Rite Aid Corp. said it has named one of its directors, Elizabeth “Busy” Burr, as interim CEO, effective immediately, following the abrupt departure of Heyward Donigan, who had been president and CEO at Rite Aid since 2019.
The company said it has initiated a search to identify a permanent CEO and has retained a leading executive search firm.
The change sparked some speculation that Rite Aid could once again be the target of a takeover effort, after last year rejecting an offer of $14.60 per share, or about $815 million, from Spear Point Capital. In 2018, Rite Aid and Albertsons had agreed to merge, but that deal was scuttled by both companies before it came to fruition.
Rite Aid’s stock has plummeted during the last two years, and Dealreporter said this week that the company could be vulnerable to a shareholder activist or to an acquisition effort, according to a report on Seeking Alpha.
The company last month reported a loss of $67.1 million for its fiscal third quarter on revenues of $6.1 billion, down from $6.2 billion a year ago. In announcing Donigan’s departure, Rite Aid confirmed that the company expected to report a loss of between $584 million and $551 million for the full fiscal year, on revenues of $23.7 billion to $24 billion.
The Philadelphia-based company has long struggled to compete against its larger traditional drugstore rivals, CVS and Walgreens, as well as other retail pharmacy operators, from traditional supermarkets such as Albertsons and Kroger to mass merchants such as Walmart and Costco.
Burr, who has been a director on Rite Aid’s board since 2019, most recently was president and chief commercial officer at Carrot, a digital health care company, and previously was VP and head of health ventures and chief innovation officer at health insurance company Humana. She also previously held positions with Citigroup, eBay, Credit Suisse Group AG and Gap.
“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,” Bruce Bodaken, chairman of Rite Aid, said in a statement. “With a deep understanding of the industry and our strategy, the board was unanimous in its belief that Busy is highly qualified to serve as interim CEO while the board conducts a search for a permanent successor.”
Donigan had led the company through the pandemic and had since been focused on spearheading a digital transformation of the company.
“It has been a privilege to lead Rite Aid and its exceptional team,” she 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.”