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Walgreen (NYSE: WAG ) knows that people want all kinds of options to meet their healthcare needs. Walgreen also knows that it needs to grow and keep up with competitor CVS Caremark (NYSE: CVS) and the pharmacy department at Wal-Mart (NYSE: WMT). And, yes, I suppose Rite-Aid (NYSE: RAD) is technically a competitor, too, although you wouldn't know it by that drugstore chain's stock price. Well, according to The Wall Street Journal, Walgreen plans to promote an initiative called "Complete Care and Well-Being" to employers. The goal here is to give corporate, as well as government, employees and their families access to healthcare services such as preventive medicine and dental examinations in off-hour time periods. Walgreen will use a network of in-store clinics and health centers to provide these services. That's pretty cool, right? Well, one of the bigger benefits to Walgreen is the synergy it can promote by leveraging this program.
Walgreen wants to create a higher quantity of traffic in its stores and foster better customer loyalty by offering discounted prescriptions and discounts on private-label brands to go along with use of the "Complete Care" program. By generating an overall value proposition to the health consumer, Walgreen can link its brand with quality and affordable healthcare. Pharmacies are expanding their input when it comes to the healthcare debate. They see themselves as being part of the solution. And, of course, they see increases in shareholder value by competing for attention in this industry.
However, from a purely investor-centric viewpoint, I see nothing in the Journal article that makes me want to buy Walgreen. It's a good idea and a decent program to try out, but it's not earth-shattering and I don't think anyone should buy based on it. CVS basically does similar things, although as the article does point out, Walgreen will be focusing on employers. Still, I don't see a trade here based on the news item. Walgreen should benefit if it runs the program correctly; I like how the company wants to promote its higher-margin private-label items in its non-pharmacy section. And Walgreen definitely wants to keep ahead of Wal-Mart and its own healthcare initiatives. Again, though, I'll trade on sales and earnings numbers and not this particular news piece.
Disclosure: I don't own any company mentioned; positions can change at any time.
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Reader Comments (Page 1 of 1)
1-15-2009 @ 3:06PM
Laura Atkinson said...
Walgreen's is trying to find a way to increase usage of the 100's of Take Care Clinics they built and are seeing little utilization.
By getting into the corporate wellness market they have bigger competitors than other pharmacies that typically do poorly with their quote corporate wellness programs. The thought must be with the acquisition of Whole Health who manages corporate wellness clinics and the Take Care Clinics which have not taken off as well as they would have liked to extend into the corporate market.
They will also have to contend with insurance companies like Nationwide, Wellpoint,hospitals and those companies who really do wellness.
Not a good investment in my mind. Particularly on the heels of news they are closing stores and cutting staff.
I saw this one coming.