Rite Aid Corp. (NYSE: RAD) reported its financial results for the third fiscal quarter ended November 26, 2016, with earnings missing analysts’ estimates.
According to the statement, revenue of the third quarter dropped 0.8% to $8.09 billion, which was below the previous estimates of $8.23 billion. The company reported net income of $15 million, or $0.01 per share in the third quarter, compared with the $59.5 million, or $0.06 per share the same period last year. Adjusted net income per diluted share increased from the $0.08 in 2015 to $0.02 per share, which missed analysts’ expectation of $0.04 per share.
In addition, same store sales dropped 3.4% compared to the number the same period last year. It was due to the 0.4% drop in retail sales, which was further weighted on by 4.7% decline in pharmacy sales. The company explained that new generic drugs was the main reason of the decrease of pharmacy sales, because this kind of drugs are cheaper and less profitable. Besides, the prescription revenue also fell 2.4%, which also led to the drop of pharmacy sales.
“Despite the difficult operating environment created by the extended duration of the merger process with WBA, our third quarter results show solid performance in our front-end business, good cost control and continued strong growth at our pharmacy benefit manager, EnvisionRx,” John Standley, the Chairman and CEO of Rite Aid, said in the statement. “Reimbursement rates remain our largest challenge and we expect that to continue for the remainder of the fiscal year.”
Rite Aid currently has 4,547 stores in 31 states and the District of Columbia. The financial results were reported after announcing the deal with Walgreen on Tuesday.
On December 20, 2016, Walgreens Boots Alliance, Inc. reached an agreement with Rite Aid to sell 865 Rite Aid stores and certain assets for $950 million in an all-cash deal. Walgreen is working to close the deal in early 2017.