Rite Aid has appointed Heyward Donigan as CEO, effective immediately. Donigan replaces John Standley, who will step down after nine years in the role. Standley’s exit had been planned since March, when the company announced that it would eliminate approximately 400 corporate positions, accounting for more than 20% of jobs at its headquarters and across the field organization.
Donigan most recently served as President and CEO of health care plan analysis platform Sapphire Digital. Before Sapphire Digital, Donigan was the CEO at behavioral health company ValueOptions. She also has worked at Cigna, General Electric Co. and Blue Cross insurance affiliates.
In recent years, Rite Aid has struggled to find its place in a vertical that has been undergoing significant change, including the $78 billion purchase of insurance company Aetna by CVS. Other pharmacy operators also have struggled, as consumers buy more household products online and prescription revenue dips as more Americans turn to generic drugs.Last week, Walgreens said it plans to close about 200 stores in the U.S. as part of its cost management program, while CVS slowed the pace of its store expansion efforts this year from 300 to 100.
Under Standley’s leadership, Rite Aid had sought to bolster its positioning via mergers, but these attempts fell through in back-to-back years. In June 2017, Rite Aid planned to sell itself to Walgreens, but the FTC blocked the acquisition. Rite Aid instead opted to sell 1,900+ stores to Walgreens to improve cash flow. Rite Aid had contemplated a merger with grocery giant Albertsons in August 2018, but it was cancelled by both companies amid shareholder backlash. The pharmacy now operates 2,466 stores.
In Q1, the pharmacy lost $99.3 million, or $1.88 per share, a wider-than-expected loss, even after adjusting for restructuring costs and other expenses. Analysts polled by Refinitiv expected the company to lose $0.08 per share on an adjusted basis, below the actual $0.14 per share adjusted it reported.
The company completed a reverse stock split earlier this year at a ratio of 1-for-20 in order to boost its share price and keep its stock from being delisted on the New York Stock Exchange (NYSE). In 2019, Rite Aid shares have plunged 49%.