As it has on multiple occasions over the last quarter of a century, Rite Aid finds itself beset with uncertainty. The abrupt departure of chief retail officer Andre Persaud earlier this month, coming as it did on the heels of the company’s parting of ways with president and chief executive officer Heyward Donigan at the beginning of the year, leaves the nation’s third-largest drug store chain in need of clear direction at a time when the retailing and health care sectors are being recast by the impact of digital technology, economic turbulence and the lingering effects of COVID.
Many of Rite Aid’s competitors are moving ahead rapidly to enhance and extend their capabilities. CVS Health, Walgreens Boots Alliance and Walmart, among others, are investing heavily in such areas as primary care, retail media and personalization. If Rite Aid, saddled with a large debt load ultimately stemming from illegal management practices in the late 1990s, can’t match them in scale, it needs to keep pace in terms of customer experience — both in-store and digitally. It’s clear that a decade from now a state-of-the-art chain pharmacy will look very different than it does today.
A lawsuit filed by the federal government complicates the situation. The Justice Department earlier this month joined a legal action by three former Rite Aid employees, asserting that the drug chain filled hundreds of thousands of fraudulent prescriptions for opioids and other controlled substances. Not only did the company engage in activity that helped fuel the opioid epidemic — alleges the suit, filed in federal district court in Cleveland — it destroyed records related to concerns raised by staff members about questionable scripts.
The case not only exposes Rite Aid to potential hefty financial penalties, it represents an unwelcome distraction at a time when the company should be concentrating all of its resources on charting a viable strategic course. While the search for Donigan’s successor as CEO is under way, Rite Aid is being run by Elizabeth “Busy” Burr, a member of the company’s board and former head of health ventures and chief innovation officer at Humana, and president and chief commercial officer at digital health solutions company Carrot Inc.; Bill Miller, senior vice president of central retail operations, has stepped into Persaud’s role on an interim basis.
Rite Aid’s board of directors would be wise to bring the interregnum to an end as quickly as possible and build on the company’s solid brand identity, established presence in major markets and other strengths. Putting the right CEO in place gives the company the best chance of successfully addressing the challenges it now faces.
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