Rite Aid seeks new CEO as Heyward Donigan leaves company

Rite Aid is set to name its second chief executive officer in less than four years as President and CEO Heyward Donigan has left the company

Philadelphia-based Rite Aid said Monday it has named director Elizabeth “Busy” Burr as interim CEO following Donigan’s exit from the chief executive’s post and board of directors. The drug chain didn’t give a reason for Donigan’s departure but said it has retained a leading executive search firm to identify candidates for a permanent CEO.

“On behalf of the entire board, I want to thank Heyward for her contributions and service to Rite Aid, particularly her efforts in helping to lead Rite Aid throughout the COVID-19 pandemic. We wish her all the best in her future endeavors,” Rite Aid Chairman Bruce Bodaken said in a statement.

Donigan has served as Rite Aid’s CEO since August 2019, when she succeeded John Standley, who left the company after holding the CEO spot since June 2010. Standley became president of Walgreens in August 2020 but left that post in September to pursue other opportunities.

Upon joining Rite Aid, Donigan brought more of a healthcare focus, bolstering the company’s pharmacy care, PBM and health services businesses and fine-tuning the health-and-wellness presentation of its retail stores. She came to the pharmacy chain from Sapphire Digital, where she had been president and CEO since March 2015. Formerly called Vitals, Sapphire designs and develops omnichannel platforms that help consumers choose health care providers. Before that, she was president and CEO of behavioral health firm ValueOptions and chief marketing officer at health insurer Premera Blue Cross.

“It has been a privilege to lead Rite Aid and its exceptional team,” Donigan said in a statement. “I am proud of all that we have achieved together, and I believe that the company is well-positioned for the future.”

Heyward Donigan (left) has served as Rite Aid CEO since August 2019. Elizabeth "Busy" Burr (right) comes over from the board to serve as interim CEO. / Photos: Rite Aid

However, Rite Aid has reported net losses and declining revenue for the first three quarters of its current 2023 fiscal year and finished the previous three fiscal years during Donigan’s tenure with net losses.

In particular, Rite Aid has struggled since a pair of failed mega-mergers. In August 2018, pressure from Rite Aid shareholders forced the company to kill a $24 billion merger deal with Albertsons Cos., which later led to a management restructuring that culminated with Standley’s departure.

The aborted merger with Albertsons came after the Federal Trade Commission in June 2017 derailed a $17 billion agreement by Walgreens Boots Alliance to acquire Rite Aid. To gain FTC approval, the companies downsized their deal to the sale of 1,932 Rite Aid stores to Walgreens. The transaction cut Rite Aid’s drugstore base by more than 40% and further hampered its ability to compete with much bigger rivals CVS Health and Walgreens. Rite Aid has since seen its sales fall from around $32 billion to more than $24 billion.

For its most recently completed fiscal year (ended Feb. 26), Rite Aid posted revenue (continuing operations) of $24.57 billion, up 2.2% year over year, and a net loss (continuing operations) of $538.5 million, or a $9.96 loss per share. The company operates two business units: the retail pharmacy segment of over 2,300 Rite Aid drug stores in 17 states, and the Elixir pharmacy services segment, which includes pharmacy benefit management, mail and specialty pharmacy, Medicare Part D, population health management and other services.

“As the company continues its efforts to enhance its competitive position in this dynamic environment, the board determined and Heyward agreed that now is the right time to identify the next leader of the business,” Bodaken stated on Monday. “With a deep understanding of the industry and our strategy, the board was unanimous in its belief that Busy [Elizabeth Burr] is highly qualified to serve as interim CEO while the board conducts a search for a permanent successor. We are fortunate to have someone of her caliber to step into the role and are confident in Busy’s ability to lead the company forward during this transition period.”

Rite Aid noted that Burr has strong health industry experience plus expertise in innovation, business strategy, retail and brand management. Her background includes serving as chief innovation officer and vice president and head of health ventures at health insurance giant Humana, and most recently she was president and chief commercial officer of digital health solution provider Carrot Inc. Previously, she served as managing director of Citi Ventures and global head of business incubation at Citigroup and entrepreneur-in-residence at eBay, as well as in senior leadership roles at Credit Suisse Group and Gap Inc.

“Having served as a director since 2019, I have great respect for the important role Rite Aid plays as a full-service pharmacy improving health outcomes for millions of Americans,” Burr stated. “I will work with the board and management team to realize our vast potential while supporting our thousands of pharmacists and team members who are focused every day on meeting the needs of our communities and customers.”

In announcing Donigan’s exit, Rite Aid also reaffirmed its fiscal 2023 guidance, which includes projections for total revenue of $23.7 billion to $24 billion and a net loss between $584 million and $551 million.