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Dollar General to Increase Access to Healthcare Products

Dollar General climbs as the company expands healthcare offerings and appoints a chief medical officer.

Dollar General  (DG) - Get Dollar General Corporation Report said Wednesday that it will expand its offering of healthcare products and appointed a chief medical officer as the discount retailer looks to establish itself as a health destination.

Shares of the Goodlettsville, Tenn., company were climbing 1.83% to $222.39 on Wednesday.

Dollar General said it will offer an increased assortment of cough and cold, dental, nutritional, medical, health aids and feminine hygiene products at many of its stores.

The company said 75% of the U.S. population lives within five miles of one of Dollar General's more than 17,000 stores and Dollar General "recognizes the unique access it provides to rural communities often underserved by other retailers as well as the existing healthcare ecosystem."

Jefferies analyst Corey Tarlowe said the product expansion plan, along with other major growth initiatives, should lead to further market-share gains, increased traffic, higher basket sizes, better sales comps, enhanced store productivity, and greater profitability, according to Bloomberg.

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Tarlowe, who reiterated his buy rating and $250 price target, added that the expansion into healthcare “should further DG’s share gains ahead, particularly given drug stores have been one of DG’s largest share donors,” as prices at DG are around 40% cheaper than drug stores, according to Jefferies’ research.

In addition, Dollar General named Albert Wu to the newly created position of vice president, chief medical officer.

Wu joins the company from McKinsey & Co., where he has worked since 2016 and during that time he led a team to create a total cost of care model for 250,000 rural healthcare patients.

He also oversaw multiple hospital provider turnarounds totaling $2 billion to $5 billion in revenue; designed a digitally-driven healthcare insurance product offering; and provided guidance to analysts modeling ventilation and pharmaceutical needs to support pandemic relief efforts.

Prior to that Wu was an anesthesiology resident, delivering direct care to patients in a variety of care setting. He reports to Chief Operating Officer Jeff Owen.

In May, Dollar General posted stronger-than-expected first-quarter earnings. The company had posted weaker-than-expected fourth-quarter earnings in March.