Rite Aid Q3 net income falls due to taxes as same-store sales rise

Pharmacy chain Rite Aid said Thursday its third quarter net income fell 43% due to higher income tax expenses but same-stores sales rose.

Its net income for the quarter ended Nov. 28 was $59.5 million vs. $104.8 million a year ago.

Diluted earnings per share, after adjusting for some items, totaled 6 cents, beating analysts’ consensus estimate of 5 cents that was compiled by Zacks Investment Research.

Revenue jumped 22% to $8.2 billion.

During the quarter, the Camp Hill, Penn.-based company saw "tremendous progress in strengthening (its) retail healthcare offering by converting additional stores to our Wellness format,” said Rite Aid CEO John Standley in a statement.

Revenue for the retail pharmacy unit, its largest business, rose 0.8% to $6.7 billion. That was largely due to a moderate rise of same-store drugstore sales, up 0.9% year-over-year. The number of prescriptions filled in same stores rose by 0.2%.

Prescription sales accounted for 69.9% of total drugstore sales, it said.

The pharmacy services segment's revenue totaled $1.5 billion.

The income tax expense that ate into the bottom line was partly due to the offsetting of its deferred tax assets and higher interest and amortization expenses related to its acquisition of EnvisionRx, a deal that was completed in June.

Rite Aid noted that its adjusted earnings before interest, taxes and other items rose by $40.4 million to $373.2 million.

Rite Aid has been remodeling its stores to focus on its "wellness" program, which includes loyalty points and on-site health services. In the third quarter, Rite Aid remodeled 96 stores, bringing the total number of wellness stores to 1,948.