Categories Other Industries

With Rite Aid stores under its wings, Walgreens prepares to take down rivals

Upping its ante against its rivals in the medical and pharma sector, Walgreens has finally completed its acquisition of Rite Aid’s (RAD) stores for $4.4billion. The deal brings 1,932 Rite Aid stores as well as three distribution centers under the umbrella of Walgreens, which is owned by Walgreens Boots Alliance (WBA).

Courtesy – Flickr/ Mike Mozart

Though Walgreens initially wanted to take up all of its around 4500 stores, it later had to withdraw from the plan due to anti-trust issues. The rest of the Rite Aid stores, including EnvisionRx PBM, will now go to grocery store giant Albertsons.

Rite Aid plans to use the cash received to repay its outstanding secured loans of approx $970 million. However, the stores will not be completely incorporated into Walgreens till 2020. As this mega-deal is complete, Walgreens will now commence its plan to shutter almost 600 Rite Aid stores — mainly the ones located within a mile of another Rite Aid/Walgreens store.

The deal was aimed at helping Walgreens in clawing out some market share out of its rivals, which are already on the consolidation mode. Pressure to outdo its rivals intensified last year when CVS Health (CVS), which has close to 9,700 retail locations, scooped in Aetna (AET) for $69 billion and Cigna (CI) struck a deal to buy PMB giant Express Scripts (ESRX) for $67 billion.  Adding to this, Amazon (AMZN) is gradually building a niche for itself in the medical and pharma sector.

Meanwhile, the acquisition of Rite Aid stores boosted Walgreens’ performance during the recent second quarter. The company’s earnings rose 27% to $1.73 per share and revenue jumped 12.1% to $33.02 billion. In fact, this quarter’s sales growth was the highest in the past eight quarters. Same-sales stores rose 2.4% and pharmacy sales rose 5.1%.

The positive results made Walgreens raise its guidance for 2018. The company now sees its earnings to be about $5.58 to $6.05 per share. Walgreens shares closed 2.5% higher at $67.59 on Wednesday.

Most Popular

Infographic: How Alaska Air Group (ALK) performed in Q1 2024

Alaska Air Group (NYSE: ALK) reported its first quarter 2024 earnings results today. Total operating revenue increased 2% year-over-year to $2.23 billion. Net loss amounted to $132 million, or $1.05 per

KMI Earnings: Kinder Morgan Q1 2024 adjusted profit increases; revenue drops

Kinder Morgan, Inc. (NYSE: KMI) reported higher adjusted earnings for the first quarter of 2024 despite a decrease in revenues. The energy infrastructure company also issued guidance for the full

What to expect when Altria (MO) reports first quarter 2024 earnings results

Shares of Altria Group, Inc. (NYSE: MO) stayed green on Wednesday. The stock has dropped 8% over the past one month. The tobacco giant is scheduled to report its first

Add Comment
Viewing Highlight