Here's why we think might consider purchasing Walgreens Rite AidWalgreens
and Rite Aid were the headlines hits lately because of reports that the
former, the largest pharmacy chain in the US, could by buying this, the
third largest. Last
year, Walgreens completed a merger with Alliance Boots, a British
pharmacy chain, a chain of more than 12,000 stores in 25 countries to
create. Speculation
about the Rite Aid RAD -0.8% acquisition began appearing when Stefano
Pessina, the billionaire investor who developed the Walgreens Alliance
Boots deal and currently the acting CEO of WBA, said he could imagine
more offers in the United States as Obamacare shakes health system in the country.
However, this is not the first time such rumors have been around about this acquisition have been. Back in 2012, the share price Rite Aid jumped about 10% in a single day on similar reports. But this time, there are more reasons. In the case Let us take a look at some of these reasons below.
Check out our analysis for Walgreens
Acquisition is Walgreen's lead before CVS Extend the largest US pharmacy chain
As of November 30 2014 WBA possession more than 8300 stores in the US, more than 7,800 CVS Health stores (as of February'15). More than 4,600 stores Rite Aid is to achieve a significant increase in the United States provide WBA available when an overlap in the areas covered by the two chains, where appropriate, conduct business in the closure of some Rite-Aid. This falls in line with the strategy of further broadening of pharmacy, health and wellness services such as Rite Aid has also been putting efforts in positioning itself as a health and wellness experts about their wellness + program WBA. In addition, Walgreens sales per square meter about 54% (or $ 300) to the Rite Aid. By replicating some of his successes (if not all) in stores Rite Aid, the company is to unlock an added value for its shareholders. The total size of the possibility that when WBA, the same sales per square meter of transactions to produce Rite Aid, as it has in its own stores, stands at 12.5 billion dollars.Will contribute to the function of Pharmacy Benefit Managers
WBA, due to the nature of the business, has a higher exposure to risks from low reimbursement rates (in detail below). His rival, CVS managed better this problem, as it has a PBM business of your own. PBMs process recipes and use their scale to negotiate prices with drug manufacturers and pharmacies. While some of the savings achieved from the negotiations will be passed on to customers, is a part of the PBM result. This dependence on a temporary increases the cost of WBA as PBMs squeeze out the already low reimbursement rates for the optimization of their profits.
Rite Aid recently acquired EnvisionRx to help a national pharmacy benefit management company, are these issues. The acquisition of Rite Aid Walgreen can minimize the refund rate risks and improving margins on prescription drugs by. The PBM margin There are several other synergies that we think Rite Aid me might be seen in the situation, through the acquisition of EnvisionRx explained. By acquiring Rite Aid, WBA stands to benefit from all these synergies.Completion
Taking into account the company's history of growing through acquisitions such as that of Duane Reade and Drugstore.com, it is likely that Walgreen's going to take another step in the same direction. This will not only help take the company (increasing as health expenditure and Obamacare expands Medicaid coverage) Advantages of the good times in health care, but also represents the company in a better position to manage headwinds such as lower reimbursement rates. Taking into account a hypothetical post-acquisition scenario we are in another article, quantify, such as benefits that will result from this acquisition impact on share price WBA.
However, this is not the first time such rumors have been around about this acquisition have been. Back in 2012, the share price Rite Aid jumped about 10% in a single day on similar reports. But this time, there are more reasons. In the case Let us take a look at some of these reasons below.
Check out our analysis for Walgreens
Acquisition is Walgreen's lead before CVS Extend the largest US pharmacy chain
As of November 30 2014 WBA possession more than 8300 stores in the US, more than 7,800 CVS Health stores (as of February'15). More than 4,600 stores Rite Aid is to achieve a significant increase in the United States provide WBA available when an overlap in the areas covered by the two chains, where appropriate, conduct business in the closure of some Rite-Aid. This falls in line with the strategy of further broadening of pharmacy, health and wellness services such as Rite Aid has also been putting efforts in positioning itself as a health and wellness experts about their wellness + program WBA. In addition, Walgreens sales per square meter about 54% (or $ 300) to the Rite Aid. By replicating some of his successes (if not all) in stores Rite Aid, the company is to unlock an added value for its shareholders. The total size of the possibility that when WBA, the same sales per square meter of transactions to produce Rite Aid, as it has in its own stores, stands at 12.5 billion dollars.Will contribute to the function of Pharmacy Benefit Managers
WBA, due to the nature of the business, has a higher exposure to risks from low reimbursement rates (in detail below). His rival, CVS managed better this problem, as it has a PBM business of your own. PBMs process recipes and use their scale to negotiate prices with drug manufacturers and pharmacies. While some of the savings achieved from the negotiations will be passed on to customers, is a part of the PBM result. This dependence on a temporary increases the cost of WBA as PBMs squeeze out the already low reimbursement rates for the optimization of their profits.
Rite Aid recently acquired EnvisionRx to help a national pharmacy benefit management company, are these issues. The acquisition of Rite Aid Walgreen can minimize the refund rate risks and improving margins on prescription drugs by. The PBM margin There are several other synergies that we think Rite Aid me might be seen in the situation, through the acquisition of EnvisionRx explained. By acquiring Rite Aid, WBA stands to benefit from all these synergies.Completion
Taking into account the company's history of growing through acquisitions such as that of Duane Reade and Drugstore.com, it is likely that Walgreen's going to take another step in the same direction. This will not only help take the company (increasing as health expenditure and Obamacare expands Medicaid coverage) Advantages of the good times in health care, but also represents the company in a better position to manage headwinds such as lower reimbursement rates. Taking into account a hypothetical post-acquisition scenario we are in another article, quantify, such as benefits that will result from this acquisition impact on share price WBA.