Rite Aid Same-Store Sales Fall Amid Generics Pressure
September 22 2016 - 8:50AM
Dow Jones News
Rite Aid Corp. said sales figures came in below Wall Street
estimates in its second quarter as pharmacy reimbursement-rate
pressure and generic drugs cut into results.
Same-store sales decreased 2.5% in the quarter from a year ago
as a 0.1% increase in retail sales was offset by a 3.6% decrease in
pharmacy sales. The company said new generic drugs, which are
generally cheaper and less profitable, were responsible for much of
the pharmacy decrease. The company also cited a "challenging
reimbursement-rate environment."
In all, Rite Aid reported a profit of $14.8 million, or 1 cents
a share on a per-share basis, compared with a profit of $21.5
million, or 2 cents a share, a year prior. Excluding certain items,
adjusted per-share earnings fell to a 3 cents a share from 6 cents
a year earlier.
Revenue climbed 4.8% to $8.03 billion.
Analysts polled by Thomson Reuters had forecast adjusted
earnings of 2 cents on $8.17 billion in revenue.
The third-largest drugstore chain agreed last October to merge
with No. 1 Walgreens Boots Alliance Inc. in a $17.2 billion deal.
The companies are still working with regulators to get that deal
approved. On Wednesday, Rite Aid said it continues to expects the
deal to close in the second half of the year. Earlier this month
Walgreens said it would divest more of its stores than previously
expected to help satisfy the Federal Trade Commission's review.
The chain, like its rivals, has expanded into the health and
wellness sector. During the quarter it remodeled 85 wellness
stores, which offer organic food and natural personal-care options
and feature consultation rooms for discussions with pharmacists.
Looking ahead, the company plans to focus on its flu immunization
campaign and converting additional stores to the format. Those
stores now represent 2,214 of its 4,550 stores in all.
In February 2015, Rite Aid agreed to buy pharmacy-benefit
manager Envision Pharmaceutical Services for about $2 billion.
Revenue in its pharmacy services segment increased 53% to $1.63
billion as revenue in its retail pharmacy segment fell 2.4% to
$6.49 billion.
Shares,up 4.8% in the last three months, were inactive in
premarket trading.
Write to Austen Hufford at austen.hufford@wsj.com
(END) Dow Jones Newswires
September 22, 2016 08:35 ET (12:35 GMT)
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