Human Capital & Careers

Rite Aid Posts 22% Revenue Increase

But the drugstore chain's same store-sales fell short of estimates in part due to the introduction of low-margin generic drugs.
Matthew HellerDecember 17, 2015

Rite Aid on Thursday reported third-quarter growth in revenue and same-store sales, citing “significant contributions” from its new pharmacy services unit.

The No. 3 drugstore operator, which is being acquired by Walgreens Boots Alliance, posted a 22% jump in revenue to $8.15 billion, below analysts’ estimates of $8.18 billion. Same-store sales growth was also below analysts’ estimates of 2.1% growth, reflecting the introduction of more low-margin generic drugs.

“We are pleased with our results for the third quarter, which reflect growth in revenue, same-store sales, and adjusted EBITDA along with positive, significant contributions from our new pharmacy services segment,” Rite Aid CEO John Standley said in a news release.

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“We also continued making tremendous progress in strengthening our retail healthcare offering by converting additional stores to our Wellness format,” he added.

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As the Wall Street Journal reports, Rite Aid, like other drugstore chains, “has adjusted its offerings to broaden its business model as the pharmacy and drugstore industry expands into the health and wellness sector,” expanding its RediClinics and remodeling 96 wellness stores, which offer organic food and natural personal-care options and feature consultation rooms for discussions with pharmacists.

Year over year, same-store sales increased 0.9% in the third quarter, with a 0.3% increase in front-end sales and a 1.2% increase in pharmacy sales. Pharmacy sales were dented 252 basis points from new generic introductions, Rite Aid said.

The company also reported a third-quarter profit of $59.5 million, or 6 cents a share, down from $104.8 million, or 10 cents a share, a year earlier. Adjusted EBIDTA was $373.2 million, up from $332.8 million a year earlier.

Analysts polled by Thomson Reuters had forecast earnings of 6 cents. “Profit was hurt by expenses related to EnvisionRx, the pharmacy benefit manager which Rite Aid bought for about $2 billion in June, and lower income tax expense in the year earlier period,” Reuters said.

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