RITE AID: Sells 38 California Stores to Longs
Walnut Creek-based Longs Drugs has purchased 38 California drug stores from Camp Hill, PA-based Rite Aid for $186 million, a transaction that if approved by regulators will give Longs a total of about 420 stores in six western states. The newly sold stores were among 1,006 West Coast pharmacies that Rite Aid purchased in 1996 from Thrifty PayLess. But Rite Aid "has had difficulty managing the larger stores," which at an average of 35,000 square feet each are about double the size of most Rite Aid stores. Rite Aid also "has come under regulatory fire for selling expired vitamins and baby food as well as overcharging customers because cash registers were not kept current with sale prices," and the chain has seen nonprescription sales slide, especially on the West Coast. "This transaction will allow us to divest some of the larger former PayLess stores which have not been meeting our financial goals and are not consistent with our long-term strategic plan," said Rite Aid President Timothy Noonan. Last month, Rite Aid said it might consider selling up to 250 of its West Coast locations in order to generate cash needed to pay off its purchase of pharmacy benefits manager PCS Health Systems Inc. The transaction with Longs, which has board approval on both sides but still needs regulatory sign-off, will affect five stores in greater Los Angeles and 33 throughout Northern California (Benfell, Santa Rosa Press Democrat, 9/21).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.