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Rite Aid reports third quarter results

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CAMP HILL, Pa. — Rite Aid Corp. today reported operating results for its third fiscal quarter ended December 1.

For the third quarter, the company reported net loss from continuing operations of $17.3 million, or $0.02 per share, Adjusted net income from continuing operations of $14.7 million, or $0.01 per share, and Adjusted EBITDA from continuing operations of $142.8 million, or 2.6% of revenues.

“Our third quarter results reflect the progress we’re making in growing our retail and pharmacy benefits management businesses,” said Rite Aid chief executive officer John Standley. “We realized our strongest prescription count performance in over two years and our best comparable store sales in over three years, driven by the success of our immunization business and other clinical pharmacy services that are benefiting our patients. We grew revenue by 5.6% at our EnvisionRxOptions PBM, driven by growth in our Medicare Part D membership. We look forward to building on this momentum by further improving clinical services in our pharmacy business, enhancing the customer experience in all channels and investing for further growth in both our retail and pharmacy services businesses.”

“In addition, as we separately announced today, we have agreed to the key terms of an amendment to our drug purchasing agreement with McKesson Corp., continuing our relationship for an additional 10 years and providing us with competitive drug pricing and operating flexibility that will help drive future growth,” Standley said.

Revenues from continuing operations for the quarter were $5.5 billion compared to revenues from continuing operations of $5.4 billion in the prior year’s third quarter. Retail Pharmacy segment revenues were $4.0 billion and increased 0.4% compared to the prior year period due to an increase in same store sales, partially offset by a reduction in store count. Revenues in the Pharmacy Services segment were $1.5 billion, an increase of 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 for the quarter increased 1.6% compared to the prior year, consisting of a 3.1% increase in pharmacy sales and 1.5 % decrease in front-end sales. Pharmacy sales included an approximate 108 basis point negative impact from new generic introductions. The number of prescriptions filled in same stores, adjusted to 30-day equivalents, increased 2.4% compared to the prior year period due to strong results from immunizations and other initiatives to drive script growth. Prescription sales from continuing operations accounted for 67.6% of total drugstore sales.

Net loss from continuing operations was $17.3 million or $0.02 per share compared to last year’s third quarter net loss from continuing operations of $18.2 million or $0.02 per share. Adjusted net income from continuing operations was $14.7 million or $0.01 per diluted share compared to last year’s third quarter Adjusted net income from continuing operations of $8.5 million or $0.01 per diluted share.

Adjusted EBITDA from continuing operations was $142.8 million or 2.6% of revenues for the third quarter compared to Adjusted EBITDA from continuing operations of $142.1 million or 2.7% of revenues for the same period last year, an increase of $0.7 million. Stronger pharmacy gross profit from script count increases was offset by  weaker front end gross profit caused by a decline in front end same store sales and by increases in distribution costs caused primarily by the realignment of stores within Rite Aid’s distribution network. Stores were realigned to facilitate the sale of a distribution center to Walgreens Boots Alliance (WBA). Retail SG&A expense benefited from the receipt of $17.9 million of fees under the Transition Services Agreement with WBA, offset by increases in employee related costs.

In the third quarter, the company also remodeled 21 stores and relocated one store, bringing the total number of wellness stores chainwide to 1,748. During the third quarter, the company closed one store, resulting in a total store count of 2,525 at the end of the third quarter.


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