Health and Healthcare
Rite Aid Whiffs Big on Q3 Revenues
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When Rite Aid Corp. (NYSE: RAD) released its most recent quarterly results after the markets closed on Wednesday, the company said that it had breakeven earnings per share (EPS) and $5.35 billion in revenue. That compared with consensus estimates that called for a net loss of $0.02 per share and revenue of $7.45 billion. The fiscal third-quarter of last year reportedly had EPS of $0.03 and $5.67 billion in revenue.
During the past quarter, same-store sales from continuing operations decreased 2.5% from the prior year, consisting of a 3.5% decrease in pharmacy sales and a 0.5% decrease in front-end sales.
The number of prescriptions filled in same stores decreased 2.4% from the past year, due in part to exclusion from certain pharmacy networks with which Rite Aid participated in the prior year. Prescription sales from continuing operations accounted for 66.5% of total drugstore sales.
John Standley, Rite Aid board chair and chief executive, commented on its agreement with Walgreens Boots Alliance Inc. (NASDAQ: WBA):
The third quarter was a busy time for our team in preparing for and beginning the transfer of stores and related assets to Walgreens Boots Alliance. I would like to thank our entire Rite Aid team for their dedication and efforts in accomplishing this important business initiative for our company and our shareholders. To date, we have transferred 357 stores and have received approximately $715 million in proceeds, which we have used to pay down debt. Looking forward, in addition to completing the transfer process, we will continue to focus on our most significant business-building opportunities as we work together to deliver a great experience to our customers and patients.
Under the amended and restated agreement, Walgreens will purchase a total of 1,932 stores, three distribution centers and related inventory from Rite Aid for an all-cash purchase price of $4.375 billion. Rite Aid and Walgreens expects to continue to transfer ownership of the stores in phases over the coming months.
Keep in mind that Rite Aid had 4,404 stores nationwide at the end of its fiscal third quarter.
Shares of Rite Aid were down over 6% at $1.97 early Thursday, with a consensus analyst price target of $2.11 and a 52-week range of $1.38 to $8.77.
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