Wendy future of retail top

Rite Aid fine-tunes outlook for current fiscal year

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CAMP HILL, Pa. — Rite Aid Corp. trimmed its full-year earnings guidance to reflect pharmacy margin pressure and lower expectations for same-store sales. The company also pruned its revenue forecast.

“Our guidance reflects our expectations for continued reimbursement rate pressure and the benefits from the McKesson purchasing agreement, as well as the anticipated benefits of our wellness remodel program, file-buy acquisitions, and other initiatives to grow sales and drive operational efficiencies,” chief financial officer Darren Karst said in a conference call.

Total sales for fiscal 2016, including a projected contribution from the EnvisionRx PBM, are now forecast at $30.8 billion to $31.1 billion, compared with the previous guidance of $30.7 billion to $31.2 billion.

Drug store sales are now projected at $26.7 billion to $27 billion, versus the prior forecast of $26.9 billion to $27.4 billion. Guidance for same-store sales growth has been lowered to a range of 1.5% to 2.5%, compaged with the previous range of 2.5% to 4.5%, reflecting the cycling of last year’s Medicaid expansion benefit, current sales trends and an expected negative impact of 347 basis points from new generic drugs.

Management also tightened its forecast for adjusted EBITDA to a range of $1.36 billion to $1.44 billion, compared with the previous estimate of $1.35 billion to $1.45 billion.

Net income guidance has been lowered to a range of $125 million to $195 million, or 12 cents to 19 cents per diluted share, down from the prior estimate of $150 million to $230 million, or 14 cents to 22 cents per diluted share. Analysts, on average, projected 21 cents per share.

“This is going to be a tough reimbursement rate year for us,” chairman and chief executive officer John Standley said in the call. “But it is in line with our expectations so far.”

During fiscal 2016, Rite Aid aims to open 18 new stores and relocate 27, as well as complete 400 wellness remodels. Capital expenditures are expected to total $665 million, with about $95 million earmarked for new stores and relocations, $235 million for wellness remodels, $100 million for prescription file buys and $15 million for ­EnvisionRx.


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