Camp Hill, Pennsylvania-based pharmacy chain Rite Aid has named Heyward Donigan as its new CEO, hoping the hoping experienced digital health and insurance executive can help to engineer a turnaround at the beleaguered company.
Donigan is replacing former John Standley, who led the company for nine years before the Rite Aid’s board of directors announced a leadership restructuring that cut 400 corporate positions in an attempt to save costs and steer the company in a new direction.
From a peak back in 2015, Rite Aid share prices have dropped more than 95 percent in the wake of a number of failed acquisition attempts by Walgreens and Albertsons.
Donigan holds little experience in retail, instead serving as a executive at payers like Cigna and Premera Blue Cross and most recently as CEO of Sapphire Digital, a healthcare technology company owned by WebMD that helps patients connect to high quality providers.
Prior that position she served as CEO of behavioral health comapny ValueOptions, now known as Beacon Health Options, where she helped grow company revenues to over $1 billion.
“Today’s announcement is an important step in positioning Rite Aid for the future, and we are confident that Heyward is the right person to lead the company in capitalizing on the opportunities in the evolving healthcare environment,” Rite Aid Chairman Bruce Bodaken said in a statement, citing Donigan’s knowledge across healthcare and digital shopping.
While Rite-Aid’s 2,500 stores still ranks it as the third largest pharmacy chain in the country, the company has fallen behind market leaders CVS Health and Walgreens in efforts to broaden its base of business amid declining retail sales and the emergence of new pharmacy competitors like Amazon.
In the wake of its blockbuster purchase of Aetna last year, CVS Health is in the midst of a transition toward care delivery through the growth of its HealthHUB model and investment in chronic disease management for members.
The company’s second quarter earnings were a positive indication of this transformation, with more than 35 percent year-over-year revenue growth driven mainly by Aetna.
Walgreens has also started to move in a similar direction through partnerships with established providers and technology companies to bolster its own digital offerings. The company recently expanded its Find Care digital health marketplace with new chronic disease management tools from Propeller Health and Dexcom.
Earlier this year, it also joined forces with Microsoft in a 7-year strategic partnership meant to use Microsoft’s AI and cloud infrastructure to give Walgreens customers access on-demand virtual care and build data-sharing capabilities for better patient outcomes.
Rite Aid has started to make initial steps as part of a larger digital transformation strategy that include launching new retail-based virtual care kiosks with InTouch Health and signing a deal with Adobe meant to use the company’s cloud technology to improve the customer experience.
“I see tremendous opportunity to revitalize the company’s position as a leader in meeting the health and wellness needs of customers and patients through our store and pharmacy benefit management platforms,” Donigan said in a statement.
Whether or not that goal can be met is still an open question.
“While investors may be temporarily encouraged by new management and its future plans, we are skeptical that much can be done besides putting off the day of reckoning,” Evercore ISI analyst Ross Muken wrote in an investor note.
Picture: Justin Sullivan, Getty Images
