Shares of the drug retailer Rite Aid Corp (RAD) tanked on Monday after the company narrowed its fiscal 2019 earnings outlook. The company now expects its adjusted loss per share to be between four cents and break-even, compared to the earlier projected EPS of $0.02 – 0.06 issued on April 12, 2018.
Shares were down 12.5% before the opening bell.
Meanwhile, Rite Aid expects the outlook for sales and same-store sales to remain unchanged as prescription count growth and pharmacy reimbursement rates are predicted to be in line with estimates. Sales are expected to be between $21.7 billion and $22.1 billion, and same-store sales in the range of flat to up 1%.
Rite Aid, which is close to completing its merger with grocery retailer Albertsons Cos., blamed the generic drug pricing for this updated outlook. The company said the generic drug purchasing efficiencies are expected approximately $80 million below its previous experience and will not meet the expectations for the year.
Rite Aid/Albertsons merger
The special stockholders meeting scheduled for August 9 will vote on a proposal to approve its $24 billion mergers with the private firm Albertsons, which has received objection from a few investors. Now that Rite Aid has narrowed its profit outlook, the deal could be in jeopardy as Albertson is already under massive profit pressure.
If the proposed merger gets an approval, Rite Aid would then be a wholly owned subsidiary of Albertsons Companies Inc… The merged companies will be called Albertsons Companies and will trade on the NYSE under the symbol “ACI”.