Rite Aid expands primary care locations, but not enough to threaten Walgreens, CVS

The news: Primary care company Homeward is partnering with Rite Aid to provide primary care services across 700 rural Rite Aid locations.

• Rite Aid pharmacists will introduce Medicare customers to Homeward’s annual wellness visits, screenings, and risk assessments.
• The pharmacy giant will also offer Homeward’s mobile care units in parking lots of select rural Michigan Rite Aid locations.

The opportunity: More consumers are tapping retail pharmacies for healthcare services. That could help Rite Aid and its peers boost customer spending and satisfaction levels.

• Over half (51%) of retail pharmacy customers say they’ve visited their pharmacy for services like routine screenings, vaccines, and physical exams over the past year, per a J.D. Power 2021 US Pharmacy Study.
• That’s good news for pharmacy retailers like CVS, Walgreens, and Rite Aid (all of which are either already providing primary care services or plan to soon).
• Customers who used at least one healthcare service at their retail pharmacy spent an average of $5 more than other customers, per J.D. Power.
• Plus, customer satisfaction scores climbed after using a healthcare service at their pharmacy. Overall satisfaction scores rose 24 points (on a 1,000-point scale).

Zooming out: Rite Aid likely won’t become a major threat to CVS’ and Walgreens’ primary care businesses.

Rite Aid’s core strategy lies in its pharmacy services.

• In 2020, the retail giant revealed plans to take on competitors like CVS and Walgreens by revamping its user experience at stores.
• Its new pharmacies will look like an Apple Genius Bar with virtual care rooms to remotely connect with a pharmacist or physician, for instance.

Meanwhile, CVS and Walgreens are doubling down on primary care.

• For example, CVS recently revealed its $1 billion plan to shutter 900 of its retail stores and convert them to full-scale primary care clinics over the next three years.
• It’s likely Walgreens will remain CVS’ main retail clinic competitor. Especially since Rite Aid’s leaders have no intention of taking business away from other primary care organizations.
• Rite Aid’s senior vice president of payor and strategic initiatives, Chris Bohrer, told Insider that Rite Aid wouldn’t want to compete with local providers by owning its own primary care clinics.