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Rite Aid posts 1Q net loss

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CAMP HILL, Pa. — Aside from its terminated merger deal with Walgreens Boots Alliance (WBA), Rite Aid Corp. reported a net loss and declined sales for its fiscal 2018 first quarter.

For the first quarter ended June 3, Rite Aid had a net loss of $75.35 million (GAAP), or 7 cents per diluted share, compared with a net loss of $4.59 million, or 0 cents per diluted share, a year earlier. The company attributed the decrease mainly to a decline in adjusted EBITDA (earnings before interest, taxes, depreciation and amortization), partially offset by a higher income tax benefit.

Rite Aid said its adjusted net loss for the quarter was 5 cents per diluted share, compared with adjusted net income of 2 cents per share a year ago. Wall Street’s consensus estimate was for a net loss of 1 cent per share, according to Thomson Reuters.

Adjusted EBITDA came in at $192.56 million, or 2.5% of revenue, for the first quarter versus $286 million, or 3.5% of revenue, in the fiscal 2017 quarter. Rite Aid said the decline stems from a decrease of $100.9 million in the retail pharmacy segment, resulting from lower pharmacy gross profit due to lower reimbursement rates. The company noted that it wasn’t able to fully offset the impact of lower reimbursement with generic drug purchasing efficiencies and script count, but good cost control provided a partial offset. Meanwhile, adjusted EBITDA in the pharmacy services segment rose $7.4 million from a year ago due to higher gross profit.

First-quarter sales totaled $7.78 billion, down 4.9% from $8.18 billion in the prior-year period. Retail pharmacy segment sales also fell 4.9% to  were $6.35 billion from $6.68 billion, primarily from declined same-store sales and reimbursement rates, according to Rite Aid. Pharmacy services segment revenue totaled $1.51 billion, down 5.6% from $1.6 billion a year ago because of an election to participate in fewer Medicare Part D regions, which caused a decrease in covered lives at Envision Insurance Co., the company said.

Same-store sales for the quarter decreased 3.9% year over year, reflecting declines of 1.5% in the front and and 5% in the pharmacy. Rite Aid noted that comparable pharmacy sales included a negative impact of 222 basis points from introductions of new generic drugs.

Prescription count, adjusted to 30-day equivalents, dipped 1.1% in the first count on a comp-store basis, due in part to exclusion from certain pharmacy networks that Rite Aid participated in the prior year, the company said. Prescription sales represent 67.9% of overall drug store sales in the quarter.

Rite Aid said it opened one store, relocated four stores expanded one store and closed 14 stores in the first quarter. The drug chain also remodeled 67 stores, bringing the total number of Wellness Stores to 2,482. As of June 3, Rite Aid operated 4,523 stores in 31 states and the District of Columbia.

Under the new deal with WBA, struck after the companies decided to call off their planned merger, Rite Aid is slated to sell 2,186 stores, three distribution centers and related assets for $5.175 billion in cash, the assumption of related real estate leases and an option join the Walgreens Boots Alliance Development GmbH group purchasing organization for pharmaceuticals. The transaction is expected to be completed in the next six months, pending FTC approval and other closing conditions. WBA also has agreed to pay Rite Aid a termination fee of $325 million.


ECRM_06-01-22


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