Rite Aid reported a 3.4% drop in same-store sales for the third quarter as low prescription-reimbursement rates and cheaper generic drugs hurt pharmacy revenue.
The decline in comparable sales reflected a 4.7% decrease in pharmacy sales that included an approximate 182 basis point negative impact from new generic drug introductions. Retail sales slipped 0.4% while prescription revenue, which accounts for 68.9% of Rite-Aid’s total drugstore sales, fell 2.4%.
“Reimbursement rates remain our largest challenge and we expect that to continue for the remainder of the fiscal year,” CEO John Standley said in a news release.
He also noted the “difficult operating environment created by the extended duration of the merger process” with Walgreens Boots Alliance but said the third-quarter results “show solid performance in our front-end business, good cost control and continued strong growth” at EnvisionRx.
Rite Aid acquired the pharmacy-benefit manager in February 2015 for about $2 billion. The unit contributed to a 9.7% increase in pharmacy services sales.
Overall, the third-largest U.S. drugstore chain reported a profit of $15 million, or a penny a share, compared with $59.5 million, or 6 cents, a year prior. Excluding certain items, per-share earnings fell to 2 cents a share from 8 cents a year earlier.
Revenue edged 0.8% lower to $8.09 billion. Analysts polled by Thomson Reuters had forecast adjusted earnings of 4 cents on $8.23 billion in revenue.
As The Wall Street Journal reports, Rite Aid, like its rivals, has been expanding into the health and wellness sector. During the quarter, it remodeled 95 wellness stores, which offer organic food and natural personal-care options and feature consultation rooms for discussions with pharmacists
“Moving forward, we will remain focused on improving the health of our patients through clinical services like immunizations and medication adherence, converting additional stores to our highly successful Wellness format and working as a team to deliver a consistently outstanding experience to our customers,” Standley said.