RAD Rite Aid Corp

By Austen Hufford 

Rite Aid Corp. reported a 21% increase in revenue, boosted by its acquisition of a pharmacy-benefit manager, but reported its first decline in retail and pharmacy sales in years.

The third-largest drugstore chain agreed to merge into No. 1 Walgreens Boots Alliance Inc. in a $17.2 billion agreement struck in late October. Accordingly, Rite Aid said it wouldn't provide guidance for its just started fiscal year. The company said it expects the deal, which is undergoing antitrust scrutiny, to close in the second half of the year.

Sales at established stores decreased 0.6% in the fourth quarter ended Feb. 27 from last year. On that basis, pharmacy sales fell 0.8%, its first such decline in nearly three years, and retail sales dropped 0.4%, the first such decline in two years.

Pharmacy sales were dented by new generic introductions, but the number of prescriptions filled increased 0.1%.

In February 2015, Rite Aid agreed to buy pharmacy-benefit manager Envision Pharmaceutical Services for about $2 billion from investment firm TPG. Revenue from that segment now accounts for 18% of total revenue, driving the sales increase, but revenue in Rite Aid's larger retail pharmacy segment declined in the quarter from a year before.

The chain, like its rivals, has adjusted its offerings to broaden its business model as the pharmacy and drugstore industry expands into the health and wellness sector. Rite Aid has worked to expand its RediClinics and remodeled 89 wellness stores, which offer organic food and natural personal-care options and feature consultation rooms for discussions with pharmacists. It added three new clinics.

Rite Aid reported a profit of $65.6 million, or 6 cents a share, down from $1.84 billion, or $1.79 cents a share, a year prior. The previous year's profit benefited from a $1.68 billion income-tax benefit. Excluding that and other items, earnings per share rose to 7 cents from 6 cents a year prior.

Revenue jumped 21% to $8.27 billion, but its retail pharmacy segment saw a 0.3% decline to $6.83 billion.

Analysts polled by Thomson Reuters had forecast earnings of 6 cents on $8.4 billion in revenue.

Shares, which have risen 4.1% over the last three months, increased 0.1% in premarket trading.

Write to Austen Hufford at austen.hufford@wsj.com

(END) Dow Jones Newswires

April 07, 2016 09:58 ET (13:58 GMT)

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