Categories AlphaGraphs, Earnings, Retail

Earnings preview: Rite Aid unlikely to deliver any surprise in Q1

Rite Aid Corporation (NYSE: RAD) was on the verge of being delisted after the stock price slipped to a record low at the beginning of the year amid the operational crisis that followed a couple of botched merger deals and management reshuffle. However, the condition improved after an extensive restructuring.

The drugstore chain will be publishing the results for the first quarter of 2020 Wednesday after the closing bell. Market watchers are looking for a modest loss of $0.07 per share, representing an improvement from the $0.20 per share loss reported a year earlier. The forecast for revenues is $5.38 billion, which is broadly in line with last year.

Rite Aid reported a narrower loss from continuing operations in the fourth quarter 2019.

The good news for the disillusioned shareholders is that the management’s growth strategy is giving positive results. The overall improvement in operational efficiency and the acquisition of EnvisionRxOptions are putting the company back on track. In the recent quarters, the increased focus on wellness offerings and the pharmacy benefits management businesses boosted prescription sales and prescription count significantly at comparable stores.

The overall improvement in operational efficiency and the acquisition of EnvisionRxOptions are putting the company back on track

Of late, Rite Aid has been posting better bottom-line numbers compared to the market’s expectations, and the trend is likely to continue during the remainder of the year. Also, its entry into the sales of CBD-based wellness products, with the aim of the cashing in on the growing demand, is expected to catalyze the recovery.

Related: Can Walgreens and CVS Health resist the online invasion

However, margins will remain under pressure from the high costs and muted sales growth in the foreseeable future even as competition from online pharmacy retailers intensifies.

The company reported a modest net loss for the fourth quarter, which was in line with the prior-year quarter and slightly better than the estimates. At $5.38 billion, revenues were broadly flat year-over-year as an increase in the Pharmacy Services segment was offset by flat Retail Pharmacy revenues. Sales were negatively impacted by new generic launches.  

Walgreens Boots Alliance (WBA), which has acquired a significant number of Rite Aid stores under an asset purchase deal, will be reporting its third-quarter results Thursday before the opening bell. Among others, CVS Health (CSV), is scheduled to release second-quarter results on July 31 early morning.

Also read: Top biotech stocks to be considered for investment

Rite Aid shares have remained in a perpetual downward spiral for more than two years. The stock has lost 80% in the past twelve months and 57% since the beginning of 2019. Currently trading at a multi-year low of around $6.5, the stock has long been underperforming the sector.

Follow our Google News edition to get the latest stock market, earnings and financial news at your fingertips

Most Popular

Context Therapeutics: Another clinical-stage oncology research firm to go public soon

The US primary markets seem to be having a record-breaking start to the year, with over $171 billion raised in the first half of 2021 compared to $168 billion for

Biogen (BIIB) Stock: Does FDA nod for Aduhelm offer a buying opportunity?

The pharmaceutical industry has been witnessing hectic activity for some time, with most drug makers either channelizing their resources for vaccine development or engaging in COVID care programs. Biotechnology giant

IPO News: Monte Rosa Therapeutics will go public this week, here are a few things to know

Biotechnology company Monte Rosa Therapeutics is slated to go public this week. In a pandemic-ridden world, this industry is expanding at a healthy pace. The global biotechnology market is estimated

Add Comment
Loading...
Cancel
Viewing Highlight
Loading...
Highlight
Close
Top