Rite Aid Corporation
Overview
Rite Aid (RAD) is a pharmacy retail healthcare company, providing its customers and communities with a high level of care and service through various programs the company offer through its two reportable business segments, its Retail Pharmacy segment and its Pharmacy Services segment. The company accomplish its goal of delivering comprehensive care to its customers through its retail drugstores, RediClinic walk-in retail health clinics and transparent and traditional EnvisionRx and MedTrak PBMs. The company also offer fully integrated mail-order and specialty pharmacy services through EnvisionPharmacies. Additionally through EIC, EnvisionRx also serves one of the fastest-growing demographics in healthcare: seniors enrolled in Medicare Part D. When combined with its retail platform, this comprehensive suite of services allows it to provide value and choice to customers, patients and payors and allows it to succeed in today’s evolving healthcare marketplace.1
Rite Aid has two reportable business segments: Retail Pharmacy segment and Pharmacy Services segment.
Retail Pharmacy Segment
Rite Aid Retail Pharmacy segment sells brand and generic prescription drugs, as well as an assortment of front-end products including health and beauty aids, personal care products, seasonal merchandise, and a large private brand product line. Its Retail Pharmacy segment generates the majority of its revenue through the sale of prescription drugs and front-end products at its 4,507 retail stores. The company replenish its retail stores through a combination of direct store delivery of pharmaceutical products facilitated through its pharmacy Purchasing and Delivery Agreement with McKesson Corporation, and the majority of its front end products through its network of ten distribution centers. In addition, the Retail Pharmacy segment includes 99 RediClinic walk-in retail clinics, of which 63 are located within Rite Aid retail stores in the Baltimore/Washington D.C, Philadelphia, Seattle and New Jersey markets.
Pharmacy Services Segment
Rite Aid Pharmacy Services segment, which was formed on June 24, 2015 through acquisition of EnvisionRx, provides a full range of pharmacy benefit services. The Pharmacy Services segment provides both transparent and traditional pharmacy benefit management (“PBM”) options through its EnvisionRx and MedTrak PBMs, respectively. EnvisionRx also offers fully integrated mail-order and specialty pharmacy services through EnvisionPharmacies; access to the nation’s largest cash pay infertility discount drug program via Design Rx; an innovative claims adjudication software platform in Laker Software; and a national Medicare Part D prescription drug plan through EIC’s EnvisionRx Plus product offering. The segment’s clients are primarily employers, insurance companies, unions, government employee groups, health plans, Managed Medicaid plans, Medicare plans, other sponsors of health benefit plans and individuals throughout the United States.
Pending Asset Sale to WBA
On September 18, 2017, The company entered into the Amended and Restated Asset Purchase Agreement with WBA and Buyer, which amends and restates in its entirety the Original APA. Pursuant to the terms and subject to the conditions set forth in the Amended and Restated Asset Purchase Agreement, Buyer will purchase from it 1,932 stores, three (3) distribution centers, related inventory and other specified assets related thereto for a purchase price of approximately $4.375 billion, on a cash-free, debt-free basis, plus Buyer’s assumption of certain liabilities of Rite Aid and its affiliates. On September 19, 2017, The company announced that the waiting period under the HSR Act expired with respect to the Sale. The expiration of the waiting period under the HSR Act satisfies one of the conditions to the closing of the Sale. Completion of the Sale remains subject to various closing conditions, including but not limited to 
the absence of a material adverse effect on the stores and distribution centers being acquired in the Sale and (ii) a duplicate copy of its key information technology systems and prescription dispensing system being operational.
Rite Aid, WBA and Buyer have each made customary representations and warranties. The company have agreed to various covenants and agreements, including, among others, its agreement to conduct its business at the Acquired Stores in the ordinary course during the period between the execution of the Amended and Restated Asset Purchase Agreement and the closing of the Sale, subject to certain exceptions, and the company, WBA and Buyer’s agreement to use its respective reasonable best efforts to obtain all authorizations and approvals from governmental authorities. The company have agreed to provide transition services to Buyer for up to (3) three years after closing of the Sale.
The Amended and Restated Asset Purchase Agreement contains specified termination rights for the company and WBA, including a mutual termination right in the event any court of competent jurisdiction or other governmental entity shall have issued a final and nonappealable legal restraint that prevents, makes illegal, prohibits, restrains or enjoins the completion of the Sale, and a termination right for WBA prior to the closing of the first set of stores in the Sale in the event the company enter into an agreement to sell all of the remainder of Rite Aid or over 50% of its stock or assets to a third party. In the event that the company enter into an agreement to sell all of the remainder of Rite Aid or over 50% of its stock or assets to a third party prior to the end of the transition period under the TSA, any potential acquirer would be obligated to assume its remaining obligations under the TSA. Under the terms of the Amended and Restated Asset Purchase Agreement, The company have the option to purchase pharmaceutical drugs through an affiliate of WBA under terms, including cost, that are substantially equivalent to Walgreen’s for a period of ten (10) years, subject to certain terms and conditions.
