Last week, Walgreens Boots Alliance (WBA -0.13%) announced a blockbuster deal to acquire peer pharmacy chain Rite Aid (RAD -55.79%) for over $17 billion.

Pharmacy benefit management is an important business for some retail pharmacies. In this video, we discuss Rite Aid's PBM business segment and its relation -- or lack thereof -- to this deal. Hint: Not every retail pharmacy considers a PBM to be critical.

Listen to the full podcast by clicking here. A full transcript follows the video.

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Kristine Harjes: One other thing for me, looking at this, I said, "Maybe this is the heart of why they did this." That was the PBM side of things. You have Rite Aid acquiring EnvisionRx, their pharmacy benefits manager, but to me it seems like it would be small potatoes to Walgreens.

I wonder if their plan is to expand that and develop this in-house PBM from this small company that Rite Aid originally acquired. If that really looked like such a promising business to begin with, couldn't Walgreens just have acquired it on their own, before Rite Aid actually nabbed it up? This leaves me with a lot of questions.

Michael Douglass: Sure. Let's face it; Walgreens could have come in with a higher price point, too. They're bigger, they're not weighted down by debt like Rite Aid has been. It's interesting because, reading through that call transcript, you didn't really get the sense that the PBM was that core to their investing thesis. You really got the sense that the PBM was a nice thing to have; it's a top 10 PBM.

That's nice to have, and it would give them some better understanding of the Medicare landscape and a few other pieces, but you didn't really get the sense that was core to their investing thesis, here. In my head, it's very much Walgreens doubling down on this retail pharmacy-centric mind-set that they've had.

In a lot of ways, that's very different from what CVS Health (CVS 0.55%) has done. Theoretically, you have these two companies that are retail pharmacies. I'm putting that in scare quotes, for our listeners. "Retail pharmacies," but really very different companies. You have CVS, which has really focused on the PBM side.

The majority of their revenue flows through the PBM, and while they've certainly done a lot with the retail pharmacy, they've accepted a loss on tobacco on the retail pharmacy side, in part, to help prop up that PBM business and make it a more attractive business in contract negotiations. While they'll never be able to point to a specific number, that's what they've done. You've got Walgreens that's reaffirmed that they plan to stay the course on selling tobacco; they really seem to be doubling down on this retail pharmacy centric model.