through, though the long term plans for the Rite Aid name were unknown. On December 21, 2016, it was announced that Fred's would acquire 865 Rite Aid stores as a result of the merger for $950 million, for antitrust reasons. In January 2017, Rite Aid and Walgreens cut the price of the merger to approximately $6.8 billion and delayed the merger by six months. On January 31, 2017, it was reported that the workers' union 1199SEIU United Healthcare Workers East, representing 6,000 Rite Aid Corp workers, as opposed to the sale of the Rite Aid stores to Fred's Inc.
On June 29, 2017, Walgreens (WBA) announced the merger was cancelled, adding that it would be purchasing 2,186 stores from Rite Aid for $5.2 billion plus a $325 million penalty for cancelling. Most experts had thought that the merger would be completed within a few weeks. The merger would have had about 46% of the market share. The revised deal--now not including Fred's at all--effectively would have seen Rite Aid exit the Southeastern United States.
On September 19, 2017, the Federal Trade Commission (FTC) approved a fourth deal agreement, this time allowing Walgreens to purchase only 1,932 Rite-Aid stores for $4.38 billion.
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See also
- CVS Health
- Walgreens
Notes
External links
- Rite Aid Corporation website
Source of article : Wikipedia
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