Rite Aid shares soar on earnings beat
Rite Aid (RAD) shares closed up sharply Thursday after the drugstore chain reported third-quarter financial results that topped Wall Street expectations and raised the company's full-year fiscal guidance.
Shares of the nation's third-largest drugstore chain jumped nearly 11.9%, closing at $6.78.
Rite Aid reported revenues of $6.7 billion — up from $6.4 billion for the same quarter last year — on net income of $104.8 million. That was equivalent to 10 cents per diluted share.
Financial analysts surveyed by Fact Set had projected $6.65 billion in revenue and 5 cents in earnings per share.
A 5.3% increase in revenues primarily resulted from a jump in same-store sales compared with last year's third quarter, Rite Aid reported.
The rise in net income was driven by an increase in adjusted earnings before interest, taxes and amortization and a lower last-in, first-out charge that was partly offset by a higher loss on debt retirement related to the redemption of Rite Aid's 10.25% senior secured notes.
The Camp Hill, Pa.-based company also reported that its pharmacy sales included a roughly 228 basis point negative impact from new introductions of lower-priced generic drugs. The number of prescriptions filled in the same stores increased 4.5% compared with last year's results, Rite Aid said.
The pharmacy chain continues "to face significant reimbursement rate pressure" on drug costs, but was able to mitigate that pressure during the third quarter, Rite Aid Chairman and CEO John Standley said during a conference call with financial analysts.
"We have always found a way to purchase a little better than the year before, and that's our expectation that those trends will continue," said Standley. And reimbursement rates will inevitably come down to some degree over that same period of time, but the balancing act that we always talk about is trying to get costs and reimbursement rates to align up."
The chain acquired six stores during the third quarter and closed six others, resulting in a total store count of 4,572, Rite Aid said.
Based on the results, the company said full-year net income is expected to total $1.275 billion to $1.305 billion. Net income is forecast to register between $315 million and $370 million. And income per diluted share is expected to be between 31 cents and 37 cents.
"Our focus on expanding our health and wellness offering and delivering a higher level of care to the communities we serve drove our strong same-store sales, prescription count and gross profit," Standley said in a statement released with the earnings results.