By Tess Stynes
Rite Aid Corp. (RAD) said its fiscal fourth-quarter earnings
fell 55%, despite continued revenue growth, owing to impacts of
one-time items such as inventory-accounting adjustments and
debt-extinguishment charges.
Shares rose 8.3% to $6.93 in recent premarket trading, as
adjusted earnings topped expectations and Rite Aid's fiscal-year
revenue guidance topped Wall Street views.
For the new fiscal year, the company forecast per-share earnings
of 31 cents to 42 cents and revenue of $26 billion to $26.5
billion. Analysts polled by Thomson Reuters expected per-share
profit of 35 cents and revenue of $25.75 billion.
On Thursday, Rite Aid also said it acquired regional
retail-clinic operator RediClinic. The provider of treatment for
common conditions and preventative services has 30 clinics in the
Houston, Austin and San Antonio areas. Rite Aid said it plans to
open new RediClinics in some of its markets, as well as support
RediClinic's expansion in Texas.
The company also recently acquired Health Dialog Services Corp.,
adding a provider of health coaching, analystics and other
services.
The acquisitions come as the broader pharmacy and drugstore
sector has been expanding offerings in the health and wellness
space.
Chief Executive John Standley cited the recent acquisitions and
the company's expanded distribution agreement with drug wholesaler
McKesson Corp. (MCK) to include generic drugs among the factors
positioning Rite Aid "to transition its strategy from turnaround to
growth as we more aggressively pursue opportunities to become a
growing retail health-care company."
For the period ended March 1, Rite Aid reported a profit of
$55.4 million, or six cents a share, down from $123.1 million, or
13 cents a share, a year earlier. Excluding items such as
inventory-accounting impacts and debt-extinguishment losses,
adjusted earnings rose to 10 cents a share from seven cents a
share.
Analysts polled by Thomson Reuters expected per-share profit of
four cents.
Rite Aid last month reported that total drugstore sales
increased 2.2% to $6.57 billion and that same-store sales rose
2.1%. In the front of the store, same-store sales edged down 0.7%,
while they increased 3.5% in the pharmacy section.
Generic drug introductions had a negative impact of 1.23
percentage points on same-store pharmacy sales. Same-store
prescription counts declined 1.8%.
The No. 3 U.S. drugstore chain by sales behind Walgreen Co.
(WAG) and CVS Caremark Corp. (CVS) has posted a string of quarterly
profits in a turnaround following years of losses.
The company's loyalty program has bolstered its sales. Rite Aid,
which has nearly 4,600 stores, also has worked to improve its
balance sheet.
Write to Tess Stynes at tess.stynes@wsj.com
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