Rite Aid swings to profit in Q1 on one-time gains

Drugstore chain Rite Aid (RAD) swung to profit in the first quarter owing to one-time gains from the sale of its stores. The company closed more than a dozen stores during the period and reaffirmed its outlook for fiscal 2019.

First-quarter profit was $214.4 million or $0.20 per share, compared to a loss of $75.3 million or $0.07 per share in the year-ago-quarter. During the three-month period, net loss from continuing operations widened to $41.7 million or $0.04 per share from $36 million or $0.03 per share a year earlier, hurt by higher lease termination and impairment charges.

Total revenues dropped 2% to $3.97 billion, mainly due to stores closures that affected the overall retail business. Revenues from continuing operations edged down 1% to $5.39 billion. Lower sales in both the Retail Pharmacy and Pharmacy Services segments contributed to the unimpressive top-line performance.

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“During the first quarter our Retail Pharmacy Segment delivered strong results with an increase in Adjusted EBITDA compared to the prior year for the second consecutive quarter, while our Pharmacy Services Segment results reflect the operating investments we made to support growth,” said Rite Aid CEO John Standley.

The Camp Hill, Pennsylvania-based company reaffirmed its revenue outlook for fiscal 2019 between $21.7 billion and $22.1 billion. Same-store sales are expected to be flat or 1% higher compared to last year. The company sees a net loss in the range of $40 million and $95 million during the year, and adjusted earnings between $0.02 and $0.06 per share. Full-year capital expenditure is estimated to be $250 million.

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During the quarter, the company sold 281 stores to Walgreens Boots Alliance (WBA), closed 17 and remodeled 49 others, reducing the overall store count to 2,533.

Rite Aid’s competitor CVS Health (CVS) is scheduled to report financial results for its most recent quarter on August 1. Walgreens, which recently replaced General Electric (GE) on the Dow Jones Industrial Average, will release third quarter results on June 28.

Shares of Rite Aid closed Wednesday’s trading higher by 1% and gained further in the after-hours, following the earnings announcement.