Rite Aid (RAD) Misses on 1Q Earnings, Revenue
Shares of Rite Aid Corporation (RAD) were trading down -0.07 or -0.90 percent to $7.75 per share in Thursday’s premarket after the company announced first quarter earnings that missed analyst expectations. Rite Aid Corp. stock closed at $7.82, down -0.01 or -0.13 percent in Wednesday’s regular trading session.
Based in East Pennsboro Township, Cumberland County, Pennsylvania, the Rite Aid Corporation began as a single store in Scranton, Pennsylvania in 1962.
For the company’s first quarter of its 2017 fiscal year, Rite Aid reported a loss of -$4.6 million, or $0.00 per diluted share, which compares with a profit of $18.8 million or $0.02 per share in the same period one year ago. With the exclusion of some non-recurring items, adjusted earnings per share came to $0.01.
Revenue for the quarter came to $8.18 billion compared to $6.6 billion in the first quarter of 2016, an increase of $1.5 billion or +23.1 percent. The analyst consensus was for the company to report earnings of $0.05 per share on revenue of $8.24 billion.
Same store sales increased +0.4 percent over the previous year, with a +0.1 increase in pharmacy sales and an increase of +1.2 percent in front end sales. Pharmacy sales included approximately a -198 basis point negative impact from the introduction of new generic products.
Rite Aid Chairman and Chief Executive Officer John Standley noted in this morning’s press release that, “Our results for the first quarter reflect strong performance in our Pharmacy Services Segment and our front-end business as well as good overall expense control. Our challenge was pharmacy reimbursement rate pressure, which we were unable to offset largely due to drug purchasing efficiencies that did not meet our expectations. While drug cost reductions will continue to be short of our expectations in the near term, we anticipate improvements over the second half of the fiscal year.”
Rite Aid is still tentatively to be taken over by Walgreens Boots Alliance (WBA). The deal was announced on October 27th of last year and has the approval of both boards of directors and Rite Aid shareholders. The transaction will have Walgreens Boots pay $9.00 per share in cash for a total enterprise value of $16.6 billion. The deal is still being reviewed by regulators, with the Federal Trade Commission yet to approve the transaction, which is expected to close by the second half of this calendar year.
The concern is that the merged company will have approximately 46.5 percent of the market, which compares to rival CVS’s 30 percent. The deal could still be quashed due to the FTC’s anti-trust provisions, which recently prevented a merger of Staples and Office Depot.
Other News About RAD
Rite Aid stock gained last week on favorable news from the FTC.
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