Drugstore chain Rite Aid Corporation (RAD) slipped to a loss in the third quarter from a profit last year, due to lower discontinued operations. The results exceeded analysts’ expectations. Following this, the stock inched up over 6% in the after-market session.
In a separate release, Rite Aid and McKesson (MCK) agreed to key terms that will continue the companies’ pharmaceutical sourcing and distribution partnership for an additional 10 years. Under these terms, McKesson will continue providing Rite Aid with sourcing and direct-to-store delivery for the brand and generic pharmaceutical products through March 2029.
Net loss for the quarter was $4.5 million or $0.00 per share compared to a profit of $81 million or $0.08 per share in the previous year quarter. The latest quarter results were hurt by lower discontinued operations.
Adjusted income from continuing operations was $14.7 million or $0.01 per share, in line with market expectations. This compares to a net income of $8.5 million or $0.01 per share last year. Revenues rose 1.9% to $5.5 billion.
For the full year 2019, Rite Aid narrowed its revenue outlook to the range of $21.8 billion to $21.95 billion from the prior range of $21.7 billion to $22.1 billion. Same-store sales are now expected to be up 0.5% to 1% compared to the prior estimate range of flat to up 1%. The company now expects the adjusted loss in the range of $0.03 to $0.01 per share from the previous outlook of between a loss of $0.03 and a profit of $0.01 per share.
The company projects adjusted EBITDA in the range of $545 million to $570 million and capital expenditures of about $250 million for the full year 2019.
For the third quarter, Retail Pharmacy Segment revenues rose 0.4% year-over-year due to an increase in same-store sales, partially offset by a reduction in store count. Revenues in the Pharmacy Services Segment grew 5.6% compared to the prior year period, which was due to an increase in Medicare Part D membership.
Same-store sales from Retail Pharmacy continuing operations increased 1.6%, consisting of a 3.1% increase in pharmacy sales and 1.5% decrease in front-end sales. The number of prescriptions filled in same stores, adjusted to 30-day equivalents, increased 2.4% due to strong results from immunizations and other initiatives to drive script growth. Prescription sales accounted for 67.6% of total drugstore sales.
In the third quarter, the company remodeled 21 stores and relocated one store, bringing the total number of wellness stores chainwide to 1,748. Also, the company closed one store, resulting in a total store count of 2,525 at the end of the third quarter.
Rite Aid also said it has substantially closed a refinancing of its revolving credit facility that will extend its debt maturities and provide additional liquidity. The new facilities are expected to mature in 2023 subject to an earlier maturity on December 31, 2022, if Rite Aid has not repaid or refinanced its existing 6.125% senior notes due 2023 prior to such date. The company now expects to complete the refinancing by the end of December 2018.
Shares of Rite Aid ended Wednesday’s regular session down 4.58% at $0.91 on the NYSE. The stock has fallen over 58% in the year so far and over 39% in the past three months.
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